New Report highlights vitality of Asia Pacific alternative finance sector

By Tadhg Walker

The first Asia-Pacific Alternative Finance survey, Harnessing Potential, has been released. A collaborative effort between the University of Cambridge, Tsinghua University, University of Sydney Business School and KPMG has led to the first benchmarking report into Asia-Pacific’s alternative finance sector. Together with over 20 research partners, including Crowdfund Vibe, data from 503 leading alternative finance platforms in 17 different countries was collected and aggregated.

The alternative finance sector was estimated to be worth a staggering $102.81 billion USD in 2015. China makes up 98.9% of this total, registering $101.7 billion by transaction volume with year-on-year growth of 328%. The rest of the Asia Pacific region recorded a volume of $1.12 billion USD, at a marginally lower year-on-year growth rate of 313%.

Growth of the Alternative Finance sector in the Asia Pacific Region, excluding China.

Growth of the Alternative Finance sector in the Asia Pacific Region, excluding China.

growth chinese AF

Growth of the Alternative Finance Sector in China.

 

 

 

 

 

 

 

 

 

 

 

Information on the alternative finance sector was lacking in the Asia-Pacific region. As the world’s most populous region comprehensive, academic research was required “to understand the growth and development of the sector to inform policy making, business practice, to raise public awareness and to harness the potential of alternative finance.” China has been of particular interest due to its massive size, and the associated inherent risks with its high rate of growth. This study is the first to benchmark China’s alternative finance industry against other international standards.

The report also shed light on the differing regulatory schemes in place. Some countries, like Thailand and Singapore have opted to regulate alternative finance within existing legal frameworks, while others, like New Zealand, Malaysia and South Korea have created new regulation to govern equity and debt based alternative finance. Platforms in countries with bespoke regulation generally found the regulation to be adequate, whereas countries such as Japan and Thailand regarded the regulation to be restrictive.

The survey provides analysis of alternative finance by type and by country, providing a treasure trove of information for the sector. Excluding China, Real Estate Crowdfunding raised the highest average amount per campaign. Rewards based crowdfunding, unsurprisingly, had by far the highest average number of funders. Peer to peer lending had the largest market share. The largest markets on a per capita basis were China, New Zealand and Australia.

The number of funders has also grown dramatically from 508,703 in 2013, to more than 1.6 million in 2015, excluding China. The number of campaigns has also snowballed from 21,600 to 136,000 from 2013 to 2015. In China, the number of funders has risen from 718,199 to an astonishing 31,227,281 over the same period, with campaigns increasing from 348,209 to over 9 million. The number of successful campaigns, however, is trending downward.

Market share of different types of alternative finance, excluding China.

Market share of different types of alternative finance, excluding China.

Harnessing Potential has provided a wealth of essential information about alternative finance in the Asia-Pacific region. In the introduction to the report, Professor Greg Whitewell from Sydney University Business School states:

We know that online alternative finance has grown quickly but until now we have been largely ignorant of its dimensions. For the first time we can now speak with some confidence about the nature and size of online alternative finance in the Asia-Pacific region. We can better understand its multiple forms, its complexity and its innovative characteristics, and appreciate, for the first time, the relative importance of women as funders and borrowers.

Professor Kong Ying from the Tsinghua University Graduate School at Shenzhen went on to say:

As with the development of any new business model, the alternative finance industry will also need to go through a period of transition to reach maturity. Alternative forms of finance need to develop within many constraints and grow with purposes, including serving the mainstream economy, adhering to regulatory requirements, promoting financial stability, protecting consumer rights, ensuring fair competition and emphasising the importance of self-discipline.
Dr Luke Deer presenting the results of the report

Dr Luke Deer presenting the results of the Asia-Pacific Alternative Finance Report

The report will increase understanding of alternative finance’s rapid rise and uncover patterns of development throughout this diverse region. While providing some answers, undoubtedly many more questions will now be asked of how alternative finance will progress in the Asia-Pacific. With alternative finance as diverse as the region itself, this report is the first step to realise and harness its potential.

 

The full report can be found here.

 

Read our previous story on the survey.

 

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