Philippines Alternative Lending Business Analysis Report 2023-2027 - Digital Lenders are Forging Strategic Alliances with AI-powered Fintech Firms

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Nov 14, 2023, 14:30 ET

DUBLIN, Nov. 14, 2023 /PRNewswire/ -- The "Philippines Alternative Lending Market Business and Investment Opportunities Databook - 75+ KPIs on Alternative Lending Market Size, By End User, By Finance Model, By Payment Instrument, By Loan Type and Demographics - Q2 2023 Update" report has been added to ResearchAndMarkets.com's offering.

Alternative lending market in Philippines is expected to grow by 45.4% on annual basis to reach US$488.8 million in 2023.

Medium to long term growth story of alternative lending in Philippines remains strong. Alternative lending adoption is expected to grow steadily over the forecast period, recording a CAGR of 36.2% during 2023-2027. The alternative lending market in the country will increase from US$336.0 million in 2022 to reach US$1,680.4 million by 2027.

This report helps in navigating the nuanced relationships between payment instruments and lending models, offering a detailed breakdown of transaction dynamics. Uncover the multifaceted nature of loans, from personalized B2C offerings like payroll advances to strategic B2B solutions like lines of credit. Complementing these insights, delve into consumer attitudes and behaviors, decoding the impact of age, income, and gender on financial choices.

The adoption of digital lending applications has been on a rampant surge in the Philippines in 2022. High percentage of unbanked population, coupled with the growing demand for credit amid the current macroeconomic environment, has resulted in more and more consumers turning to alternative lending providers in 2022. This trend is projected to further continue in 2023, as inflation continues to impact the disposable income of many across the Southeast Asian market.

The Philippines' alternative lending industry is one of the most competitive markets worldwide. The ecosystem is projected to become even more competitive in 2023, as foreign players eye expansion into the Southeast Asian region.

The presence of global and domestic players will, therefore, also drive growing innovation in the sector. Overall, the digital banking revolution in the Philippines is expected to keep supporting the growth of the alternative lending industry over the next five years.

Fintech firms and neo-banks are launching innovative lending products to serve the unbanked and underbanked in the Philippines

With consumers spending an increasing amount of time on digital lending applications to fund their daily lives and purchases, new fintech players are entering the market with innovative lending products.

In January 2023, Salmon, the fintech startup in the Philippines, announced that the firm is going live with its first lending product catering to the credit demand among unbanked and underbanked customers. For the launch of the point-of-sale lending service, the firm partnered with 30 merchants. The lending product is specifically targeted towards millennials and Gen Z consumers, who do not have the time and patience to go through the complicated processes of conventional institutions.

Alongside new players, neo-banks are also launching lending products to further drive financial inclusion and serve the underbanked and unbanked section of the society in the Philippines market.

Tonik, for instance, announced the launch of two new lending products, Flex Loan and Big Loan, in November 2022. While Flex Loan provides consumers with the ability to purchase anything they like and is available without any collateral, Big Loan is a home equity type of loan wherein the property is pledged as collateral. The launch of these solutions comes on the back of its Quick Loan product. From the short to medium-term perspective, the publisher expects more such new products to be launched in the Philippines market as the demand for credit continues to grow among consumers.

Digital lenders are forging strategic alliances with AI-powered fintech firms to provide credit and lending services to unbanked Filipinos

To enable accurate credit risk profile assessment, including for the unbanked section of the community, digital lenders are forging strategic alliances with AI-powered fintech firms in the Philippines.

In December 2022, UNO Digital Bank announced that the firm had entered into a strategic collaboration with AI-fintech firm Trusting Social. The aim of the partnership is to offer credit and lending services to unbanked Filipinos. As part of the collaboration, UNO Digital Bank will leverage the expertise of Trusting Social and its AI-powered customer onboarding solution to offer a one-stop financial solution for all Filipinos.

The accurate credit risk profile assessment will also enable UNO Digital Bank to reduce delinquencies, thereby aiding more sustainable growth for the firm in the long-term perspective. From the short to medium-term perspective, the publisher expects more such strategic collaborations in the alternative lending sector in the Philippines.

Alternative lending providers are expanding their service offering through strategic collaborations

Amid the growing competition in the Filipino alternative lending segment, firms are entering into strategic collaborations to diversify their service offerings and add another revenue stream to their core operations.

In April 2023, Tala, one of the leading alternative lending providers, announced that the firm had partnered with Union Digital, a digital bank in the Philippines. The collaboration will see the two firms launch a digital wallet for consumers to send and receive money. The e-wallet solution will enable the firms to reach underserved sectors including MSMEs and Filipinos overseas.

In the beta phase, the digital wallet has garnered increasing traction among Filipinos. As of April 2023, the firm had disbursed nearly PHP 2 million worth of credit to the e-wallet. Currently, Tala has more than two million customers in the Philippines. The addition of a digital wallet is expected to further add to its user base from the short to medium-term perspective. Going forward, the publisher expects more providers to expand their service offerings to drive accelerated growth.

Scope

Philippines Economic Indicators

Gross Domestic Product at Current Prices
Population
Unbanked Population
Unemployment Rate
Loan Default Rate

Philippines Alternative Lending Market Size and Forecast

Transaction Value
Average Transaction Value
Transaction Volume

Philippines Alternative Lending Market Size and Forecast by End User

End User - Business
End User - Consumer

Philippines Alternative Lending Market Size and Forecast by Finance Models

P2P Marketplace Consumer Lending
P2P Marketplace Business Lending
P2P Marketplace Property Lending
Balance Sheet Consumer Lending
Balance Sheet Business Lending
Balance Sheet Property Lending
Invoice Trading
Debt Based Securities
Equity Based Crowd Funding
Real Estate Crowd funding

Philippines Alternative Lending Market Size and Forecast by Payment Instrument - Transaction Value, Volume and Average Value

Cash
Cheques
Credit Transfer
Direct Debits
Debit Card
Credit Card
E- Money

Philippines Alternative Lending Market Size and Forecast by Payment Instrument to Model

Alternative Lending Market Size and Forecast by Payment Instrument to P2P Marketplace Consumer Lending

Alternative Lending Market Size and Forecast by Payment Instrument to P2P Marketplace Business Lending

Alternative Lending Market Size and Forecast by Payment Instrument to P2P Marketplace Property Lending

Alternative Lending Market Size and Forecast by Payment Instrument to Balance Sheet Consumer Lending

Alternative Lending Market Size and Forecast by Payment Instrument to Balance Sheet Business Lending

Alternative Lending Market Size and Forecast by Payment Instrument to Balance Sheet Property Lending

Alternative Lending Market Size and Forecast by Payment Instrument to Invoice Trading

Alternative Lending Market Size and Forecast by Payment Instrument to Debt Based Securities

Alternative Lending Market Size and Forecast by Payment Instrument to Equity Based Crowd Funding

Alternative Lending Market Size and Forecast by Payment Instrument to Real Estate Crowd funding

Philippines Alternative Lending Market Size and Forecast by Loan Types

B2C Loans
Personal Loan
Payroll Advance
Home Improvement
Education/Student Loans
Point of Sale
Auto Loans
Medical Loans
B2B Loans
Lines of Credit
Merchant Cash Advance
Invoice Factoring
Revenue Financing

Philippines Alternative Lending Analysis by Consumer Attitude and Behaviour

By Age
By Income
Gender

For more information about this report visit https://www.researchandmarkets.com/r/6gsbpn

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