KEY POINTS

  • The US has one of the largest P2P lending markets in the world by loan volume, but the UK's is 72% larger on a per capita basis. Low consumer confidence in banks (even before the financial crisis), a high degree of comfort with online platforms, and a positive regulatory environment have all helped nurture the UK's P2P lending market.
  • Europe is the next big market for P2P lending: The alternative finance market in Europe reached nearly €3 billion ($3.9 billion) in 2014, a 144% jump, and small-business P2P loan volume in France grew almost 4,000% last year, to reach €8.2 million ($10.6 million). 
  • Although the industry is flourishing, there are serious risks that could derail it: Interest rate hikes, new regulations, frayed bank relationships, and other factors could put a stop to the industry's current surge. 

This report serves as a companion to our overview report, "THE PEER-TO-PEER LENDING EXPLAINER: How digital lending marketplaces work and why they're poised for major growth," which takes a close look at the mechanics of lending platforms and why this business segment is poised for growth.

A note about currency conversion: This report uses primary data sources that originally present data in euros. To convert to US dollars, we took the US Treasury's listed conversion rates for each quarter in 2014, and averaged the figures to create a constant rate for all of 2014. We used this single conversion rate to convert across our time series in order to remove currency effects from the curve. The converted figures are meant to provide a look primarily at the market's growth and potential.

The UK is the most advanced P2P lending market, ahead of the US

The US and the UK are the two leading markets for P2P lending in the world. 

The UK actually has a smaller P2P lending market than the US in terms of total volume. However, on a per capita basis, the UK market is larger.

  • The UK generated nearly $2.3 billion in peer-to-peer loans in 2014.
  • The US generated $6.6 billion in peer-to-peer loans last year.
  • However, the UK's population in 2014 was one-fifth the size of the US, making the P2P market in the UK the largest in the world on a per capita basis. 72% more lending volume is transacted in the UK than in the US per person. 

For this reason, [...]