The Institute for Financial Services Zug IFZ of the Lucerne School of Business, the Swiss Marketplace Lending Association (SMLA) and the TMF Group, have launched The Marketplace Lending Report, the first comprehensive analysis on the financing of Swiss companies, public companies and individuals with loan capital via the Internet.

Marketplace Lending Report Switzerland 2021

The report highlights that new technologies, the low interest rate environment and changing customer behaviors are eroding some of the key competitive advantages of banks and leading to the emergence of new business models that could challenge the model. traditional banking. Online market lender platforms allow investors to lend debt capital to commercial and retail borrowers as well as public companies. Lenders can be individuals or professional and institutional investors such as insurance companies, funds, pension funds, banks, family offices or other legal persons. Unlike banks, market lenders do not take deposits and do not lend themselves. Therefore, they add no risk to their balance sheet.

More specifically, the development of lending marketplaces is interesting because it has the potential to disrupt traditional banking models: the volume of transactions on these platforms in Switzerland reached CHF 15.4 billion in 2020, the report reveals. The first comprehensive analysis of online finance solutions in Switzerland also shows which marketplace lending models are evolving and what market share marketplace lenders have in the different segments.

Market volume has almost tripled since 2017

The study reveals that the total volume of new debt capital traded through online platforms reached around CHF 15.4 billion in 2020. Since 2017, the volume of loan transactions on the market in Switzerland has almost tripled. From 2019 to 2020, the overall market volumes (new loans / bonds) increased by 42.5%. However, the volumes and growth rates of the segments are very different. The equity loan segment reached CHF 448.0 million in 2020. The market segment for platform-traded mortgages funded by institutional and professional investors reached CHF 5.5 billion in 2020. The loan segment and bonds for medium and large companies as well as public entities reached 9.4 billion francs in 2020.

The crowdlending segment impacted by the Covid-19 crisis

While the crowdlending segment globally grew by 7.1% in 2020, certain types of loans have been strongly impacted by the Covid-19. The decline in loans to SMEs is a direct effect of the Swiss government’s Covid-19 loan program. Between March and July 2020, companies could submit loan applications to banks to fill Corona-related cash shortages. The government’s program allowed crowdlending platforms to process significantly fewer loans during this period. The consumer credit segment was also strongly impacted by the Covid-19 crisis, with individual consumption falling in 2020, leading to a decrease in consumer credit requests. In contrast, mortgage-backed loans grew strongly and led to overall volume growth in the crowdlending segment.

Real estate loans on brokerage platforms with a market share of between 3% and 3.5%

Mortgage loans are Switzerland’s largest debt capital market in terms of volume. Brokerage platforms reached a volume of around CHF 5.5 billion in 2020, representing a market share of around 3 to 3.5% of new mortgages issued in 2020. These platforms have been online since 2012 Banks have also started to develop these market places. in recent years.

Loans to public entities a well-established market on platforms

Measured by market share, the public entity lending segment has clearly achieved the highest relevance of all lending segments in the market. The study’s authors estimate that around 10 to 15% of all loans to municipalities, towns and cantons in Switzerland are traded on platforms. The volume of loans was 9.4 billion in 2020.

Debt capital platforms are engines of innovation in Switzerland

Simon Amrein and Andreas Dietrich, authors of the study, commented: “Many online debt financing platforms are driving innovation in the Swiss debt capital market. Crowdlending platforms, for example, were among the first to provide predominantly digital lending processes for SMEs and consumers. Lending platforms to public entities (municipalities, cities, cantons) have already captured a substantial share of this market segment and have negotiated a large number of these loans at lower cost since 2016. Finally, 2020 saw the first digital bond issues on Swiss platforms, establishing a new online segment and increasing transparency in the book building of such transactions. Additionally, we expect the market to recover and growth rates to accelerate after Covid. “

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