P2P lending to increase to $22 billion by 2020 predicts Morgan Stanley
New research by Morgan Stanley predicts that the value of loans made through peer-to-peer lending (P2P) platforms in Australia will increase to $22 billion in the next five years.
The report ranked Australia as one of the fastest emerging P2P markets, alongside China and the United Kingdom, with P2P lending to Aussie consumers expected to comprise 6% of total consumer lending at $10.4 billion by 2020.
It was also predicted P2P lending to small businesses would grow, at a faster rate than consumer credit, to $11.4 billion over the same period.
P2P lenders provide technology platforms that match individual investors directly with potential borrowers that meet the eligibility requirements.
According to the report titled 'Global Marketplace Lending: Disruptive Innovation in Financials', the increasing appeal of P2P lending is that it is convenient, fast and can offer more competitive loan rates than what most banks can offer.
“We believe there is an opportunity for P2P lending to establish a meaningful presence in Australia due to high online/mobile banking penetration, growing margins and high returns in unsecured lending and a highly concentrated banking industry focused on mortgages and deposits rather than on consumer unsecured lending,” said Morgan Stanley in a recent paper.
Globally, Morgan Stanley predicted that the P2P market could grow between $US150 billion and $US490 billion by 2020.
Although still in its infancy in Australia, with only a few major players including SocietyOne, DirectMoney, RateSetter and Marketlend the bank estimates that just under $25 million have been lent to consumers through these platforms so far.