Marketplace Lending (Consumer) - Iceland

Total transaction value in Iceland's MarketMarketplace Lending (Consumer) market market is forecasted to reach US$4.45m in 2024.
When considering global comparisons, it is evident that the highest transaction value is achieved the United States (US$28bn in 2024).
The subsequent Key Market Indicators offer a snapshot of the social and economic landscape of Iceland and offer further insights into pertinent market-specific advancements.
These indicators, in conjunction with information from statistical bureaus, trade organizations, and enterprises, form the basis for the Statista market analyses.
Iceland's growing interest in Marketplace Lending reflects a shift towards alternative capital raising methods in the consumer finance sector.

Definition:

Marketplace Lending platforms offer private users the option to place requests for loans in an online marketplace to find private investors who would invest at an appropriate interest rate. These services apply a credit score and list the financial requests by intended purpose before fixing a lending rate. One or more investors can then serve the credit request. Although banks act in cooperation with the platform providers, the lending is done, in principle, without direct exposure, risk audits or the formal requirements normally associated with credit lending. This is attractive for many users because the processes are expedited, there is less demand when it comes of the borrower’s creditworthiness and the conditions are often more flexible than with traditional bank loans. Users are defined in this case as active borrowers on an online platform; applicants or investors who are only partially recorded as users are not included. The amount of outstanding, short-term installments or consumer loans recognized during the applicable year is used here as a benchmark.

Additional Information:

Key players in the market are Lending Club, Zopa, Auxmoney and Prosper.

Online marketplace for personal loan applications and private investors
Peer-to-Peer loans with interest rates depending on internal credit scoring of the platform provider

Online comparison websites for bank loans
Traditional bank loans
Loans for business purposes (see Crowdlending)

Marketplace lending has been steadily gaining popularity in Iceland in recent years, driven by changing customer preferences and favorable local circumstances. This emerging trend in the consumer lending market is reshaping the way individuals borrow money and meet their financial needs.

Customer preferences: In Iceland, like in many other countries, customers are increasingly turning to marketplace lending platforms as an alternative to traditional banks. This shift is driven by several factors. Firstly, marketplace lending offers a more streamlined and efficient borrowing process compared to traditional banks, with quicker approval times and less paperwork. Secondly, borrowers are attracted to the competitive interest rates offered by marketplace lenders, which can be lower than those provided by banks. Lastly, the convenience and accessibility of online platforms make it easier for customers to apply for loans and manage their finances.

Trends in the market: One of the key trends in the marketplace lending market in Iceland is the diversification of loan products. Initially, marketplace lending platforms primarily focused on personal loans, but they have now expanded their offerings to include other types of consumer loans such as car loans and debt consolidation loans. This diversification allows borrowers to find tailored solutions for their specific needs, further driving the growth of the market. Another trend is the increasing collaboration between marketplace lenders and traditional financial institutions. As marketplace lending gains traction, banks and other financial institutions are recognizing the potential of this new lending model. Some banks have started partnering with marketplace lenders to offer their customers access to a wider range of loan products. This collaboration benefits both parties, as it allows banks to tap into the growing marketplace lending market while providing marketplace lenders with a broader customer base.

Local special circumstances: Iceland's relatively small population and high internet penetration rate make it an ideal market for marketplace lending. The country's population of around 360,000 people creates a tight-knit community where borrowers and lenders can easily connect through online platforms. Additionally, Iceland has one of the highest internet penetration rates in the world, with over 98% of the population having access to the internet. This widespread internet connectivity enables borrowers to easily access marketplace lending platforms and complete loan applications online.

Underlying macroeconomic factors: The development of the marketplace lending market in Iceland is also influenced by underlying macroeconomic factors. The country has experienced strong economic growth in recent years, with low unemployment rates and increasing disposable income. This favorable economic environment has created a demand for credit, driving individuals to seek alternative lending options such as marketplace lending. Furthermore, the low interest rate environment in Iceland has made borrowing more affordable, encouraging individuals to take advantage of marketplace lending platforms. In conclusion, the marketplace lending market in Iceland is growing rapidly due to changing customer preferences, favorable local circumstances, and underlying macroeconomic factors. As customers increasingly turn to marketplace lending platforms for their borrowing needs, the market is diversifying its loan products and fostering collaborations with traditional financial institutions. With a small population and high internet penetration rate, Iceland provides an ideal environment for marketplace lending to thrive.

Data coverage:

The data encompasses B2C enterprises. Figures are based on transaction values / revenues / assets under management and user data of relevant services and products offered within the FinTech market.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, consumer spending, population, internet penetration, smartphone penetration, credit card penetration, and online banking penetration. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

Crowdfunding is the collective effort of a large number of individuals who network and pool small amounts of capital to finance a new or existing business venture. Each campaign is set for a goal amount of money and a fixed timeframe, each day is counted down and the money raised will be tallied up for visitors to follow its success. The size of the global crowdfunding market is growing and the largest markets are North America and Asia.