Digital Lending Market Promising High Growth Owing To Fintech Innovations
Digital Lending Market
The Digital Lending
Market is estimated to be valued at US$
334.7 million in 2022 and is expected to exhibit a CAGR of 26.9% over the forecast period 2022 to 2030, as highlighted in a new report published by Coherent
Market Insights.
Market Overview:
Digital lending refers to online lending services provided by lenders. Digital
lending platforms enable a faster, secure and transparent credit approval
processes for borrowers. They provide easy access to credit for individuals and
small businesses anytime and anywhere through digital interfaces like mobile
apps and websites. This overcomes geographical barriers and offers customized
loan products to customers based on their needs and creditworthiness.
Market key trends:
Fintech innovations are driving growth in the digital lending market. Major
lenders are actively investing in developing advanced AI, machine learning and
big data capabilities to optimize and automate loan approval processes. This
allows lenders to analyze huge amounts of structured and unstructured data to
assess risk profiles of borrowers more accurately and provide a seamless
digital experience. Online lending platforms also leverage alternative data
sources like utility bills, phone records and social media footprints to make
credit decisions. Such data-driven innovations are enhancing transparency,
convenience and financial inclusion. As a result, more customers are adopting
digital loans for various purposes including personal loans, business loans,
mortgages and student loans.
Porter’s Analysis
Threat of new entrants: Low capital requirements and easy access to online
distribution channels result in a moderate threat of new entrants.
Bargaining power of buyers: Individual borrowers have high bargaining power due
to availability of alternative lenders.
Bargaining power of suppliers: Lenders have moderate bargaining power over
non-traditional data sources due to differentiated data evaluating
capabilities.
Threat of new substitutes: Growing popularity of peer-to-peer lending platforms
poses a major threat of substitute.
Competitive rivalry: Highly competitive due to presence of many players.
SWOT Analysis
Strengths: Streamlined online processes offering fast funding. Alternative data
sources help assess creditworthiness of underserved customers.
Weaknesses: Challenges in effective risk management and high default rates.
Vulnerable to technology and cybersecurity issues.
Opportunities: Large unbanked population and growth in small business loans
present expansion opportunities. Partnerships with fintech firms can enhance
digital capabilities.
Threats: Stricter regulations on use of alternative data may limit customer
segment. Economic downturns increase delinquency rates.
Key Takeaways
The global Digital Lending Market is expected to
witness high growth, exhibiting CAGR of 26.9% over the forecast period, due to
increasing financial inclusion in developing nations. Digital lenders provide
convenience of applying and receiving loans remotely using mobile devices and
internet. This attributes to their surging popularity among millennials and Gen
Z.
North America dominated the market with more than 35% share in 2021 led by the
US where fintech adoption is extensive. However, Asia Pacific is anticipated to
emerge as the fastest growing region between 2022-2030 with CAGR of over 30%
owing to massive underbanked population and growing internet penetration in
India and China.
Key players operating in the digital lending market are On Deck Capital Inc.,
Lendingclub Corp., and Social Finance Inc. (Sofi). The US-based On Deck Capital
provides small business loans through its automated platform. While Lendingclub
is a peer-to-peer lending giant facilitating personal and auto loans. Sofi
offers student loan refinancing and personal loans through its all-digital
process.
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