The alternative finance market continues to grow across Europe with this growth remaining to be dominated by the UK market. Recent market data has shown that the market which was worth an estimated 7.7 billion at around the end of 2016 with data from the Cambridge centre for alternative finance recently showing that 5.6 billion of that total as being accounted for by the UK.
This data showing a 41% increase during that period across Europe providing a valuable line of funding for entrepreneurs and SME businesses alike that were not able to secure funding from traditional funding sources and high street banks. In the UK alone the market was up 101 per cent.
Consumer lending still remains the single biggest sub sector category within the alternative finance industry, with Peer-to-peer lending sites accounting for a 34 per cent share of the market. However, SME business funding is significant with P2P business lending, invoice trading and equity based crowdfunding options together sharing 40 per cent of the market.
With these services having raised significant sums of finance for the SME sector, providing 1.14 billion euros to more that 14 thousand businesses across Europe as a whole. Debt models show that P2P business loans also accounted for 67 per cent of business finance, with equity based ending models accounting for 27 per cent.
What this data shows is that financial services and the SME lending market is undergoing a profound transformation that will eventually completely reshape business banking as we know it. Looking forward the Cambridge Centre for Alternative finance predicts further strong growth for the industry.
Many services developed as a result of the financial crisis a decade ago with UK high street banks pulling back on its lending particularly to SME businesses. The sector is now a very well-established market working alongside banks who have now returned to lending although somewhat hesitantly.
One key sign of such maturity is the vast amounts of institutional investment cash that is now available to the industry with 69 per cent of peer to peer consumer and business lending being funded by institutions including banks, pension funds and asset management firms evidencing the strength of the industry and its potential for further growth for UK SME’s.