Australia's US$348 million Alt-Fi market including peer-to-peer lending and crowdfunding is the third largest in Asia Pacific and grew 320 percent in 2015, according to the first comprehensive research of the Asia-Pacific online alternative finance market.
The study, titled "Harnessing Potential, Asia Pacific Alternative Finance Benchmarking Report", surveyed over 500 Alt-Fi companies. It was conducted by a research team from the Cambridge Centre for Alternative Finance, the Tsinghua University Graduate School at Shenzhen and the University of Sydney Business School, in collaboration with KPMG and with the support of the Association of Chartered Certified Accountants and CME Group Foundation. The research captured an estimated 70 percent of the visible market, yielding the estimates contained in the report.
Ian Pollari, Global Co-Lead for KPMG’s Fintech practice “While still a relatively new concept for many, online Alternative Finance has experienced rapid growth globally since 2013, and in Asia has already become a multi-billion dollar market. Activity in China dwarfs much of the region, but Australia is punching above its weight, creating niche markets and capitalising on the sophistication and financial muscle of its established financial services sector.”
In Australia, the total volume of alternative finance has grown from US$24.22m in 2013, to US$82.87m in 2014, to over US$348.37m in 2015 with an average annual growth rate of 281 percent between 2013 and 2015. On a per capita basis, Australia also ranks third in funding for Alt-Fi in Asia Pacific for 2015 (US$14.38), with China in top place at US$75.54 and New Zealand in second at US$59.37.
The largest share of Australia’s Alt-Fi market volume was balance sheet business lending, accounting for over US$120m in 2015. Invoice trading came in second at over US$105m. Marketplace/peer-to-peer consumer lending, the next largest segment of Australia's Alt-Fi market has grown from US$2m in loans in 2013 to US$9.5m in 2014 and then to over US$43m in 2015.
Donation-based crowdfunding platforms in Australia have grown in popularity, particularly in the community, charitable and social cause sectors, raising over US$10.6m in 2015. Reward-based crowdfunding is also performing relatively strongly, especially within cultural sectors, with mainly local platforms raising an equivalent of over US$28m in 2015. Investment crowdfunding has tended to take the form of a limited pool of online private placement activity to ‘sophisticated investors’ or online ‘angel investing’. That segment of the market recorded US$26m in 2015 with reported equity-based real estate crowdfunding totalling US$7.6m.
Ian Pollari added: “In a relative context, Australia leads in Asia in areas such as balance sheet business lending and invoice trading, where Alt-Fi platforms have been able to attract institutional participation and funding. The substantial growth provides a glimpse into the potential for fintech to the economy. Furthermore, collaboration between financial organisations and fintech start-ups will create more opportunities for Australian businesses to gain access to affordable finance.”
“While it is very encouraging to see the Australian government and regulators prioritising fintech and alternative-finance , it is clear that more work needs to be done to further enhance our policy and regulatory settings if Australia is to retain and enhance its position as a leading Asian and global market.”
Communications Manager – Innovation & Entrepreneurship, KPMG Australia
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