Crowdlending Survey 2019

Prof. Dr. Andreas Dietrich, Simon Amrein, Falk von der Heyde, Adrian Heuermann and Manuel Rüdisühli

www.pwc.ch

About this study

The Crowdlending Survey 2019 is the only Swiss study to focus exclusively on the

crowdlending market. It is being conducted this year for the second time in collaboration

with PricewaterhouseCoopers (PwC), the Institute of Financial Services Zug IFZ of the

Lucerne School of Business, and the Swiss Marketplace Lending Association. The purpose

of the publication is to draw attention to the increasing economic relevance of crowdlending

both in Switzerland and globally. It also sets out to highlight the key challenges and problems

facing Swiss crowdlending platforms. The study thus makes an important contribution to

transparency in this market. Executives from 11 crowdlending platforms took part in this

year’s study. We would like to thank the platforms for their support.

2 | Crowdlending Survey 2019

Contents

Executive Summary

1. Introduction to crowdlending

2. Crowdlending in Switzerland

3. Crowdlending in the international context

4. 2019 Survey

5. Authors and contact details

3 | Crowdlending Survey 2019

Executive Summary

1. Brokered volume of CHF 261.9 million in Switzerland

Swiss crowdlending platforms extended over CHF 260 million in loans in 2018.

This corresponds to an increase of 40 % year-over-year, although growth slowed (2018:

+240 %). We forecast that the rate of growth in 2019 will be on a par with that in 2018.

4. Sector reputation remains fragile

Reputational risks resulting from potential misconduct on the part of other platforms

are still regarded as a critical risk factor for the entire sector. A major case of fraud in

2018 not only created headlines in the media, but also attracted attention among the

platforms.

2. Institutionalisation requires critical mass

The importance of professional investors continues to rise. Whether talking about the

market as a whole or a specific platform, the key to being attractive to institutional

investors is reaching a critical size. We anticipate that the market could provide a further

boost to growth again when annual growth reaches around CHF 1.0 billion, since the

interest of institutional investors will revive when volumes hit this level.

5. Customer acquisition of major importance

Crowdlending platforms operate in a so-called two-sided market. The acquisition of

lenders and borrowers is particularly important. This growth must also be roughly

balanced between lenders and borrowers.

3. Market concentration becoming more pronounced

The market share of the largest five platforms in Switzerland stood at 87 % at end-2018.

We believe this could become even more pronounced as larger platforms benefit from

better access to institutional investors. Partnerships and mergers between individual

platforms are also possible in 2019.

6. Off-platform deals gaining in importance

More and more platforms are conducting transactions between borrowers and lenders

without a public tender. This trend is an initial consequence of increased institutionalisa-

tion. The market has already evolved in this direction on the international level.

4 | Crowdlending Survey 2019

How has crowdlending developed

over the last year?

What do platforms expect for 2019?

5 | Crowdlending Survey 2019

1. Introduction to

crowdlending

What is crowdlending?

Crowdlending is the brokering of a loan between lenders and borrowers over the Internet.

Borrowers can be private individuals or companies, for example. Lenders are private

individuals as well as institutional investors such as foundations, investment funds and

family offices. Loans are granted by one or more partners in combination. Lenders receive

interest on the amount loaned. Interest is generally determined by the term of the loan

and the borrower’s risk of default.

Terms: crowdlending, P2P lending, marketplace

lending

The first term that was used to describe the process of brokering loans via the Internet

was P2P (peer-to-peer) lending. As crowdfunding started to gain in popularity, however,

“crowdlending” increasingly became the standard term. Finally, a third term “marketplace

lending” was coined to better capture the idea of a digital credit marketplace. In Switzer-

land, crowdlending is the term most commonly used to refer to the market analysed

below. It is therefore the term that has been adopted for this study. In the UK, P2P lending

is still widespread, whereas in the US marketplace lending is frequently used.

Crowdlending: three different types

A distinction is drawn below between three basic types of crowdlending. Consumer

crowdlending encompasses loans to private individuals. The business crowdlending

category refers to loans to companies, generally small or mid-sized firms. The real estate

crowdlending segment covers mortgage-backed loans via crowdlending platforms (see

Figure 1).

Figure 1: Three crowdlending segments

Crowdlending

Consumer

Crowdlending

Business

Crowdlending

Real Estate

Crowdlending

6 | Crowdlending Survey 2019

Crowdlending explained simply

As explained above, crowdlending generally involves private or institutional lenders

loaning money to a borrower. For this, potential borrowers submit a credit application to

the crowdlending platform and have to disclose specific data so the platform can check

their rating and credit standing. Lenders go to the crowdlending platform to identify

and invest in their chosen borrower. Once a borrower has found a sufficient number

of investors to finance the amount they’ve requested, a credit agreement is concluded

between the lenders and the borrower. It should be noted that there are other business

models where credit agreements are made via crowdlending platforms. Investors transfer

the prorated loan amount to the borrower, and then the borrower has to pay back the

loan, typically plus the agreed interest to the lenders over a predetermined period. The

entire process is conducted via the crowdlending platform. This means that any default or

insolvency on the part of the borrower is processed by the platform without the need for

active involvement by investors. The crowdlending platform receives a fee from borrowers

and/or lenders for these services, depending on the business model employed. Depending

on the platform, individual processes are outsourced to other companies (e.g. rating

agencies or collection companies). A typical process is depicted in simplified form in

Figure 2.

Methodology

This study uses data sourced directly from Swiss crowdlending platforms on loan

volume and numbers. A detailed overview of data collection can also be found in

Crowdfunding Monitoring, published annually by the Lucerne School of Business.

The data are presented for Switzerland on an aggregate level (see Section 2).

In addition to the market development statistics, questionnaires were sent to

Swiss platforms asking about the challenges facing platforms in Switzerland (see

Section 4). A total of 11 out of 15 platforms took part in this survey.

7 | Crowdlending Survey 2019

Figure 2: How crowdlending works

Loan agreement

Loan amount

Loan application

Searching for and

selecting loans

Borrower

Platform fees

(depending on the

business model)

Crowdlending plattform

Credit check, rating, brokering,

processing, operation

Platform fees

(depending on the

business model)

Private

lenders

Institutional

lenders

Loan amount

repayment

Interest payments

2. Crowdlending

in Switzerland

There were 15 platforms active in Switzerland as of end-2018 (see Figure 3). The platforms

usually focus on one or two crowdlending segments. In the areas of business and

consumer crowdlending, there are also providers that offer loans secured by mortgages.

Business crowdlending platforms are typically geared towards small and medium-sized

enterprises (SMEs). Consumer crowdlending platforms are active in the consumer lending

market.

The pace of growth of the number of new platforms has decreased significantly. In 2018

only one new crowdlending platform – Funders – entered the Swiss market, compared with

seven new platforms in 2016 and three new platforms in 2017 (Acredius, Creditfolio and

Crowd4Cash).

In addition, two providers each launched a sort of umbrella platform in 2017 and 2018,

called Lendity and Impact Lending respectively, which invest on behalf of institutional

investors in loans issued by Swiss crowdlending platforms. Lendity offers a bond for

institutional investors. A corresponding fund offering was also launched by the 1741 Group,

which currently comprises three different funds.

Two of the crowdlending platforms listed are owned by banks. Funders is operated by

Luzerner Kantonalbank; it is additionally licensed at other cantonal banks and is likewise

positioned in the field of crowdsupporting. The Lendico platform was acquired in full by

PostFinance AG in 2018, resulting in Lendico Schweiz AG’s complete separation from

Lendico Deutschland. Lendico also collaborates with Cembra Money Bank, which finances

loans on the Lendico platform and consolidates them directly in its own balance sheet.1

Figure 3: Active crowdlending platforms by segment as of end-2018

Segment

Business*

Consumer

Platform

Acredius

Creditworld

Funders

Lendico

Swisspeers

Creditfolio

Lendora

Splendit

3 circle funding

Cashare

Consumer and business*

CreditGate24

Real estate

Crowd4Cash

Lend

SwissLending

Hyposcout

Launched

2017

2016

2018

2016

2017

2016

2014

2016

2008

2015

2017

2014

2016

*In the business segments multiple providers also offer loans that can be secured

by mortgages.

8 | Crowdlending Survey 2019

1 Cembra Money Bank (2018). Press release: Cembra Money Bank unterzeichnet Partnerschaft mit Startup Lendico Schweiz AG

[Cembra Money Bank signs partnership with startup Lendico Schweiz AG]. Online (28 March 2018): https://www.cembra.ch/de/investor/

news-medien/news-details/?nid=280317

In contrast to last year, Advanon no longer appears in the market overview. This platform

withdrew in full from the private investor business in 2018 in the wake of a major fraud

case and is now only open to institutional investors. This means that it no longer falls

under crowdlending as we define it. Advanon offers both short-term loans as well as

so-called invoice trading, which allows businesses to sell their receivables at a discount.

Tradeplus24 also operates a similar business model.

Volume and growth

The crowdlending market recorded a volume of CHF 261.9 million in 2018 (prior year:

CHF 186.7 million), an increase of 40.3 %. As Figure 4 shows, the number of successfully

brokered loans rose from 2,035 to 3,290. Of the total volume of CHF 261.9 million,

CHF 134.4 million was in the business crowdlending segment (SME loans). The prior-year

volume in this segment was CHF 111.6 million. The volume in the consumer crowdlending

segment (loans to private individuals) increased by almost 10 % year-over-year and now

stands at CHF 57.0 million, while the real estate crowdlending segment more than doubled

by 206.0 % to CHF 70.5 million.

Figure 4 shows that growth has slowed considerably versus the previous year, most

noticeably in the area of SME financing. This is due in part to a very large individual loan

of CHF 8.7 million processed in 2017, which drove up the total volume recorded that year.2

While the 20.4 % growth in 2018 is still significant, it is well below the previous year’s

astounding level (+296.7 %). Growth in consumer crowdlending was also comparably low.

Consumer crowdlending serves the consumer loans segment, while business

crowdlending is geared to SMEs and real estate crowdlending makes mortgage-backed

loans. These differences are clearly visible in the average loan amounts. In the case of

SME loans, this value was around CHF 300,000. The average amounts can, however, vary

widely depending on the platform’s business model. Platforms offering very short-term

loans, in particular, only tend to finance smaller volumes.

In consumer crowdlending, the average loan amount was virtually unchanged at about

CHF 30,000. In 2013 this value was just CHF 18,000, and showed a constant year-over-

year rise until plateauing last year. This average loan volume is expected to remain stable

since it is practically on a par with the average consumer loan in Switzerland.4

In the case of real estate crowdlending, the average loan volume was approximately CHF

650,000 CHF (prior year: CHF 850,000). The much higher average loan amount in this

segment compared with other segments can be explained by the fact that these funds are

used to finance residential property.

Figure 4: Crowdlending volume and the number of loans in Switzerland, 2012–20183

300

250

200

150

100

Volumes in CHF million

(left scale)

Number of loans

(right scale)

Real estate

Business

Consumer

261.9

70.5

3500

3000

2500

2000

186.7

23.1

134.4

1500

111.6

55.1

2.9

28.1

24.1

3.5

8.4

0.6

7.8

52.0

57.0

2014

2015

2016

2017

2018

1000

500

0.9

2012

2.1

2013

Lenders invested an average of CHF 17,000 in an SME loan in 2018 (2017: CHF 25,000).

For loans to private individuals, the investment amount remained unchanged year-over-

year at around CHF 4,000. It would, however, be wrong to read too much into these

figures. Institutional investors in particular seem to be more and more important and are

investing much larger amounts. While no precise figures are available on the proportion of

institutional investors, most of the crowdlending platforms in Switzerland included in the

survey report that the proportion of institutional investors has risen slightly versus 2017

(see Section 4).

9 | Crowdlending Survey 2019

See Crowdlending Survey 2018.

The statistics still include the figures from Advanon, since its business model only switched over to institutional investors (B2B) during the

course of the year. See also the discussion in the text.

ZEK – Verein zur Führung einer Zentralstelle für Kreditinformationen [Central Office for Credit Information] (2019). Annual Report 2018. p. 13.

for borrowers of one basis point per year for which the loan runs. Loanboox expanded to

Germany in 2017, followed by Austria and France in 2018. In January 2019 the platform

procured equity totalling CHF 22 million. Investors included Deutsche Kreditbank AG and

the LGT Group. Loanboox has valued its company at CHF 122 million.6

Another example of the B2B business model is Remaco with its direct lending platform

that matches companies with qualified investors. Instimatch global is likewise geared to

institutional investors. In contrast to the platforms mentioned, instimatch places a greater

focus on short-term transactions and strives to attract part of the traditional money

market to its platform. Alongside institutional investors, instimatch is also open to larger

companies that want to optimise their liquidity via the platform.

At the end of 2018 Systemcredit went online, a start-up seeking to establish a marketplace

for SME loans. Systemcredit brokers credit offers on its platforms for SMEs from multiple

potential lenders. The lenders targeted by the company are primarily banks, institutional

investors and crowdlending platforms (or their investors). Partnerships are currently in

place with Bank Cler as well as with the crowdlending platform Swisspeers.

Figure 5: Average loan amount 2018

300’000

31’000

650’000

Business

Consumer

Real estate

There are also major differences in the purpose for which the loans are used. When

it comes to business crowdlending, the emphasis is often on project financing, debt

rescheduling or short-term loans for liquidity management. In the case of consumer

crowdlending, the most common reasons for loans are debt rescheduling, education,

cars, travel or weddings. Unfortunately there are no detailed data available on these

intended uses for Switzerland. The real estate crowdlending segment generally deals

with mortgages for private individuals and sometimes with bridging finance for real estate

developers. Mortgage-backed SME loans may also fall into this category.

Other business models in marketplace lending

In addition to the classic crowdlending business models mentioned, the past two to

three years have seen the emergence of a number of other platforms geared primarily to

institutional investors.

Bank Vontobel launched the platform Cosmofunding in September 2018. The

Cosmofunding offering is aimed at entities governed by public law (ÖRK) and private

companies. The platform works in collaboration with the Swiss rating agency fedafin,

which compiles ratings for the borrowers concerned. Only professional investors are

admitted. Since its launch the platform has registered credit applications totalling over

CHF 1 billion. The average loan issue volume currently stands at CHF 17.6 million, while the

average term is 2.9 years (volume-weighted average: 0.65 years).

Another active player on the ÖRK market is the Loanboox platform, which has been online

since September 2016. From its launch until September 2018, Loanboox had brokered

loans amounting to CHF 6.5 billion.5 Like Cosmofunding, Loanboox exclusively pursues a

B2B approach and accepts only institutional and professional investors. On the borrower

side, the platform is open to municipalities, cities, towns and cantons to finance loans

between CHF 500,000 and CHF 500 million. Most loans have just one counterparty.

Loanboox limits itself to providing pure brokerage services and charges a one-time fee

10 | Crowdlending Survey 2019

Finanz und Wirtschaft (2018). Rund 15 Mrd. Fr. über Loanboox nachgefragt (Approx. CHF 15 billion requested via Loanboox).

Online (31 December 2018): https://www.fuw.ch/article/rund-15-mrd-fr-ueber-loanboox-nachgefragt/

Loanboox (2019). Loanboox sammelt 22 Millionen Franken ein (Loanboox collects CHF 22 million). Press release of 30 January 2019.

Online (14 April 2019): https://www.loanboox.com/landing/ch/news/posts/series-b-01-19

Balance sheet lending in Switzerland

A question that always arises when analysing crowdlending volumes is the relevance of

the respective crowdlending segment. One way of classifying the figures is to compare

the sub-markets where the crowdlending platforms are active. Below we show how overall

trends in the consumer lending market (consumer crowdlending), in the SME lending

market (business crowdlending) and in the mortgage market (real estate crowdlending)

have evolved and their respective shares of the total crowdlending market.

The outstanding volume of consumer loans in Switzerland was CHF 7.7 billion effective

end-2018 (up CHF 419 million on the prior year).7 In addition, there was CHF 8.8 billion

in leasing volume (CHF +136 million). New loans totalling approximately CHF 4.4 billion

were granted in the consumer loan segment in 2018. Consumer crowdlending of CHF 57.0

million in 2018 is still small compared with the overall market (around 1.3 %, prior year:

1.2 %)

Total lending by Swiss banks within Switzerland amounted to CHF 1,173 billion in 2018, a

large portion of which – CHF 1,005 billion – is secured by mortgages. Borrowers include

private individuals, companies and the public sector. As of end-2018 CHF 788 billion of

the loan volume was accounted for by private individuals, CHF 355 billion by companies

(of which 87 % was to SMEs with fewer than 249 employees) and CHF 29 billion to public

entities.8

11 | Crowdlending Survey 2019

All of these values are balance sheet figures, i.e. volumes that were outstanding on the

balance sheets of Swiss banks at the end of 2018. Annual lending can only be estimated.

With that in mind, we estimate that each year loans totalling between CHF 150-180 billion

are extended or newly granted to private individuals in the Swiss mortgage market. The

crowdlending volume in the mortgage segment in 2018 of CHF 70.5 million is therefore not

relevant in terms of the overall market.

The same applies to the SME lending market. The volume of CHF 310 billion on bank

balance sheets is significantly higher than the CHF 134.4 million in business crowdlending

in 2018. Moreover, a representative study by the Swiss State Secretariat for Economic

Affairs (SECO) and the Institute of Financial Services Zug IFZ has shown that there are no

credit supply bottlenecks in Switzerland. Only 5 % of SME credit applications are rejected

by banks. Aside from these SMEs, however, there are also companies that are in need of

financing but do not submit a credit application to a bank. This group of “discouraged”

SMEs makes up about 6 % of all Swiss SMEs or 27 % of SMEs with financing needs.9

These SMEs could be an interesting potential customer base for crowdlending platforms.10

In addition, the statistics on loans to companies do not take into account loans brokered

by non-banks on a non-public basis through the private debt market. Lenders in these

cases include private debt funds, family offices, insurance companies and pension funds.11

In terms of the volumes in all three crowdlending segments, crowdlending is still a niche

market. At the same time, the comparatively low loan volumes in all three segments

indicate that there is significant potential for crowdlending as an alternative financing

option. The market share of crowdlending in the respective markets can be expected

to rise sharply in future. The UK in particular is an example of a market with strong

crowdlending platforms, with 9.5 % of all new financing arrangements in the SME segment

processed via online platforms in 2017, up considerably on the share of just 0.34 % in

2012. Very small companies in particular make use of this financing option.12 The following

section explores the leading markets in the UK, the USA and China in greater detail.

ZEK – Verein zur Führung einer Zentralstelle für Kreditinformationen [Central Office for Credit Information] (2019).

Annual Report 2018. p. 12.

SNB (2018). SNB data portal. Online (1 April 2019): https://data.snb.ch/

Lucerne University of Applied Sciences and Arts/SECO (2017) – Institute of Financial Services Zug IFZ & SECO. Studie zur Finanzierung

der KMU in der Schweiz 2016 [Study on SME financing in Switzerland 2016].

10 Dietrich, A. & Amrein, S. (2018). Welches Potenzial hat Crowdfunding in der Schweiz? [What potential does crowdfunding offer in

Switzerland?]. Blog of 5 March 2018. Online (1 April 2019): https://blog.hslu.ch/retailbanking/2018/03/05/welches-potential-hat-

crowdlending-in-der-schweiz/

11 A study by the Institute of Financial Services Zug IFZ due to be published in summer 2019 will provide an initial insight into the private

debt market in Switzerland. For more information, see Birrer, T., Bauer, M. & Amrein, S. (2019). Unternehmensfinanzierung mit Private

Debt in der Schweiz [Corporate financing with private debt in Switzerland].

12 University of Cambridge (2018b). The 5th UK Alternative Finance Industry Report. Cambridge Centre for Alternative Finance.

3. Crowdlending in the

International Context

The Swiss crowdlending market again recorded respectable growth in 2018. The volumes

for other countries for 2018 were not available at the time of publication of this study,

which is why the international comparisons relate primarily to 2017. Figure 6 illustrates

the crowdlending volumes for the USA, UK and China for 2017. As in 2016, China was the

largest crowdlending market worldwide in 2017, with an equivalent of CHF 345.1 billion in

total loans brokered via crowdlending platforms, up 48 % on the previous year. In the USA,

the volume in 2017 was CHF 38.7 billion (+21.4 %), while in the UK it was CHF 5.9 billion

(+25 %). In Switzerland, volume reached CHF 186.7 million in 2017. Last year, loans were

brokered totalling CHF 261.9 million. Consumer crowdlending is especially widespread in

the USA and China, where in 2017 it made up 76 % and 68 % of the overall crowdlending

market respectively.

26 %

30 %

UK 2017

CHF 5.9 billion

44 %

3 %

21 %

USA 2017

CHF 38.7 billion

Figure 6: Crowdlending volume USA, UK

and China (2017)13

76 %

2 %

Consumer

Business

Real estate

30 %

China 2017

CHF 345.1 billion

68 %

12 | Crowdlending Survey 2019

13 All data obtained from: University of Cambridge, Judge Business School (2019). Publications. Online (11 April 2019):

https://www.jbs.cam.ac.uk/faculty-research/centres/alternative-finance/publications/

To ensure consistency of data, the international data contained in all charts has been

sourced from the Judge Business School of the University of Cambridge.14 However, other

studies with more recent market data are available for certain countries. For example, the

data provider Brismo puts the volume in the UK in 2018 at CHF 8.1 billion, which would

constitute year-over-year growth of approximately 24.6 %.15 This would mean the growth

rate for 2018 would be roughly level with 2017.

Figure 8: Crowdlending volume per capita (in CHF)

2017

2018

No reliable overall market data are available for China for 2018, but a significant slowdown

in growth is expected. Following several years with tremendously high growth rates,

multiple cases of fraud came to light in 2018, which resulted in street protests in some

cases. The announcement of more stringent regulation further increased uncertainty in

2018, and numerous platforms withdrew from the market. The number of platforms is likely

to have fallen by over half in 2018 to some 1,000 platforms.16

249

China

119

USA

Switzerland

Given the differing size and economic output of the countries listed above, statements on

the absolute volumes concerned are of limited value. One starting point for assessing the

relevance of crowdlending is the ratio of volume to economic output. As Figure 7 shows,

China also exhibits a high value, with crowdlending equivalent to an impressive 2.86 % of

gross domestic product. In the UK and USA, this ratio is around 0.2 %. Figure 8 shows

the ratio of 2017 crowdlending volume to population. In China, per capita crowdlending

investment was CHF 249, compared with CHF 119 in the USA and CHF 89 in the UK.

In Switzerland, an average of CHF 22 per inhabitant was invested in crowdlending in 2017,

rising to CHF 31 in 2018.

Figure 7: Crowdlending volume compared to gross domestic product 2017 (Switzerland: 2018)

2,68 %

China

0,20 %

USA

0,18 %

0,04 %

Switzerland

13 | Crowdlending Survey 2019

The role played by institutional investors in the UK and USA has gained markedly in

importance in recent years. In the UK, this figure was around 40 % in 2017. The year before

(2016), institutional investors accounted for 28 % in the business crowdlending segment

and 32 % in the consumer crowdlending segment. The share of institutional investors is

much higher in the USA, where 97 % of funds in consumer crowdlending in 2017 (2016:

70 %) and 76 % in business crowdlending (2016: 67 %) came from institutional investors.17

Another model, balance sheet lending, has gone from strength to strength in the USA and

has also been incorporated into the statistics and figures. Under this model, the platform

itself extends direct loans to companies. The financing needed is frequently provided by

an investment fund or by institutional investors. The advantage of partnerships like these

is that the financing arrangements can be made much more quickly since the traditional

brokerage process between lender and borrower to finance the loan no longer applies.

Once credit approval has been granted, the loan can be paid out immediately. Most

crowdlending platforms in the USA now also offer balance sheet lending. Since 2016 in

particular, a lot of the “traditional” crowdlending platforms have evolved in this direction.18

14 University of Cambridge, Judge Business School (2019). Publications. Online (11 April 2019): https://www.jbs.cam.ac.uk/faculty-research/

centres/alternative-finance/publications/

15 British Business Bank (2019). Small Business Finance Market. Online (11 April 2019): https://www.british-business-bank.co.uk/wp-con-

tent/uploads/2019/02/British_Business_Bank_Small-Business-Finance-Report-2019_v3.pdf

16 Financial Times (2018). China’s P2P lenders say regulation will cause industry collapse. Online (15 October 2018): https://www.ft.com/

content/eac2c2de-d050-11e8-a9f2-7574db66bcd5

Bloomberg (2019). China P2P Lending Crackdown May See 70 % of Firms Close. Online (1 January 2019): https://www.bloomberg.com/

news/articles/2019-01-02/china-s-online-lending-crackdown-may-see-70-of-businesses-close

17 University of Cambridge (2018a). The 3rd Americas Alternative Finance Industry Report. Reaching New Heights. Cambridge Centre for

Alternative Finance. University of Cambridge (2018b). The 5th UK Alternative Finance Industry Report. Cambridge Centre for Alternative

Finance

18 University of Cambridge (2018a). The 3rd Americas Alternative Finance Industry Report. Reaching New Heights. Cambridge Centre for

Alternative Finance.

4. 2019 Survey

As in the previous year, executives of Swiss crowdlending platforms were asked to rank

eight key topics in order of importance. The subject areas are competition, customer

acquisition, platform growth, cost and availability of qualified workers, IT costs, regulation,

wait time from credit application to disbursement of the loan, and risks. In some cases

several questions were asked for a subject area.

Figure 9 summarises the key findings, aggregated for the eight key topics. The values in

the figures below are the median in each case. A total of 11 of 15 platforms took part in

this year’s survey, which covers the majority of the Swiss market.19 The section that follows

presents the findings of the individual sub-topics, analyses the results, and compares

these with the results of the previous year.

Figure 9: Average importance for Swiss platforms

(10 = very important, 1 = not at all important)

Risks

Competition

Customer acquisition

Platform growth

The areas “Customer acquisition” and “Cost and availability of qualified workers” continue

to pose particular challenges for the companies surveyed. The importance of regulation

has declined somewhat, while that of customer acquisition seems to have increased in

relevance.

Waiting time from

credit application

to payout

14 | Crowdlending Survey 2019

19 We would like to thank 3 Circle Funding, Acredius, Cashare, CreditGate24, Creditworld, Crowd4Cash, Lend, Lendico, Lendora, Splendit,

SwissLending and Swisspeers for taking part in the Crowdlending Survey 2019. Lend and Splendit submitted a joint response due to their

shared parent company, Switzerlend AG.

Regulation

Costs and availability

of qualified workers

Median 2019

Median 2018

IT costs

Customer acquisition

This year, Swiss crowdlending platforms again continued to view customer acquisition

as the greatest challenge overall. On a scale of 1 to 10, customer acquisition was given

a median rating of 8 (10 = very important, 1 = not at all important). Within the different

customer segments, the acquisition of institutional investors is perceived as being very

important and rated 9, while the acquisition of private investors is rated 8. By contrast,

acquisition of borrowers showed slightly decreasing importance with a rating of 7. The

changes on the previous year are, however, minimal overall and do not suggest any

fundamentals (see Figure 10).

Of the 11 Swiss crowdlending platforms surveyed, five said that the share of institutional

investors in 2018 was between 0 % and 20 % (2017: 7/11). Two stated that the share of

institutional investors was between 20 % and 40 % (2017: 1/11), three between 60 % and

80 %, and one between 80 % and 100 % (2017: 1/11).

This indicates that the share of institutional investors in the overall volume has risen

slightly. Larger platforms tend to have a higher share of institutional investors and have

increased this further (see Figure 11). It follows from this that institutional investors prefer

platforms of a certain size when looking for partners. Platforms that work with institutional

investors are also able to focus more on acquiring borrowers.

The analysis shows that the investor structure of Swiss platforms is extremely

heterogeneous. Although the loans on some platforms are attributable in large part to

private investors, on other platforms institutional investors account for a major share of

financing.

The two figures below illustrate the ratio of new customers to loan volumes for lenders

(see Figure 12) and borrowers (see Figure 13). It is clear that a significant number of new

investors have been attracted to the platforms overall. At the same time, however, it is

clear that the platforms have regular investors. On the borrower side, the share of first-time

customers is, understandably, considerably higher. But there are borrowers here as well

that have used crowdlending for financing purposes on multiple occasions.

15 | Crowdlending Survey 2019

Figure 10: Importance of customer acquisition for

crowdlending platforms

Figure 11: Share of institutional investors in loans

Importance

Number of platforms

Finding

borrowers

Finding

institutional

investors

Finding

private investors

2018

2019

0-20 % 20-40 % 40-60 % 60-80 % 80-100 %

2018

2019

Figure 12: Share of new investors in 2018

Figure 13: Share of new borrowers in 2018

Number of platforms

0-20 % 20-40 % 40-60 % 60-80 % 80-100 %

Figure 14: Strategic partnerships

Figure 15: Perception of competition

75 %

Banks

50 %

Start-ups

33 %

Other crowdlending

platforms

73 %

Banks

45 %

Start-ups

36 %

Other crowdlending

platforms

Importance

Competition from

crowdlending platforms

Competition

from banks

2018

2019

2018

2019

Strategic partnerships

In this year’s survey 82 % of all platforms (2018: 75 %) said they are seeking a strategic

partnership. Figure 14 shows the entities with which the platforms would consider entering

into a strategic partnership (multiple answers possible). All the participating platforms

seeking a strategic partnership but one state they would like to enter into such a partnership

with a bank. Approximately half the platforms seeking a partnership also indicated they

would be interested in working with other crowdlending platforms or start-ups.

Competition

The risk posed by other crowdlending platforms is deemed to be negligible (median of 4

out of 10 possible points). The analysis shows that larger Swiss platforms regard banks as

major competitors, while smaller crowdlending platforms perceive c...