In Focus Risk
The continued growth of alternative finance in Europe
The new lending market is continue to grow, with the United Kingdom at the head of this development
Raghavendra Rau Academic director, the Cambridge Centre for Alternative Finance
The United Kingdom is still the largest individual alternative-finance market, albeit with a declining market share from 73% in 2016 to 68% in 2017. Excluding the UK from overall volume, the European online alternative-finance industry grew 63% from €2.06bn to €3.37bn in 2017, according to the 4th European Alternative Finance Benchmarking Report – Shifting Paradigms. The top three national markets for online
alternative finance by market volume in Europe, excluding the UK, continued to be France, Germany, and the
Netherlands.The French market reached €661m, followed by Germany (€595m), the Netherlands (€280m). The Nordic countries collectively generated €449m, making them the third- largest regional market in Europe following France and Germany. The report was produced by the
Cambridge Centre for Alternative Finance at Cambridge Judge Business School and the University of Agder in Norway. This year’s study gathered data from 269 platforms with reported operations in 2017. These 269 platforms were responsible for 519 unique data entries across 45 countries in Europe.
Peer-to-peer lending For the fourth year in a row, peer-to-peer consumer lending accounted for the largest market share of European alternative finance (excluding the UK). This accounted for 41% of all volume, and represented a
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Kristin Wallevik Dean, the University of Agder’s School of Business and Law
Dave Dowsett Global head of technology strategy, innovation and planning, Invesco
Online alternative finance for businesses across Europe also continued to grow, providing €1.66bn to over 24,000 businesses. Overall, business funding in Europe increased by €534m, raising funds for an additional 9,586 businesses. Debt models (including P2P business lending and invoice trading) accounted for 76% of all business finance
doubling of growth from €697m in 2016 to €1.39bn in 2017. Online alternative finance for businesses
across Europe also continued to grow, providing €1.66bn to over 24,000 businesses. Overall, business funding in Europe increased by €534m, raising funds for an additional 9,586 businesses. Debt models (including P2P business
lending and invoice trading) accounted for 76% of all business finance, while equity models accounted for 21%. The top five countries with the highest volume of business funding were France (€325m), the Netherlands (€264m), Italy (€171m), Sweden (€126m), and Germany (€106m).
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International range Internationalisation of platforms is also on the rise. In 2017, 88% of platforms reported some level of cross-border inflows, while 61% reported outflows. This represents a growth of 11% for
platforms reporting cross-border inflows, and 17% growth for those reporting cross- border outflows. Since 2015, we have released four reports
aimed at understanding the development and growth of the European online alternative-finance market. This sector has continued to evolve, creating both new opportunities and challenges. It has, therefore, never been more
important to understand its evolution and track the trajectory of its growth. The report’s message of ‘shifting
paradigms’ is of relevance for the financial sector, business education and research sectors. Here, by focusing attention on the important financial aspects of our ever more digital lives, we actively contribute to more informed decision making, policy formulations, as well as responsible development of new industries. Rapid technological change and increasing
connectedness have allowed the alternative finance market to emerge and flourish to provide capital to businesses and individuals in new ways. The report shows continued growth and
dives into sentiment around risk and regulatory environments.
June 2019
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