by The digital lending process involves leveraging online data and digital documentation to originate and service loans. With digital lending, lenders can onboard customers, generate acceptance decisions, and disburse funds digitally without requiring physical paperwork or in-person meetings. Digital lending provides customers with faster and more convenient loan approval and funding compared to traditional models. Digital lending platforms allow customers to conveniently apply for loans online and often receive approval decisions in minutes rather than days or weeks. Customers can access and manage loans through online accounts and mobile apps. The global digital lending market facilitates point-of-sales lending, lending between enterprises, and lending between consumers.
The global Digital Lending Market is estimated to be valued at US$ 538.99 Mn in 2023 and is expected to exhibit a CAGR of 26.9% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market key trends:
One of the major trends in the digital lending market is the growing adoption of smartphones and increased internet penetration globally. People’s increasing dependence on smartphones for daily tasks such as mobile banking, bill payments, and shopping is driving the demand for digital lending solutions that can be easily accessed through mobile apps. According to the Mobile Economy Report 2022 by GSMA, there are currently 6 billion unique mobile subscribers globally, equivalent to around 75% of the world’s population. In addition, around 1 billion people have subscribed to a mobile broadband service. The increasing smartphone adoption and internet usage are making the digital lending process more accessible and convenient for both lenders and customers globally.
Porter’s Analysis:
Threat of new entrants: Low barriers to entry allow new competitors to enter the market easily. However, established players have significant resources and customer base which make it difficult for new players to gain market share.
Bargaining power of buyers: Buyers have moderate bargaining power due to availability of many lending options from financial institutions as well as fintech lenders.
Bargaining power of suppliers: Not applicable since this market does not deal with suppliers in a traditional sense.
Threat of new substitutes: Emerging alternative lending options like peer-to-peer lending and crowdfunding pose threat of substitution.
Competitive rivalry: Intense competition exists among existing players to acquire more customers. Players compete on factors like interest rates, application process, and customer experience.
Key Takeaways
The Global Digital Lending Market Size is expected to witness high growth. Digital lending is emerging as a popular lending avenue due to its convenience and fast approval process. North America dominates the global digital lending market currently due to advancements in technology and high smartphone and internet penetration rate. The US accounts for majority of the North American digital lending market.
In the Asia Pacific region, China holds the largest share currently. Rapid economic growth, increasing internet user base, and government support for financial technology sector are driving the Chinese digital lending market. India is another fast growing regional market owing to initiatives like Digital India and increasing smartphone user base. Financial inclusion of rural population also presents an opportunity for digital lending growth in India.
Key players operating in the digital lending market are On Deck Capital Inc., Lendingclub Corp., and Social Finance Inc. (Sofi). On Deck Capital focuses on small businesses lending through its online platform. Lendingclub dominates the US personal loans market. Sofi offers personal as well as student loans through online and app-based platform. New technologies like AI and machine learning are allowing players to provide enhanced customer experience and automated credit decisioning.
Ravina Pandya, Content Writer, has a strong foothold in the market research industry. She specializes in writing well-researched articles from different industries, including food and beverages, information and technology, healthcare, chemical and materials, etc. With an MBA in E-commerce, she has an expertise in SEO-optimized content that resonates with industry professionals.
