Harnessing Potential: The Asia-Pacific Alternative Finance Benchmarking Report

96 Pages Posted: 30 Jun 2020

See all articles by Kieran Garvey

Kieran Garvey

University of Cambridge - Cambridge Centre for Alternative Finance

Bryan Zheng Zhang

Cambridge Centre for Alternative Finance, Cambridge Judge Business School, University of Cambridge

Luke Deer

University of Sydney

Robert Wardrop

University of Cambridge - Cambridge Centre for Alternative Finance

Andrew R. Grant

University of Sydney Business School - Discipline of Finance; Financial Research Network (FIRN)

Susan Thorp

The University of Sydney Business School

Tania Ziegler

University of Cambridge - Cambridge Centre for Alternative Finance

Ying Kong

Tsinghua University

Xinwei Zheng

Department of Finance

Eva Huang

University of Sydney Business School - Discipline of Business Law

John Burton

Independent

Hung-Yi Chen

Cambridge Centre for Alternative Finance, Judge Business School, University of Cambridge

Alexis Lui

affiliation not provided to SSRN

Date Written: March 8, 2016

Abstract

Online alternative finance is developing rapidly in the Asia-Pacific region. It is characterised by innovative financial instruments and channels that fall outside the traditional avenues of capital raising and financial intermediation. From reward-based crowdfunding to peer-to-peer consumer and business lending (i.e. marketplace lending), to invoice trading and equity-based crowdfunding, these online alternative finance activities are directly connecting lenders to consumer and small business borrowers, raising venture capital for start-ups, funding the creative industries and creating new ways for individuals and institutions to choose how and to whom money is distributed, lent and invested.

This benchmarking research is the first comprehensive study of the Asia-Pacific online alternative finance market. It has been conducted by an international research team from the Cambridge Centre for Alternative Finance at Cambridge Judge Business School, the Tsinghua University Graduate School at Shenzhen, the University of Sydney Business School, in partnership with KPMG and with the support of the ACCA and CME Group Foundation. Working with over 20 industry research partners, together we have systematically collected survey data from 503 leading alternative finance platforms operating in 17 Asia-Pacific countries and regions, out of which, 376 were from mainland China.

Our definition of online alternative finance focuses on the provision of finance to individuals and businesses through alternative channels via online marketplaces outside of the banking system. It excludes activities such as peer-to-peer insurance, online money market funds or third-party payments. The report captures an estimated 70% of the visible market, and estimates that the total Asia-Pacific online alternative finance market grew 323% year-on-year to reach $102.81 billion USD in 2015.

Market size & growth
China is the world's largest online alternative finance market by transaction volume, registering $101.7 billion (or RMB 638.79 billion) in 2015. This constitutes almost 99% of the total volume in the Asia-Pacific region. In comparison, the total size of the UK online alternative finance market was $4.5 billion (or £3.2 billion) in 2015. The Chinese online alternative finance market grew from a relatively low base of $5.56 billion in 2013 to reach $24.30 billion in 2014 and then went on to reach $101.7 billion in 2015 - an average growth rate of 328% between 2013 and 2015. Marketplace/peer-to-peer consumer lending is the largest market segment in China with $52.44 billion lent, followed by marketplace/peer-to-peer business lending ($39.63 billion) and real estate lending ($5.51 billion). Online invoice trading reached $1.46 billion, equity-based crowdfunding recorded $948.26m and reward-based crowdfunding rose to $829.52m in 2015.

Excluding mainland China, the rest of the Asia-Pacific region recorded a volume of USD $1.12 billion in 2015 with a 313% year-on-year growth rate from the $271.94 million raised in 2014. Japan's online alternative finance market accrued $360.23m in 2015, followed by $348.37m originated in Australia, $267.77m in New Zealand, $41.18m in South Korea, $39.91m in India and $39.76m in Singapore. However, New Zealand has the highest alternative finance volume on a per capita basis outside of China with $59.37 per capita, followed by Australia ($14.83), Singapore ($7.27), Japan ($2.83) and Hong Kong ($1.28). China's alternative finance market volume per capita stands at $74.54 in 2015.

In terms of prevailing market segments outside of China, marketplace/peer-to-peer business lending was the largest with $355.51m, followed by market/peer-to-peer consumer lending ($326.22m), balance sheet business lending ($120.62m), invoice trading ($116.95m), reward-based crowdfunding ($81.22m) and equity-based crowdfunding ($64.13m).

Keywords: FinTech, Alternative Finance, Crowdfunding, P2P Lending, Asia Pacific, China, Regulation

JEL Classification: G23, G28, G38, F65, F63, G18, O19, O33, O38, O55, Q01, Q28, Q42

Suggested Citation

Garvey, Kieran and Zhang, Bryan Zheng and Deer, Luke and Wardrop, Robert and Grant, Andrew R. and Thorp, Susan and Ziegler, Tania and Kong, Ying and Zheng, Xinwei and Huang, Eva and Burton, John and Chen, Hung-Yi and Lui, Alexis, Harnessing Potential: The Asia-Pacific Alternative Finance Benchmarking Report (March 8, 2016). Available at SSRN: https://ssrn.com/abstract=3621310 or http://dx.doi.org/10.2139/ssrn.3621310

Kieran Garvey (Contact Author)

University of Cambridge - Cambridge Centre for Alternative Finance ( email )

10 Trumpington Street
Cambridge, CB21QA
United Kingdom

Bryan Zheng Zhang

Cambridge Centre for Alternative Finance, Cambridge Judge Business School, University of Cambridge ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom

HOME PAGE: http://www.jbs.cam.ac.uk/ccaf

Luke Deer

University of Sydney ( email )

Level 3, Social Sciences Building
Sydney, NSW 2006
Australia

Robert Wardrop

University of Cambridge - Cambridge Centre for Alternative Finance ( email )

10 Trumpington Street
Cambridge, CB21QA
United Kingdom

Andrew R. Grant

University of Sydney Business School - Discipline of Finance ( email )

H69 Codrington Business School Building
Sydney, NSW 2006
Australia
61-2-9036-6238 (Phone)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Susan Thorp

The University of Sydney Business School ( email )

Abercrombie Building
H70
The University Of Sydney, NSW 2006
Australia
0290366354 (Phone)

Tania Ziegler

University of Cambridge - Cambridge Centre for Alternative Finance ( email )

10 Trumpington Street
Cambridge, CB21QA
United Kingdom

Ying Kong

Tsinghua University ( email )

Beijing, 100084
China

Xinwei Zheng

Department of Finance ( email )

221 Burwood Highway
Burwood, Victoria 3125
Australia

Eva Huang

University of Sydney Business School - Discipline of Business Law ( email )

University of Sydney
Sydney, NSW 2006
Australia

John Burton

Independent ( email )

Hung-Yi Chen

Cambridge Centre for Alternative Finance, Judge Business School, University of Cambridge ( email )

Cambridge Centre for Alternative Finance
10 Trumpington Street
Cambridge, Cambridge CB2 1QA
United Kingdom

Alexis Lui

affiliation not provided to SSRN

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