The 4th European Alternative Finance Benchmarking Report

147 Pages Posted: 16 Mar 2021

See all articles by Tania Ziegler

Tania Ziegler

University of Cambridge - Cambridge Centre for Alternative Finance

Rotem Shneor

University of Agder

Karsten Wenzlaff

University of Hamburg - Faculty of Business, Economics, and Social Sciences; University of Cambridge - Cambridge Centre for Alternative Finance; European Centre for Alternative Finance

Ana Odorović

affiliation not provided to SSRN

Rui Hao

University of Cambridge - Cambridge Centre for Alternative Finance

Lukas Ryll

University of Cambridge - Department of Engineering; University of Cambridge - Cambridge Centre for Alternative Finance

Date Written: January 24, 2021

Abstract

This year’s report is titled ‘Shifting Paradigms’ to, in part, emphasise the continued growth and development of the European Alternative Finance Industry, but also underscore that these patterns of growth can develop and change as the sector continues to develop and mature. Throughout the region, platforms have continued to grow, respond to regulation, and expand operations internationally. In some regions, model prominence has shifted, allowing for others to grow. At times, this has been a response to the development or lack of regulation, or simply a result of competing market forces.

Last year’s report, ‘Expanding Horizons’, sought to exemplify the positive developments in European Alternative Finance in 2016 and foreshadowed future developments in the industry. The sector as a whole has continued to expand, and across the board has grown in volume. As with last year, this study captured market data from 45 European countries, and continued to explore issues with regard to innovation, research and development, as well as internationalisation trends.

This year’s European Alternative Finance Industry Report has been produced by the Cambridge Centre for Alternative Finance at Cambridge Judge Business School and the University of Agder. This report was generously supported by Invesco and the CME Group Foundation.

Highlights from the report

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. The study shows that the total European online alternative finance market (including the UK) grew by 36 per cent to reach €10.44 billion in 2017. The United Kingdom is still the largest individual alternative finance market, albeit with a declining market share from 73 per cent in 2016 to 68 per cent in 2017. Excluding the UK from overall volume, the European online alternative finance industry grew 63 per cent from €2.06 billion to €3.37 billion in 2017.

France (€661.37 million), Germany (€595.41 million) and the Netherlands (€279.93 million) remained the top three national markets for online alternative finance by market volume in Europe, excluding the United Kingdom.

For the fourth year in a row P2P Consumer Lending accounted for the largest market share of European Alterative Finance (excluding the UK). This model accounted for 41 per cent of all volume and grew by 99.8 per cent from €697 million in 2016 to €1.39 billion in 2017.

Internationalisation of platforms is on the rise. In 2017, 88 per cent of platforms reported some level of cross-border inflows, while 61 per cent reported outflows. This represents a growth of 11 per cent for platforms reporting cross-border inflows, and 17 per cent growth for those reporting cross-border outflows. Despite growth in international orientation of platforms, the extent of actual localisation of services, interface and brand remains limited.

While in 2016, models that were associated with larger volumes reported a higher level of change to their business model, the opposite trend was observed in 2017. For the top five model types by volume, 50 per cent or more of platforms reported making no changes to their business model. Product innovation, however, was high across the board.

As was observed in the previous year, most innovation focused on improving the operational efficiency of platforms through process streamlining and automation, as well as optimising payment processing and customer verification. Additionally, as with last year, the secondary research focus for platforms in Europe regards investment and development in customer service features, predominantly social media and promotional tools, community management, and CRM systems.

As regulatory regimes across Europe continue to develop, so to do the perceptions of platforms on the adequacy of these regulations. In general, while overall views are still divided, it appears that the level of approval has been increasing.

Keywords: alternative finance, fintech, Europe, benchmark, crowdfunding, digital lending, digital payments, invoice trading, financial innovation, P2P consumer lending, P2P business lending

Suggested Citation

Ziegler, Tania and Shneor, Rotem and Wenzlaff, Karsten and Odorović, Ana and Hao, Rui and Ryll, Lukas, The 4th European Alternative Finance Benchmarking Report (January 24, 2021). Available at SSRN: https://ssrn.com/abstract=3772260 or http://dx.doi.org/10.2139/ssrn.3772260

Tania Ziegler (Contact Author)

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

10 Trumpington Street
Cambridge, CB21QA
United Kingdom

Rotem Shneor

University of Agder ( email )

Serviceboks 422
N-4604 Kristiansand, VEST AGDER 4604
Norway

Karsten Wenzlaff

University of Hamburg - Faculty of Business, Economics, and Social Sciences ( email )

Von-Melle-Park 9
Hamburg, 20146
Germany

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

10 Trumpington Street
Cambridge, CB21QA
United Kingdom

European Centre for Alternative Finance ( email )

Vredenburg 138
Utrecht, 3511 BG
Netherlands

Ana Odorović

affiliation not provided to SSRN

Rui Hao

University of Cambridge - Cambridge Centre for Alternative Finance

10 Trumpington Street
Cambridge, CB21QA
United Kingdom

Lukas Ryll

University of Cambridge - Department of Engineering ( email )

Cambridge
United Kingdom

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

10 Trumpington Street
Cambridge, CB21QA
United Kingdom

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