Alternative lending is gaining more and more market share
In the constantly growing European alternative finance market, Lithuania, together with other Baltic countries, has been recording extremely favorable results in the field of crowdlending in recent years. After four years of crowdfunding and peer-to-peer lending, this sector in Lithuania counts approximately 92 million. EUR or 31 thousand loans issued, is published in the overview prepared by the crowdfunding platform "Profitus", comparing the trends of the Lithuanian, Latvian, and Estonian markets.
Although alternative lending platforms in Lithuania in 2018 accounted for only 0.59% of the total borrowing value in the country and are significantly behind Latvia and Estonia. However, general trends in the Baltic region highlight alternative lending as a serious challenge for traditional banks and credit unions. Overall, alternative lending is increasingly significant in Lithuania, Latvia, and Estonia. During the first three years of the 2018 quarters (January - September), alternative lending platforms lent 1.1 billion euros. This represents more than 8% of the total value of loans issued during that period in the Baltic region (banks and credit unions lent approximately EUR 12 billion).
This is largely determined by the increasingly favorable investment environment and financial policy, which provides extremely good conditions for investors interested in the alternative investment market.
According to the Bank of Lithuania, 170 financial technology (Fintech) companies were operating in Lithuania at the end of last year. Most of them specialized in the field of electronic payments (44%), followed by companies operating in the field of lending (15%), and third place was shared by companies operating in the banking sector and developing blockchain technology.
Viktorija Vanagė, an expert in real estate investment (RT) and the founder of the crowdfunding company Profitus, says that the trends that have emerged so far allow us to hope that due to the comprehensive and consistent policy of the Bank of Lithuania in favor of financial technologies, the scale of crowdfunding in Lithuania will increase even more in the coming years. : "The regulated and supervised environment, increasing public awareness of alternative financial markets, strict and often relatively unfavorable conditions for traditional borrowing in banks and credit unions - especially for real estate development - are obvious factors that determine the increasing popularity of alternative financing options. In Lithuania and other Baltic countries, the number of platforms providing these services and the number of loans they provide is increasing".
General at the earliest, i.e. The portfolio of loans financed by alternative lending platforms established in 2015-2016 increased by 200% on average last year. The financial results of collective lending operators are also getting better and better. Over the course of a year, their revenue has doubled on average, while operating costs have decreased relative to revenue.
The review prepared by "Profitus" also compares the annual interest rates paid by alternative lending platforms in the Baltic countries to investors who lend their money for a fee.
In Lithuania, the expected annual interest rate for investors is between 8 - 30% (the expected average annual interest rate for consumer loans is 17%, and business loans and real estate development loans - are 11%).
In other Baltic countries, the trends remain similar. The interest rate promised by platform operators is from 7 to 25%, depending on the type of loan (consumer credit, business loan, or real estate development loan), on an average of 14% per year.
You can download the full review here: https://www.profitus.com/review2018