The total value of business loans provided by alt-fi platforms in the United Kingdom projects to reach L10 Billion ($15 Billion) by 2020, according to a report commissioned by global fin-tech provider Fiserv.
Even though they are responsible for 43 percent of all U.K. private sector turnover, SMEs still encounter a challenging credit market.
Government post-recession efforts to boost lending to SMEs have not had much effect so far, yet the P2B sector has managed to gain a foothold. The report estimates P2B provided £850 million in new credit flow last year and £1.2 billion overall, a 6000 percent increase since 2011. Crowdfunding contributed L310 million in 2013.
While those growth projections may impress, they could grow if the industry does a good job of letting small business owners they exist. Almost 60 percent of respondents said they did not know how to find an alternative finance provider.
Those publicity efforts have started, a Fiserv official said.
“Our research suggests that improved and user-friendly technology is impelling the growth of alternative finance in the U.K.,” International Group CMO Travers Clarke-Walker offered. “We have seen the P2B and crowd-funding sectors engaging in a concerted marketing push, which is likely to raise awareness significantly.”
The report also suggested demand will continue to increase beyond 2020 as the economy strengthens.
Do not be surprised if the banks adjust, Mr. Clarke-Walker added.
“As SMEs and consumers demand new products and services, there is a significant opportunity for banks to innovate with their own new products or to coexist through partnership with start-ups and alternative lenders. By embracing technological advances, financial institutions can also contribute to serving SMEs with this growth in new forms of lending and expanded credit.”