The Asia-Pacific Alternative Finance Benchmarking Report
Bryan Zhang, Luke Deer, Robert Wardrop, Andrew Grant, Kieran Garvey, Susan Thorp, Tania Ziegler, Kong Ying, Zheng Xinwei, Eva Huang, John Burton, Hung-Yi Chen, Alexis Lui & Yvonne Gray
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Online alternative finance is developing rapidly in the Asia-Pacific region. It is characterised by innovative financial instruments and channels that fall outside the traditional avenues of capital raising and financial intermediation. From reward-based crowdfunding to peer-to-peer consumer and business lending (i.e. marketplace lending), to invoice trading and equity-based crowdfunding, these online alternative finance activities are directly connecting lenders to consumer and small business borrowers, raising venture capital for start-ups, funding the creative industries and creating new ways for individuals and institutions to choose how and to whom money is distributed, lent and invested.
This benchmarking research is the first comprehensive study of the Asia-Pacific online alternative finance market. It has been conducted by an international research team from the Cambridge Centre for Alternative Finance at Cambridge Judge Business School, the Tsinghua University Graduate School at Shenzhen, the University of Sydney Business School, in partnership with KPMG and with the support of the ACCA and CME Group Foundation. Working with over 20 industry research partners, together we have systematically collected survey data from 503 leading alternative finance platforms operating in 17 Asia-Pacific countries and regions, out of which, 376 were from mainland China.
Our definition of online alternative finance focuses on the provision of finance to individuals and businesses through alternative channels via online marketplaces outside of the banking system. It excludes activities such as peer-to-peer insurance, online money market funds or third-party payments. The report captures an estimated 70% of the visible market, and estimates that the total Asia-Pacific online alternative finance market grew 323% year-on-year to reach $102.81 billion USD in 2015.
Market size & growth
China is the world's largest online alternative finance market by transaction volume, registering $101.7 billion (or RMB 638.79 billion) in 2015. This constitutes almost 99% of the total volume in the Asia-Pacific region. In comparison, the total size of the UK online alternative finance market was $4.5 billion (or £3.2 billion) in 2015. The Chinese online alternative finance market grew from a relatively low base of $5.56 billion in 2013 to reach $24.30 billion in 2014 and then went on to reach $101.7 billion in 2015 - an average growth rate of 328% between 2013 and 2015. Marketplace/peer-to-peer consumer lending is the largest market segment in China with $52.44 billion lent, followed by marketplace/peer-to-peer business lending ($39.63 billion) and real estate lending ($5.51 billion). Online invoice trading reached $1.46 billion, equity-based crowdfunding recorded $948.26m and reward-based crowdfunding rose to $829.52m in 2015.
Excluding mainland China, the rest of the Asia-Pacific region recorded a volume of USD $1.12 billion in 2015 with a 313% year-on-year growth rate from the $271.94 million raised in 2014. Japan's online alternative finance market accrued $360.23m in 2015, followed by $348.37m originated in Australia, $267.77m in New Zealand, $41.18m in South Korea, $39.91m in India and $39.76m in Singapore. However, New Zealand has the highest alternative finance volume on a per capita basis outside of China with $59.37 per capita, followed by Australia ($14.83), Singapore ($7.27), Japan ($2.83) and Hong Kong ($1.28). China's alternative finance market volume per capita stands at $74.54 in 2015.
In terms of prevailing market segments outside of China, marketplace/peer-to-peer business lending was the largest with $355.51m, followed by market/peer-to-peer consumer lending ($326.22m), balance sheet business lending ($120.62m), invoice trading ($116.95m), reward-based crowdfunding ($81.22m) and equity-based crowdfunding ($64.13m).