The UK alternative finance sector grew by 84% in 2015, according to Nesta’s 2015 Alternative Finance Report (PDF). It facilitated £3.2 billion in loans, investments and donations, up from £1.74 billion in 2014.
Peer-to-peer lending still remains on top
Peer-to-peer lending as a whole remains the largest alternative finance model, with consumer P2P lending reaching £909 million in 2015, up from £547 million in 2014.
Peer-to-peer business lending, by companies like Funding Circle, totalled £881 million and for the first time the report treated peer-to-peer real estate lending separately, which came to £609 million.
Consumer P2P lending trends
According to the report, the weighted average size of a peer-to-peer consumer loan is £6,583 and the average borrower acceptance rate across all platforms is 15.84%. Looking forward to the introduction of the If ISA in a few months’ time, the industry expects it to drive a 26% increase in lending volume.
The report also highlights that platforms are expanding their borrower base with corporate partnerships with other disrupters, our partnership with Uber surely being one of the examples they have in mind.
Digital sharing economy in general is growing fast
It’s not just the alternative finance sector that’s seeing rapid growth; the wider digital sharing economy is also growing fast. Another report this week found that in the U.S. 2.5 million people are now making money from the sharing economy by using services such as Airbnb and Uber.
More and more people are taking advantage of the flexibility and simplicity these digital services offer. Zopa alone has now helped over 200,000 people with their finances, and with full FCA regulation and its own ISA category coming in 2016, peer-to-peer lending is taking ever-bigger steps into the mainstream.
This year in Nesta’s report, the big change was to treat peer-to-peer real estate lending as its own category. As volumes grow and the government continues to signal strong support for the sector, surely a consideration for the future reports has to be whether ‘alternative finance’ continues to be an accurate way to describe peer-to-peer lending.
Read the full Nesta Report (PDF).