B2B Payments

A New Outlook For Corporate P2P Finance

The alternative lending space has seen predictions of massive growth and development in the last year alone. The market in the U.K. is especially large, and new research pinpoints what the nation’s P2P lending space for businesses might look like in 2020.

New findings from the Centre for Economics and Business Research, in collaboration with payments company Fiserv, found that the alternative finance industry for corporate lending is set to see a valuation of more than $18.7 billion by the end of the decade — a tenfold increase from the $1.8 billion lent out in 2014 by the industry.

Unsurprisingly, analysts pointed to the shrinking lending space among traditional banks as the fuel behind corporates’ decision to look elsewhere for cash.

“Threats to banks’ traditional SME customer base come from the rise of alternative finance providers,” the report concluded, according to reports in The Telegraph on Monday (Sept. 28). “Typically, small and micro businesses have relied heavily on their bank for credit needs, but this appears to be largely due to the lack of knowledge around other sources of credit, rather than due to being happy with their banking relationship.”

[bctt tweet=”Threats to banks’ traditional SME customer base come from the rise of alternative finance providers.”]

But the report also added new insight into the reasons behind wild alt-lending growth for SMEs. “Improving technology has recently given rise to peer-to-business lending and crowdfunding as alternatives to banks,” researchers said. “With an emphasis on user-friendliness and a concerted market drive, this sector is likely to grow rapidly over the years to 2020.”

The report noted that while some of the growth will be due to natural economic expansion, it will also be fueled by the decision among innovators in the lending space that are taking market share away from traditional financial institutions.

Still, reports noted, even with an $18.6 billion lending volume in 2020, the figure is still “well below” the volume of cash lent to businesses by traditional U.K. banks.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out the February 2019 PYMNTS Digital Fraud Tracker Report

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