UK Digital Lending Landscape Report

The digital lending sector got started in the U.K. in 2005, but its growth has been slower there than in the U.S., where it emerged later. U.S. digital lenders compete with banks using algorithmically driven systems to provide faster access to credit along with advanced underwriting models that can potentially better assess risk and reach more borrowers. U.K. digital lenders for the most part have retained more manual processes in their operating models, relying on representatives, underwriting committees and other human elements for making lending decisions.

That does not tell the whole story, however, and while U.K. lenders could use a boost in innovation, their market is well established and regulated. This report explores the evolution of the industry, growth in originations, current events impacting the market and how U.K. lenders can catch up to the higher growth rates seen at U.S. firms.

• S&P Global Market Intelligence sees growth opportunities for U.K. digital lenders amid a favorable regulatory and political climate that especially encourages nonbank lending alternatives for small businesses.
  

• Digital lenders are also likely to benefit from new Innovative Finance Individual Savings Accounts, which allow U.K. savers to make tax-free investments on marketplace lending platforms.
  

• S&P Global Market Intelligence estimates that nine major digital lenders in the U.K. originated £6.69 billion in loans since their respective inceptions, the earliest of which was in 2005. Annual origination volumes grew about 34% year over year in 2016 to an estimated £2.74 billion.
  

The lenders featured in the report are Zopa, RateSetter and Lending Works (personal loan-focused); Funding Circle, ThinCats and Assetz Capital (small/medium enterprise loan-focused); and Landbay, LendInvest and Bridge Crowd (property loan-focused).