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Digital Lending Statistics – The Automated Solution Changing Finance

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Digital Lending Statistics – The Automated Solution Changing Finance

Although the first digital lending services hit the market in the mid-2000s, their popularity exploded during and shortly after the COVID-19 pandemic. In fact, over the past few years, digital lending platforms have emerged as the leading competitor against traditional banks.

An increasing number of SMEs and individual consumers turn to this tech-powered alternative, as digital lending provides streamlined and inclusive financing options even to those traditionally underbanked.

But is digital lending here to stay? In this article, we’ll review all the puzzle pieces, including the latest digital lending statistics by segment and the most important trends worth your attention.

Let’s get started!

What Is Digital Lending?

Digital lending, or fintech lending, allows individuals and businesses to access loans through a digital platform.

The entire application and approval process happens online and is powered by AI to automate pre-approval, credit assessment, and risk management.

Digital lending is incredibly convenient thanks to its widespread accessibility and speedy procedures.

Digital lending is also more flexible, which makes it an attractive option for small businesses and those seeking personal loans.

Prospective borrowers can choose from various financing plans, including buy now, pay later loans, microloans, and lines of credit with instant fund transfers.

Key Digital Lending Statistics & Trends to Know

  • Lending will become the second biggest fintech segment by 2030.
  • The global digital lending market value was estimated at $11.6 billion in 2023.
  • Banks make up almost 33% of global digital lending revenue.
  • Small business loans constitute 45% of the P2P lending market.
  • Asia Pacific (APAC) is forecasted to register the fastest CAGR until 2032.
  • The US makes up nearly 40% of the global digital lending market revenue.
  • Over 16% of Americans who switched to fintech banks cited improved credit scores as a reason.
  • Adults under 40 are the most likely to trust fintech banks than traditional ones.

Digital Lending Market – General Statistics

The digital lending market is relatively new, although it’s been growing rapidly in recent years, especially during the pandemic. Neobanks, the main providers of digital lending services, have steadily increased their yearly revenue over the last decade.

Neobanks market size throughout 2021-2023
Source: Statista

According to a recent report by Statista, the estimated global market size of neobanks doubled between 2021 and 2023, increasing from $47 billion to $96 billion. This is expected to reach $2.05 trillion in 2030, with an impressive estimated CAGR of 53.4%!

It’s worth noting that neobanks provide more than just digital lending services; they also handle digital payments, investments, and assets. Still, lending was already the second largest neobanking segment after payments in 2021.

Global fintech revenue by segment in 2021
Source: Statista

Looking at digital lending statistics alone, the estimated global fintech lending market values range between $11.6 billion and $12.6 billion, as shown in Allied Market Research and IMARC reports.

Digital lending statistics can vary across reports due to different observed periods or the sampling and data analysis methods used.

The consensus is clear, regardless of which source you use. The digital lending market has been expanding, and the widespread adoption of fintech lending services isn’t likely to slow down.

Global transaction value of digital capital raising by segment
Source: Statista

Of all digital capital-raising methods, marketplace lending generated the highest transaction value, an estimated $32.57 billion in 2023, followed by crowdlending, estimated at $30.75 billion.

Crowdinvesting and crowdfunding made up around 4% of the total transaction value of digital capital-raising methods.

We can expect all capital-raising methods to grow in the near future. The total value of crowdlending transactions could soon exceed that of marketplace lending as individuals and small businesses increasingly seek flexible financing plans due to bank credit refusals.

Digital Lending Statistics By Segment

We can classify digital lending statistics based on several criteria, although they can overlap:

  • Component: Solutions (such as software or online platforms) and services (for example, design and implementation, consulting, or customer support)
  • Deployment model: On-premises or cloud solutions
  • Function: For example, loan origination, risk compliance management, and decision automation.

Digital Lending By Component

The 2023 Allied Market Research report showed that solutions dominated the digital lending market. In 2022, this component accounted for roughly two-thirds of the global digital lending revenue.

Global fintech lending market share by component
Source: Allied Market Research

This isn’t surprising, considering the growing number of digital lending platforms and users over the past few years. For example, a 2023 survey by the fintech company Plaid shows that 56% of respondents had already used fintech solutions to overcome financial stress.

However, the design and implementation service component is also among the leading drivers of global revenue. A 2022 base year report states that design and implementation services covered 25% of the digital lending market share.

This large revenue share likely reflects financial institutions’ growing adoption of digital lending.

More banks seek to expand their lending services in response to the competitive threat of fintech providers. And fintech design and implementation services provide a personalized solution.

Digital Lending By Deployment Model

On-premises fintechs generated roughly 60% of 2022’s global digital lending revenue. Although on-premises digital lending costs more to implement (due to hardware, physical maintenance, and electricity costs), it ensures superior compliance, providing direct control over servers and data security.

Difference between on-premises and cloud-based solutions
Source: Genese Solution

However, cloud-based solutions are expected to register the highest CAGR (20.8%) in the coming years. Cloud-based lending is an attractive deployment model primarily due to lower implementation and maintenance costs, a significant advantage for small and growing companies.

Furthermore, banks increasingly opt for cloud-based services to streamline processes like loan origination and decision automation, saving time and cutting operational costs.

Digital Lending By Function

Looking at digital lending statistics by function, the business process management (BPM) segment made up over 30% of the digital lending revenue in the US in 2022, closely followed by loan origination.

Forecasted growth of digital lending by solution type
Source: Grand View Research

Subsequent 2023 estimates show that loan origination revenue exceeded that of BPM globally, being the dominant fintech solution segment at the time.

Overall, BPM and loan origination seem to be the biggest contributors to global fintech lending revenue, suggesting that fintech lending attracts many prospective service providers and borrowers.

Digital Lending Statistics By End Use

In terms of end-use, the global digital lending market splits into banks and non-bank financial institutions (NBFCs), which include insurance companies, credit unions, savings and loan associations, and peer-to-peer (P2P) platforms.

Banks in the Fintech Lending Market

Cumulatively, NBFCs make up most of the global digital lending revenue. However, banks have historically dominated the market, accounting for almost one-third of global digital lending revenue in 2022.

Global fintech lending market share by end-users
Source: Grand View Research

This is primarily thanks to the ongoing trend of bank digitization. Banks have been investing in digital lending solutions to maintain their competitive edge in the face of emerging fintech platforms.

According to a recent survey, 67% of bank executives consider implementing fintech applications, and 84% state their bank operations are already cloud-based.

NBFCs in the Fintech Lending Market

Credit unions had the largest share of global revenue out of all NBFCs in 2022, followed closely by savings and loan associations. P2P lending platforms were the fourth largest contributor to global fintech lending revenue.

Credit unions and P2P lending platforms are both expected to experience significant growth. According to a 2023 report, the global P2P market could have a CAGR of 25% over the next ten years.

Since the pandemic, more investors and borrowers have turned to P2P lending platforms, which offer increased convenience and flexibility.

Unlike traditional lending options, P2Ps will authorize loans even to those with low credit scores. However, they typically have higher fees and interest rates than credit unions.

Most Common Loans On The P2P Lending Market

According to the same 2023 report we mentioned earlier, business loans dominated the P2P lending market, making up 55% of the market share in 2022. Notably, small business loans accounted for 45% of the market revenue at the time.

Global P2P market by loan type
Source: Acumen Research and Consulting

A previous 2021 report by Acumen Research and Consulting had similar findings. Small business loans generated most of the P2P market revenue, followed closely by real estate loans.

Conversely, consumer credit loans accounted for less than one-quarter of the P2P market value.

Digital Lending Consumer Demographics

Digital lending is still a relatively new market, although it’s rapidly gaining traction among younger demographics. According to 2021 findings, young adults express the highest trust in fintech brands compared to other age groups.

Age differences in fintech approval rates in the US
Source: Statista

Most of the 18–24 age group showed trust in fintech providers. Adults between 18 and 44 expressed higher trust in fintech companies than in traditional banks.

Less than one-third of US adults aged 55 and over said they trusted fintech companies. However, this age group had the highest approval rate for banks and other traditional financial institutions.

These findings aren’t isolated, as European surveys discovered similar trends. According to a 2022 survey conducted in Ireland, 77% of respondents aged between 18 and 24 expressed high trust in fintech.

Meanwhile, just 8% of those aged 55+ claimed to trust fintech services. Women were also more likely to express low trust in fintech than men.

A Polish study published in 2023 further supports this trend, finding that fintech use is most common among men. Men also largely outnumber women in P2P platform use.

Gender distribution of P2P platform users in the UK
Source: Statista

We can expect regulatory measures to increase consumer trust in digital lending platforms across more demographic groups.

However, demographic differences in fintech acceptance could soon change thanks to emerging regulations. For example, The Reserve Bank of India published its Guidelines on Digital Lending in 2022, citing borrower safety and financial risks as the primary concerns.

Increased transparency and a continued good track record for fintech lending platforms will likely attract more investors and borrowers in the future.

Digital Lending Market By Region

According to 2022 digital lending statistics provided by Allied Market Research, North America accounted for nearly two-fifths of the global digital lending market revenue, the largest share of all regions observed.

Digital lending trends by region in 2022
Source: Grand View Research

However, APAC is forecasted to register the fastest CAGR (22%) until 2032. The region’s high population, large share of unbanked people, and high internet penetration rate could be the main drivers of this expected growth.

The Middle East, Africa, and Latin America have experienced lower fintech adoption and market growth over the past few years, especially in digital lending.

Digital capital raising is the least popular fintech segment in Brazil
Source: Statista

For example, Brazil and Mexico were among the top ten countries with the most fintech unicorns in 2023, with six and five such companies, respectively. Still, according to estimates, both countries had very few capital-raising users as of 2023.

Regional Differences in Fintech Lending By Capital-Raising Method

According to a recent Statista report, North America (particularly the US) dominates the global digital capital-raising segment.

APAC comes second, with China having the second-largest digital capital raising transaction value in 2022, while Europe takes third place.

However, when further stratified by capital raising methods and end users, North America is first in the fintech consumer lending segment, with Europe in second place.

On the other hand, China came first in digital business lending, having the highest average transaction value.

This likely means large business loans are more popular in China, particularly in Hong Kong (which houses most of China’s fintech giants). In the West, on the other hand, consumer lending is more popular.

Excluding China, the leading fintech sector in APAC is still marketplace consumer lending. Its market volume was $2,363 million in 2020, approximately 30% higher than the volume of marketplace business lending.

Market volume of alternative finance models in APAC
Source: Statista

Consumer lending is also the most popular segment in Europe, although the UK stands out for its large business lending market. In 2020, for example, the UK was the leading country in Europe by P2P business lending, having a total market value of $3,262 million.

Germany came second, although it had a considerably lower business lending market volume of $808 million. France and the Netherlands were third and fourth in the region, with a P2P business lending market value of approximately $500 million each.

European countries by P2P business lending market volume
Source: Statista

However, Germany, France, and Italy are Europe’s leading P2P consumer lending countries. In 2020, Germany’s total digital consumer lending market value was $712 million, followed by France ($320 million) and Italy ($231 million).

In 2024, estimates place Germany’s P2P consumer lending market value at $768 million, compared to the UK’s $215 million estimate.

Regional Differences in Fintech Lending By Market Size

Overall, the US and Europe stand out for their high offer and demand for fintech services. A 2020 survey shows that the US and UK were first and second in the world, respectively, in terms of fintech market volume per capita (including all segments).

Global alternative finance market volume per capita
Source: Statista

Most of the other top ten countries by market volume per capita were in Europe, suggesting that North America and Europe currently have the highest fintech adoption and use and a greater demand for online banking services.

As for the market offer, the US also dominates in fintech innovation and the number of fintech unicorns (134 as of April 2023), being home to renowned global fintech giants like LendingClub, Prosper Marketplace, Pipe, and Kiva.

The UK came second globally, with 27 domestic fintech unicorns.

India is third globally in terms of the number of fintech unicorns, which suggests the rapid development of neobanks in APAC.

India also has over double the number of fintech unicorns than China despite historically having fewer domestic fintech platforms.

However, China is second in the world regarding the number of leading digital lending giants. Hong Kong-based platforms like FundPark and Velotrade are among the biggest players in the global fintech business lending sector.

The UK, Germany, France, Italy, and the Netherlands are Europe’s biggest players in the fintech market.

European countries with the most fintech users in 2023
Source: Statista

In 2020, for example, the UK had the largest number of alternative finance platforms, followed by Germany, Italy, and France.

Similarly, in 2023, the UK boasted the largest number of fintech users in Europe, followed by Germany and France. Note that these numbers are estimates and include users across all fintech segments, such as digital payments, neobanking, and investments.

Over the past few years, the UK-based platform Funding Circle has been the leading fintech business lending company in Europe and among the biggest fintech lenders in the world. In 2023 alone, the company generated a revenue of $195 million.

Fintech lending is an attractive option thanks to its convenience and accessibility, qualities often lacking in the traditional banking sector.

Technological advancements, changing consumer behavior, and post-pandemic economic trends have been the main factors driving fintech adoption and digital lending growth over the past few years.

Unlike older generations, who prefer the perceived safety of established traditional banks, the younger generations are increasingly focusing on convenience, flexibility, and accessibility, which fintech readily provides.

The rapid adoption of fintech among young people could also be due to their higher digital literacy, which increases their trust in new fintech platforms. On the other hand, older adults might find fintech solutions less trustworthy because of their short history on the market.

The biggest advantage of digital banks and lending platforms is they’re available online 24/7 and easily accessible from any device.

Furthermore, tech advancements like cross-platform integrations and AI-powered automation streamline loan applications, approvals, and transfers. Fintech allows users to access loans in minutes, whereas traditional loans take days or weeks to process.

Most common reasons for consumers’ fintech adoption in the US
Source: Statista

These trends are most noticeable in the US, the world’s leading fintech and digital lending market. According to a 2022 American survey, more than one-third of respondents switched to digital banks because of faster transfers and lower costs.

Approximately 28% also cited the availability of instant transfer options as a reason for switching to fintech services.

Fintech lending is also gaining traction as it provides better financial inclusion for underbanked individuals and SMEs, which could otherwise struggle to access even small credit loans for various reasons, including:

  • Unsatisfactory or no credit score
  • No or insufficient collateral
  • Unfulfilled eligibility requirements (like time in business or annual revenue)
  • High debt-to-income ratio
  • Insufficient documentation

This trend has become even more pronounced since the pandemic due to the tighter lending conditions and interest rates banks implemented to combat inflation.

According to a 2024 YouGov survey, half of Americans were denied a loan over the past two years.

These changes came at a time when 3 in 5 Americans are already in credit card debt, according to a recent survey by Clever Real Estate.

Since a high debt-to-income ratio is among the main reasons for loan refusals, more people with credit card debt could be seeking alternative loans to cover their expenses.

Furthermore, over 60% of American respondents in a 2023 survey believed that credit scores provide only part of the picture of their financial history. As a result, consumers are seeking more flexible banking and financing options.

For example, most respondents sought methods to improve their credit score, like sharing their banking data and transaction histories.

Many fintech solutions already offer such options, and over 16% of Americans who switched to fintech banks cited FICO score boosting as a reason.

Tech developments and fintech banking adoption will likely drive future digital lending in North America, Europe, and APAC. However, there are potential limiting factors.

Digital Lending Constraints

Because of its growing popularity and the fact that regulations are struggling to keep up with rapid fintech developments, the digital lending sector has become susceptible to cyberattacks and fraud – two concerns that could slow down the wider adoption of fintech lending.

With the cloud-based deployment segment having the largest projected growth in the future, the risk of data breaches is at an all-time high. Potential data loss and identity theft are big deterrents for both lenders and borrowers.

Furthermore, fake digital lending apps are already diminishing end-user trust in fintech solutions. For example, according to the Reserve Bank of India, nearly half of all digital lending apps available in Q1 of 2021 were illegal.

The general scope of digital lending regulation includes borrower and lender protection, data privacy, and transparency in lending practices. Such regulations can support the long-term growth of fintech lending platforms by increasing consumer trust and adoption.

To combat such issues, multiple countries have introduced more stringent fintech regulations, though not without raising industry concerns.

Although necessary, such regulations also come with steep short-term costs, as they demand hefty cybersecurity investments.

Increased regulation demands could also stifle innovation, thereby slowing fintech progress in the short term, especially among startups.

What To Expect From Fintech Lending in the Future?

It’s undeniable that digital lending has helped reshape the finance landscape. Its broad accessibility and flexibility are attracting a growing number of SMEs and individual consumers, including those previously underserved by traditional banks.

Higher competition and the growing demand for online services have driven much of the fintech lending revenue thanks to banks’ investments in digitalization.

We can expect banks and credit unions to further drive the global fintech market in the future thanks to continued spending on digital lending services (like design and implementation).

The global fintech solution market will also likely experience excellent growth. While regulatory constraints could temper short-term advancements, consumers’ trust in and adoption of fintech lending platforms should grow over the long term.

References

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Diana Ploscaru Statistics & Tech Content Contributor

Diana Ploscaru Statistics & Tech Content Contributor

Diana is a seasoned writer with over four years of freelancing experience. Using her keen interest in statistics and data analysis, she specializes in crafting informative and practical content across various interesting topics.

In her free time, she enjoys studying foreign languages and going for hour-long walks to reach her daily step goal.

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