Marketplace Lending (Consumer) - South Africa

The total transaction value in the MarketMarketplace Lending (Consumer) market market in South Africa is forecasted to reach US$63.24m in 2024.
When comparing globally, the highest transaction value is projected to be the United States (US$28bn in 2024).
Key Market Indicators offer a snapshot of the social and economic landscape of South Africa, shedding light on pertinent market trends.
These indicators, coupled with information from statistical bureaus, trade bodies, and enterprises, form the basis for the Statista market forecasts.
South Africa's Marketplace Lending sector is seeing a surge in consumer capital raising through innovative digital platforms, reshaping the financial landscape.

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 (consumer) in South Africa has experienced significant growth in recent years, driven by changing customer preferences, emerging trends in the market, local special circumstances, and underlying macroeconomic factors. Customer preferences have played a crucial role in the development of the marketplace lending (consumer) market in South Africa.

With the increasing digitization of financial services, customers are seeking convenient and accessible borrowing options. Marketplace lending platforms offer a streamlined and user-friendly experience, allowing borrowers to access funds quickly and easily. Additionally, customers are attracted to the competitive interest rates and flexible repayment terms offered by these platforms.

The convenience and transparency of marketplace lending have made it an appealing alternative to traditional banking channels. Trends in the marketplace lending (consumer) market in South Africa have also contributed to its growth. One notable trend is the rise of peer-to-peer lending platforms, which connect borrowers directly with lenders.

This model has gained popularity as it eliminates the need for intermediaries, reducing costs for both borrowers and lenders. Another trend is the increasing use of alternative data in credit scoring. Marketplace lenders are leveraging non-traditional data sources, such as social media profiles and transaction history, to assess creditworthiness.

This allows them to serve a wider range of customers who may have limited credit history. Local special circumstances have further fueled the development of the marketplace lending (consumer) market in South Africa. The country has a large unbanked and underbanked population, with limited access to formal financial services.

Marketplace lending platforms have emerged as a viable solution to address this gap, providing financial inclusion to individuals who were previously excluded from the traditional banking system. Additionally, South Africa has a high rate of mobile phone penetration, making it easier for borrowers to access marketplace lending platforms through mobile applications. Underlying macroeconomic factors have also played a role in the growth of the marketplace lending (consumer) market in South Africa.

The country has experienced slow economic growth in recent years, leading to tighter credit conditions and stricter lending criteria from traditional banks. This has created a demand for alternative lending options, with marketplace lending platforms stepping in to fill the gap. Furthermore, the low-interest-rate environment has made borrowing more affordable, encouraging individuals to seek financing through marketplace lending platforms.

In conclusion, the marketplace lending (consumer) market in South Africa has experienced significant growth due to changing customer preferences, emerging trends, local special circumstances, and underlying macroeconomic factors. As customers increasingly seek convenient and accessible borrowing options, marketplace lending platforms have emerged as a viable alternative to traditional banking channels. The rise of peer-to-peer lending, the use of alternative data in credit scoring, and the country's large unbanked population have further fueled the growth of this market.

With the ongoing economic challenges and low-interest-rate environment, marketplace lending is likely to continue its expansion in South Africa.

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.