Europe’s alternative finance market could top €7bn in 2015, research by the University of Cambridge has revealed.
Last year the alternative finance market grew by 144% to €2.95bn with the UK leading the way with a market share of €2.33bn.
But the gap between the UK and the rest of Europe was significant. France had the second-largest online alternative finance industry with €154m, whilst Germany rounded up the top three with a market share of €140m.
Peer-to-peer
When the UK is taken out of the picture peer-to-peer consumer lending was the largest market in Europe, accounting for €274.62m of the market in 2014.
Reward-based crowdfunding recorded €120.33m, followed by peer-to-peer business lending (€93.1m) and equity-based crowdfunding (€82.56m).
Rhydian Lewis, founder and CEO of the UK’s leading peer-to-peer platform RateSetter, said:
“It is encouraging to see the increasing prominence of alternative finance across Europe, and in particular to see peer-to-peer lending leading the way, with consumer and business lending amounting for nearly €368m in 2014.
“The 113% growth of P2P consumer lending and 272% growth of business lending, chimes with our experience of the sector’s growing momentum and mainstream acceptance.
“I expect 2015 to be a pivotal year for the P2P industry as European financial services continue to evolve and the market breaks the €7bn barrier.”
Challenges ahead
However, challenges still lay ahead for the for the peer-to-peer market. Most notably with increased regulation in the UK and the lack of a single form of regulation across the continent.
Lewis said:
“Nonetheless, significant challenges persist – not least the divergent regulatory standards across the Continent. FCA regulation in the UK has been instrumental in allowing the sector to flourish, and other markets should similarly look to encourage growth.
“At the same time, risk management and mitigation should remain at the forefront of the industry’s agenda.
“As the leader in the now maturing UK market, we hope that emerging P2P players in mainland Europe will adopt our stringent approach as a guide.”