Marketplace Lending in Italy Still in Infancy but Long Term Potential is Promising


[Editor’s note: This is a guest post from Edoardo Matarrese and Roberto Condulmar of P2P Lending Italia an Italian language site focused on P2P lending.]

The latest AltFi data on European marketplace lending volumes speak for themselves: as of the latest available figures Italy accounts for a minuscule 0.27% share of the volumes originated by the industry since inception.

True, the UK accounts for the lion’s share of the European pie at 84.80%, suggesting that marketplace lending in Europe is currently a tale of two markets: the UK, and “all the others”. But Italy’s share looks extremely low even in comparison with France’s 3.33% and Germany’s 5.55%. It is approximately one third the size of Finland, a country whose population is over 10 times smaller than Italy’s.

However, a closer look at the recent changes that occurred in the Italian marketplace lending ecosystem would suggest that the infant may soon turn into a child. Over the last 12 months the number of platforms has grown from two (the historical pioneers Smartika and Prestiamoci, both active in loans to individuals) to eight. Two new platforms have joined the segment of loans to individuals: Soisy and Younited Credit, the latter having clearly taken the lead in new monthly originations after only four months since launch thanks to the strong support of its French mother company (the former Pret d’Union).

Four more platforms have been established to provide financing for businesses. Two of these are already operating: Borsa del Credito (which focuses on medium term (36 to 60 months) financing for micro-businesses and SMEs) and Workinvoice, which as the name suggests is a marketplace for companies aiming at financing their business via the sale of some of their receivables.

Before the end of 2016 they will be joined by Instapartners, an initiative backed by an impressive team of former top consultants and well known entrepreneurs and CashMe. Both newcomers will be focusing at least initially on offering short term financing solutions to SMEs.

The growth in the number of players is starting to generate the virtuous “network effects” typical of very early growth phases in any new industry. For sure, investments in advertising and communication are on the rise, attracting potential lenders and borrowers and the media’s interest.

Data collected from sources such as Milan’s Polytechnic (publisher of an annual report on Crowdfunding which from this year also included “Crowdfunding Lending”) or our own site (a specialist blog/site in Italian which collects monthly figures from all the platforms) are still very modest in absolute terms.

The industry’s estimated total volumes since inception as of the end of June 2016 stood at €45.6 mn (approximately $50 mn USD). By comparison, the same figure at the same date for the UK was 161.5 times larger at £5.8 bn pounds (AltFi estimates).

Looking at the future: it is not difficult to understand what is driving the recent growing interest from backers of marketplace lending platforms. Italy is a market only marginally smaller than the UK, in terms of population (60 mn people vs the UK’s 65 mn) or measured by the size of its GDP. It is also home to over 6 mn businesses, of which 4 mn classified as “micro-businesses”. Finally the pool of savings held by Italian households is huge. According to Bank of Italy’s data, total financial assets held by Italian households at the end of 2014 amounted to €3.9 tn (approximately $4.3 tn) and total net wealth was estimated at €8.7 tn ($9.5 tn USD).

The long term potential looks promising and future developments in the country are certainly worth monitoring!