Alternative Finance Market to Grow 21% by 2022

According to a report from Technavio, the global alternative finance market will grow more than 21% by 2022. Sources of alternative finance include peer-to-peer lending, crowdfunding and invoice trading. Despite the projected growth, the momentum of the market is expected to decelerate due to a decline in year-over-year gains.

A key factor driving the growth of the market is the speed and ease with which customers can obtain credit. Alternative finance provides quick and easy access to credit unlike traditional financial institutions, which may take more than a day to complete the paperwork for a loan application. Several banks have policies that restrict them from even providing loans to certain businesses such as restaurants and clinics. Alternative finance caters to such businesses and is attractive due to expedited credit practices.

The alternative finance market in several Asian countries has grown significantly in the past five years. Many SMEs in developing countries such as China, Hong Kong, Malaysia, Indonesia, India and the Philippines lack access to traditional financing sources, which has increased the demand for alternative financial services and platforms. In these developing countries in Asia, SMEs play an important role in driving the growth of the economy and account for nearly half of the total employment and national income.

The APAC region led the market in 2017 with more than 88% of the market share, followed by the Americas and EMEAl, respectively. The lack of conventional financing sources in several countries in APAC will drive the growth of alternative finance providers for the next five years.

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