Marketplace Lending Around the Globe
July 16, 2015 11:00 AM
A Fast-Spreading Phenomenon
Marketplace lending, also known as peer-to-peer lending, is quickly becoming a global business. By 2020, the industry will be issuing close to $300 billion in loans annually, according to estimates from Morgan Stanley , with more than half of that volume originating outside of the United States. What follows is a quick look at the marketplace lending industry in various parts of the globe.
China
Outside of the U.S., China has the industry's largest loan volume, and is widely seen as a fertile environment due to the country's vast population and its relatively undeveloped consumer credit market.
But the Chinese market also carries red flags. Hundreds of lending platforms have reportedly gone belly-up, some due to fraud. Delinquency rates on marketplace loans are high in China, according to Morgan Stanley. And The Wall Street Journalreported that as many as 20% to 30% of investors in P-to-P platforms had to liquidate their portfolios amid the chaos in Chinese financial markets.
But the Chinese market also carries red flags. Hundreds of lending platforms have reportedly gone belly-up, some due to fraud. Delinquency rates on marketplace loans are high in China, according to Morgan Stanley. And The Wall Street Journal
United Kingdom
The U.K. is where peer-to-peer lending was born, and unlike the U.S., the Brits have stayed closer to the original concept of connecting individual lenders and borrowers. Industry leaders in the U.K. include Zopa, RateSetter and Funding Circle.
The industry is poised to get a boost from new rules that will allow Brits to invest some of all of their retirement savings, through so-called individual savings accounts, in P-to-P loans.
The industry is poised to get a boost from new rules that will allow Brits to invest some of all of their retirement savings, through so-called individual savings accounts, in P-to-P loans.
Australia
Australia's P-to-P lending industry got off to a comparatively slow start, but is now booming, and its rapid growth is expected to continue.
By the end of the decade, marketplace lenders in Australia will issue an estimated $12.3 billion in loans annually, according to Morgan Stanley projections. That's about 10% of the projected level in the U.S. and about half of the estimate for Britain.
The P-to-P industry has started to attract attention from Australia's biggest banks. Last year, Westpac Banking Corp.took an equity stake in the Sydney-based peer-to-peer lending SocietyOne.
By the end of the decade, marketplace lenders in Australia will issue an estimated $12.3 billion in loans annually, according to Morgan Stanley projections. That's about 10% of the projected level in the U.S. and about half of the estimate for Britain.
The P-to-P industry has started to attract attention from Australia's biggest banks. Last year, Westpac Banking Corp.
Canada
The P-to-P sector is even younger in Canada. Grouplend, Borrowell and FundThrough are among the marketplace lending platforms that have launched north of the border since last fall. U.S.-based OnDeck Capital has also started lending to Canadian small businesses.
The Canadian banking sector, which is dominated by a handful of large institutions, is paying close attention. In a March speech, Toronto-Dominion Bank Chief Executive Bharat Masrani said he welcomed competition, but also called on regulators to provide oversight of new entrants into the financial services market.
The Canadian banking sector, which is dominated by a handful of large institutions, is paying close attention. In a March speech, Toronto-Dominion Bank Chief Executive Bharat Masrani said he welcomed competition, but also called on regulators to provide oversight of new entrants into the financial services market.
France
The industry leader in France is Prêt d'Union, which recently announced that it has raised $34 million from various investors. The company's French lending license offers it a significant advantage over newer entrants because, according to a recent report from Liberum Capital, the process of obtaining a license can take a year or longer.
Prêt d'Union is reportedly one of several loan marketplaces that arelooking to expand across the Eurozone .
Prêt d'Union is reportedly one of several loan marketplaces that are
Ireland
IrelandEven very small nations now have their own marketplace lending platforms. Ireland, which has fewer than 5 million residents, is home to a pair of them.
Dublin-based Grid Finance is making crowd-funded business loans of up to $84,000, while crosstown rival LinkedFinance is lending up to $112,000 to Irish small businesses.
Dublin-based Grid Finance is making crowd-funded business loans of up to $84,000, while crosstown rival LinkedFinance is lending up to $112,000 to Irish small businesses.
