This study, based on a survey of over 600 online alternative finance companies across the Asia-Pacific, reveals that Australia's US$610 million alternative finance market including peer-to-peer lending and crowd-funding has grown 53 percent over the past 12 months, to become the second largest market in the region.
The report highlights that whilst alternative finance remains small as a proportion of overall credit outstanding in the financial system of many countries, it is growing rapidly. Australia is fast becoming a regional leader (behind China), which is evidenced by the substantial growth of alternative finance compared with the low base of US$27 million reported in 2013.
The research was conducted by a research team from the Cambridge Centre for Alternative Finance, the Australian Centre for Financial Studies at Monash Business School and the Tsinghua University Graduate School at Shenzhen, in collaboration with KPMG and with the support of the CME Group Foundation and HNA Capital.
In 2016, the alternative finance market continued to grow across the Asia-Pacific region to a total market volume of US$245.28 billion, growth of 136 percent compared to 2015. After China, Australia emerged as the second largest market in the region with US$610 million in 2016 – a sizable increase on the US$398 million from 2015.
China has strengthened its position as the global alternative finance market leader accounting for 99.2 percent of the total Asia-Pacific alternative finance market and representing 85 percent of the total global market.
In 2016, the largest market volume of alternative lending in Australia was through balance sheet business lending, accounting for over US$217 million, up 80 percent from US$120 million in 2015.
The second largest segment was marketplace/peer-to-peer consumer lending, which has grown by 240 percent to over US$158 million, substantially up from the US$43 million reported in 2015.
The third largest segment was invoice trading at just under US$130 million, up 16 percent from US$105 million the year before. This was followed by peer-to-peer property lending, which reported US$36 million, and peer-to-peer business lending with US$6.93 million.
In China, the largest alternative finance model was marketplace/peer-to-peer consumer lending with US$136 billion, equating to 56 percent of the total market. In the wider Asia Pacific market, outside of China, again marketplace/peer-to-peer consumer lending was the largest alternative finance model with US$485 million (24 percent of the Asia-Pacific market outside of China).
The report surveyed alternative finance industry perceptions of regulation across the region. It found that, in Australia, 65 percent of platforms believe that existing regulations are adequate and appropriate which was an improvement on last year’s survey. Notwithstanding this, there are a number of potential vulnerabilities that might impede future growth which need to be identified, understood and prudently managed for the long-term viability of the sector.