The global digital lending platform market is projected to reach $15.3 billion by the end of 2026, according to a new report published by Million Insights.
The continuously growing market has gathered significant pace with projections of a compound annual growth rate of 20.7% over the forecast period, from 2019 to 2026.
Customers are increasingly preferring digital lending platforms due to their user-friendly interface, which is encouraging it to be adopted across more banks and financial institutions.
The Covid-19 pandemic has also pushed many banks to improve their online lending capabilities, with the Paycheck Protection Program (PPP) also boosting the web-based small business loan market.
According to the American Bankers Association, more than 50% of larger banks and 38% of smaller banks are using digital lending platforms to deliver online lending services.
Platforms such as Sigma Infosolutions, Newgen Software, and Pegasystems have provided an ease never seen before, allowing banks to offer different financial services such as faster loan processing, high-quality and cost-efficient financial services to customers across the globe.
New Jersey-based Cross River Bank, for example, partnered with more than 30 fintech companies to boost its PPP lending capabilities well beyond its ‘real-world’ footprint.
A separate survey conducted by Juniper Research found more than 50% of US consumers wanting to change banks would consider a digital-only bank.
Such rapid growth of the market is attributed to increasing internet penetration coupled with proliferation of smartphones and the continuous increase in digitalization initiatives among financial organizations.
Digital lending is in the minority of financial services positively affected by the unprecedented coronavirus pandemic. Traditional forms of service delivery in the sector have been impacted, increasing the demand for online lending solutions.
Digital lending platforms are introducing new technologies to help financial institutions make loan processing more transparent and secure with a wide range of contactless products which include insurance, loans, and credit.
Contactless payment has also become a key feature of the payment landscape during the pandemic due to interpreted reduced risk which some believe will lead to specialized solutions in the future.
Post pandemic, small businesses will continue to require personalized and affordable loans to help them recover from financial hardship of COVID-19, Million Insights said, which would also propel market demand.