July 25, 2024

Market Estimated To Witness High Growth Owing To High Adoption Of Digital Technologies And Increasing Millennial Population

The Digital Lending Market is estimated to be valued at USD 334.7 million in 2022 and is expected to exhibit a CAGR of 26.9% over the forecast period 2022 to 2030, as highlighted in a new report published by Coherent Market Insights.

Market Overview:

Digital lending refers to lending using digital processes and platforms. It utilizes big data, artificial intelligence, and machine learning to analyze huge amounts of data to assess creditworthiness and deliver instant credit decisions. Key players in the market offer digital lending platforms, mobile apps, and digital processing of loans online. Digital lending provides convenience, flexibility, and quick processing to both customers and lenders.

Market Dynamics:

The growing digital lending market is driven by high adoption of digital technologies by banks, financial institutions and non-banking financial companies (NBFCs) to enhance customer experience and optimize operations. Digital lending platforms automate processes like verification, underwriting and disbursement which has led to increased efficiency and reduced turnaround times. Furthermore, considerable rise in millennial population globally is fueling demand for convenient and hassle-free digital lending options through mobile applications. Millennials prefer using smartphones for all their financial needs including borrowing and repaying loans. According to a survey, over 70% of millennials in the US are interested in digital lending services. Growing dependence on mobile banking and online financial services among young consumers is propelling market revenue growth until 2030.

Segment Analysis

The digital lending market is segmented into personal loans and business loans. The personal loans segment dominated the market in 2021 and accounted for over 60% of the market share. This is primarily attributed to the growing trend of digitalization and increasing adoption of online channels for lending among consumers. Personal loans through digital channels offer quick approval and disbursal of funds for purposes like education expenses, home improvement, or debt consolidation, which has further propelled the demand in this segment.

PEST Analysis

Political: Favorable government regulations promoting financial inclusion and support for digital lending startups have positively impacted market growth.

Economic: The global economic recovery post-COVID-19 and rising disposable incomes have increased demand for digital loans for both personal and business needs over the forecast period.

Social: Changing consumer preferences towards digital and contactless financial services have aided market expansion. Additionally, growing tech-savviness among consumers drives their inclination towards online lending platforms.

Technological: Continuous innovations in areas of AI, blockchain, and data analytics have allowed market players to assess creditworthiness better and offer customized lending solutions, which gives them a competitive edge.

Key Takeaways

The global Digital Lending Market is expected to witness high growth, exhibiting a CAGR of 26.9% over the forecast period, due to increasing financial inclusion across developing regions. The Asia Pacific region is expected to be the fastest growing as well as the dominating regional market owing to the large underbanked population and rapid proliferation of fintech startups in countries like India and China.

Key players operating in the digital lending market are On Deck Capital Inc., Lendingclub Corp., and Social Finance Inc. (Sofi). Regional analysis The Asia Pacific region accounted for over 40% of the global digital lending market share in 2021 led by China, India and other Southeast Asian countries. Rising smartphone and internet penetration coupled with supportive government policies focused on financial technology and rural banking have boosted demand.

Key players analysis Key players operating in the digital lending market are On Deck Capital Inc., Lendingclub Corp., and Social Finance Inc. (Sofi). On Deck Capital leverages data analytics and alternative credit evaluation metrics to enhance accessibility of funding for small businesses. LendingClub Corporation operates one of the largest online lending platforms in the U.S., facilitating both personal as well as business loans through its network of investors. Sofi offers student loan refinancing and personal loans along with mortgage services and investing/retirement planning tools through its multi-product digital platform.

*Note:

  1. Source: Coherent Market Insights, Public sources, Desk research
  2. We have leveraged AI tools to mine information and compile it