Online debt capital market: new loans totalling CHF 18.6 billion

Marketplace lending platforms broker loans to companies, private individuals, municipalities and cities via the Internet. The volume of new loans reached CHF 18.6 billion in 2023. The market volume grew by 240% over the last five years.

The business models of marketplace lending platforms differ fundamentally from those of traditional banks. These platforms act as online intermediaries and do not take customer deposits onto their own balance sheets. They also do not grant loans themselves. Instead, they enable institutional and private investors to directly access the debt capital market. In 2023, loans with a volume of CHF 18.6 billion were brokered via these online platforms, corresponding to an 11% decrease compared to CHF 20.9 billion in the previous year. However, the volume has grown by 240% in the last five years. These are the findings of the latest edition of the Marketplace Lending Report by Lucerne University of Applied Sciences and Arts (HSLU) and the Swiss Marketplace Lending Association (SMLA), which published the study with the support of Apex Group and Deloitte. It is the only comprehensive analysis of debt financing via online platforms for Swiss companies, public corporations and private individuals.

Figure 1: Market Volumes 2017-2023
Last year, the volume of new debt financing via online platforms totalled CHF 18.6 billion. Despite the slight decline compared to the previous year, the volume has grown by 240 per cent over the last five years. With a volume of 13.2 billion in online loans and bonds for large companies, SMEs and public corporations, these account for around 70 per cent of the online debt capital market. Online loans have become an important pillar of financing, particularly for public corporations.

The volumes and growth figures of the various marketplace lending segments differ significantly (see box for definitions). Loans and bonds for medium-sized companies, large companies and public corporations account for around 70% of the total volume of all debt financing provided via online platforms. The study emphasises the growth potential of loans to public and near-public institutions as well as medium-sized and large companies via online platforms. The authors estimate that the market share of platforms in business with public sector entities is already around 15%.

Despite a 7% decline in the volume of loans for medium-sized companies, large companies and public entities in 2023, the study’s authors expect loan volumes to remain stable in 2024. In addition, bonds were already being processed via online platforms again in 2024.

Less growth in online mortgage loans

The mortgage brokerage business via platforms is currently undergoing a transformation, with volumes declining for the first time after a decade of growth. After growth of 5% in 2022, the market recorded a decline in 2023. This development is primarily due to the changed interest rate environment and the strategic adjustments made by individual platforms. Individual mortgage brokers have exited the traditional B2C market or adapted their business model. Stagnation or a slight decline is expected in 2024, accompanied by further consolidation. In the long term, however, the outlook remains positive.

Crowdlending market is being tested

The lending volume in the crowdlending segment fell by a further 20% in 2023. The past few years have put the market to the test. The Covid-19 pandemic was followed by economic uncertainty and a rapid rise in interest rates. Despite individual loan defaults, investors have achieved average returns of 3% over the past eight years after deducting losses and costs. Broad diversification remains crucial for investors in order to minimise losses.