Asia-Pacific alternative finance market grew 323% to US$102.8 billion in 2015

CAMBRIDGE - The Asia-Pacific alternative finance market grew by 323 per cent to US$102.8 billion in 2015, led by four-fold growth to more than U$100 billion in China, according to a regional benchmarking report by a research team from the Cambridge Centre for Alternative Finance, the Tsinghua University Graduate School at Shenzhen and the University of Sydney Business School, in collaboration with KPMG.

The Asia-Pacific online alternative finance market is fluid, diverse, increasingly complex and growing at a rapid pace,” the report says.
Outside of China, the rest of the Asia-Pacific region recorded an alternative finance volume of US$1.12 billion in 2015, up 313% from 2014. The largest markets in 2015 beyond China were Japan (US$360 million), Australia (US$348 million), New Zealand (US$268 million), South Korea (US$41 million) and India and Singapore (each about US$40 million).
China is the world’s largest alternative finance market based on the researchers’ global dataset, the report said. While there have been reports on China’s alternative finance market by Chinese companies, this is the first study to benchmark the Chinese market with a set of comparable international standards.
“The Chinese online alternative finance market grew from a relatively low base of US$5.56 billion in 2013 to reach US$24.30 billion in 2014 and then went on to reach US$101.7 billion in 2015,” the report said.
Peer-to-peer consumer lending (US$52 billion) and peer-to-peer business lending (US$40 billion) are by far the largest market segments in China. Reasons cited in the report for the rapid growth of alternative finance in China include the country’s global leadership in Internet user base and smartphone connections, and the fact that alternative finance has “been mostly unrestricted and unchecked” until recent guidelines by regulators.
The alternative finance market includes peer-to-peer consumer and business lending, equity-based and reward-based crowdfunding, and other provision of finance to individuals and businesses through alternative channels via online marketplaces outside of the banking system.
The survey involving 20 research partners was based on data from 503 leading alternative finance platforms in 17 Asia-Pacific countries and regions, of which, 376 were from mainland China. The study captured an estimated 70% of the visible market.
The report described the regulatory environment for alternative finance across the Asia-Pacific region as “diverse and rapidly changing.”
While some countries such as Singapore have chosen to regulate alternative finance within pre-existing frameworks, others, including New Zealand, have created bespoke regulation.
And while surveyed platforms in New Zealand and Malaysia generally felt existing regulation is “adequate and appropriate,” platforms in Japan and South Korea were more concerned that regulation is too strict. Chinese platforms generally felt regulation was too lax.
“The opportunities for the world's most populous region to harness the potential of alternative finance for innovation, economic growth, market efficiency, and creativity are abundant,” the report said.
“The present challenge is how to best nurture the alternative finance industry, grow the market in a sustainable manner and develop an appropriate and proportionate regulatory regime that strikes the right balance between encouraging financial innovation and protecting the interests of consumers and investors.
The report is available at   http://www.jbs.cam.ac.uk/faculty-research/centres/alternative-finance/pu...
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