Marketplace lending platforms to realise $137 billion revenues by 2023
New data from Juniper Research has found that marketplace lending (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%.
The 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. The company ranked the 5 leading vendors:
- Tavant Technologies;
- Ideal 4Finance;
Juniper also 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 securitization; selling alternative lending securities in the secondary market to generate cashflow.
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