European investments to drive developing countries in 2021

Analysts of the P2P investment platform have determined the major tendencies in the European alternative lending for this year. They include the increased flow of money from European investors to developing markets as well as the alliance of traditional and alternative lending institutions. 

The volumes of alternative lending in the developing countries have been growing yearly by 25% since 2017, and the funding from European investors has been an important contributor to it. According to the CCAF, 31% of the alternative financing in Europe is cross-border transactions, 22% of them go towards Asia. 

COVID-19 has further boosted the demand for additional funding in the developing regions. At the end of the first half of 2020, Asian-Pacific region lost about 17% of the volume of transactions in alternative lending compared to the same period in 2019.  The reason was  a more powerful impact of the pandemic than in the rest of the world. At the same time, this suggests heavy underconsumption, which should result in significant growth of alternative lending in the region in 2021. In light of this, the European P2P platforms will offer increasingly more loans originating from the developing countries.

Another prominent trend in 2021 is merging of traditional banking and alternative lending which surges amid economic instability. Banks can take advantage of the flexibility of alternative lenders, whereas the latter can get another reliable channel for attracting clients and increase their reach. 2020 saw quite a few examples of merging between the two institutions, and its positive effect is predicted to accelerate the trend this year. 

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