Marketplace Lending Platforms Will Realise $137 Billion Revenues by 2023
New data from Juniper Research has found that MPL platform revenue will reach $137 billion annually by 2023, up from less than $30 billion this year, representing growth over the period of 400%. Juniper’s new research found that alternative lending will continue to gain traction because of the short approval periods, easy accessibility and lower rates. It argued that by 2023, loan origination value via these platforms would approach $588 billion annually, representing 41% of global SME financing.
Juniper assessed 21 vendors, scoring their level of agility, presence and innovation, comprising types of loans offered and complexity of loan processes performed. They have ranked the 5 leading vendors: Divido, FlexxBuy, Tavant Technologies, Ideal 4Finance and Roostify. Divido allows customers to access loan offers from multiple lenders; handling the largest number of loan processes of any vendor assessed by Juniper. FlexxBuy, the second leading vendor, has broad loan offers; accommodating most businesses activities.
Juniper found that a lack of trust by investors is challenging to MPL. Despite using algorithms and non-traditional data to calculate eligibility, the risk of default by underserved customers, MPL’s target audience, is still high. Liquidity is also problematic for new players as few customers have completed a payment cycle. Thus, players have low cashflow due to immediate debt (loan principal) and long-term receivables. In order to counter this, the research argued that alternative lenders must increase compliance and securitisation; selling alternative lending securities in the secondary market to generate cashflow.
Juniper predicts MPL will become the main channel for personal and SME loans. The research urged traditional banks to invest in improving customer experience; offering holistic financial experience and advice, while using alternative lending as an opportunity to acquire new millennial customers.