Revenue from digital lenders grew 37% in the first year of the pandemic

Digital lending companies around the world saw their revenues increase by 37% in the first year of the pandemic, according to a new study.

A report from the Cambridge Center for Alternative Finance, the World Bank Group and the World Economic Forum found that fintechs around the world were broadly resilient to the Covid-19 crisis.

Digital lending was the second largest segment by transaction values ​​in 2020, accounting for 20% of the market, behind digital payments.

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Excluding the Chinese market, which saw a regulatory crackdown before the pandemic, global loans issued by digital lenders grew from $87 billion in 2019 to $104 billion in 2020.

“Despite the pandemic, most digital lending models grew overall in 2020,” the report said. “Only a few of the smaller trading models reported declines.”

The peer-to-peer consumer lending industry remained the world’s largest business model among digital lenders, according to the report. However, the segment’s year-over-year growth was modest, largely due to the decline of the Chinese market from $34.02 billion to $35.08 billion.

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Other business models grew at a faster rate in 2020, including P2P business lending which grew from $7.62 billion to $15.91 billion.

“The growth of business finance in light of the pandemic is not entirely surprising, given that digital lending companies have functioned as delivery or implementation partners in government programs to support the sector. of small and medium-sized enterprises,” the report said.

“Examples include the SBA Paycheck Protection Program in the US, the Coronavirus Business Interruption Loan Program in the UK, and the Coronavirus Small and Medium Business Guarantee Program in Australia, all of which have allowed several digital fintech lenders to issue loans through these programs.

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The study included data from 1,448 fintech platforms operating in 192 regions around the world. Digital lending companies made up 44% of respondents.

The report also revealed that the overall fintech ecosystem has grown despite the challenges of the pandemic. From 2019 to 2020, the transaction value of fintech platforms aimed at retail increased by 47%, bringing in $357.77 billion in 2019 and $526.21 billion in 2020.

“Overall, the results indicate that the fintech industry has been resilient and business has continued to grow, although it is important to note that the current global macroeconomic and geopolitical situation adds stressors to the sector that need to be monitored,” the report said. . “Specific factors influenced growth, particularly jurisdiction of operation, level of lockdown stringency and participation as government relief program delivery partners.”

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