‘Sustaining Momentum’ – European Alternative Finance Industry Report
The European online alternative finance market grew 92 per cent to €5.4 billion in 2015, according to the second annual survey by the Cambridge Centre for Alternative Finance, in partnership with KPMG and supported by CME Group Foundation.
The European online alternative finance market, including crowdfunding and peer-to-peer lending, grew by 92 per cent in 2015 to €5.431 billion, according to the results of the 2nd Annual European Alternative Finance Industry Survey conducted by the Cambridge Centre for Alternative Finance at University of Cambridge Judge Business School, in partnership with KPMG and supported by CME Group Foundation.
The report released today, entitled “Sustaining Momentum”, had the support of 17 major European industry associations -including ECN- and research partners, and was based on data from 367 crowdfunding, peer-to-peer lending and other alternative finance intermediaries from 32 European countries – capturing an estimated 90 per cent of the visible market.
The United Kingdom was by far the largest in Europe at €4.4 billion, followed by France at €319 million, Germany at €249 million and the Netherlands, €111 million. Other large European markets include Finland with €64 million, Spain at €50 million, Belgium at €37 million and Italy at €32 million. The Nordic countries collectively accounted for €104 million, while Central and Eastern European countries registered a total of €89 million.
Excluding the UK, the European alternative finance market grew by 72 per cent from €594 million in 2014 to €1.019 billion in 2015.
“Although the absolute year-on-year growth rate slowed by 10 per cent” (from the 82 per cent growth excluding the UK between 2013 and 2014) the industry is still sustaining momentum with substantive expansion in transaction volumes recorded across almost all online alternative finance models,” the report said.
Peer-to-peer consumer lending is the largest market segment of alternative finance, with €366 million in Europe in 2015. Peer-to-peer business lending is the second largest segment with €212 million, with equity-based crowdfunding in third with €159 million and reward-based crowdfunding fourth at €139 million.
Among other findings:
- Estonia ranked first in Europe in alternative finance volume per capita at €24, followed by Finland at €12 and Monaco at €10 outside of the UK.
- Online alternative business funding increased by 167 per cent year-on-year to €536 million raised for over 9,400 start-ups and SMEs across Europe.
- Institutionalisation took off in mainland Europe in 2015, with 26 per cent of peer-to-peer consumer lending and 24 per cent of peer-to-peer business lending funded by institutions such as pension funds, mutual funds, asset management firms and banks.
- Across Europe, perceptions of existing national regulations in alternative finance are divided. About 38 per cent of surveyed platforms felt their national regulations for crowdfunding and peer-to-peer lending were adequate and appropriate, 28 per cent perceived their national regulations to be excessive, and a further 10 per cent said current regulations were too relaxed.
- The biggest risks perceived by the alternative finance industry are increasing loan defaults or business failure rates, fraudulent activities or the collapse of platforms due to malpractice.
Oliver Gajda, CEO of ECN commented: “The Cambridge Centre for Alternative Finance 2nd Annual European Alternative Finance Industry Study is again a helpful exercise to foster a better understanding of the dynamics of the innovative financial services crowdfunding and related alternative finance actors are creating across Europe. It reflects that the crowdfunding sector in Europe benefits from ongoing professionalization and an increasing acceptance by incumbent financial services actors. The European Crowdfunding Network, striving to support professional crowdfunding in Europe, welcomes the research and is continuing to support the activities of the Cambridge Centre for Alternative Finance at the Judge Business School at Cambridge University.”
Irene Tordera, Marketing Manager at ECN, added “the results of 2nd Annual European Alternative Finance Industry Study clearly show that the crowdfunding sector is entering a delicate phase, where it will have to endure some shocks in order to mature further. This is a stage where and transparency trust – fundamental elements in crowdfunding – become even more essential. Since the beginning, ECN has played an active role to foster these aspects among its members and in the industry and for this reason, we are gladly committed to support initiatives like the present research.”
You can download a free copy of the report here.