Lending Global Market Report 2021: COVID-19 Impact and Recovery to 2030

Major companies in the lending market include Industrial and Commercial Bank of China; Agricultural Bank of China; Bank of China; Citigroup Inc and JP Morgan.

The global lending market is expected to grow from $6036.37 billion in 2020 to $6932.29 billion in 2021 at a compound annual growth rate (CAGR) of 14.8%. The growth is mainly due to the companies rearranging their operations and recovering from the COVID-19 impact, which had earlier led to restrictive containment measures involving social distancing, remote working, and the closure of commercial activities that resulted in operational challenges. The market is expected to reach $8809.55 billion in 2025 at a CAGR of 6%.

The lending market consists of sales of lending services (loans) by entities (organizations, sole traders and partnerships) that are engaged in providing secured or unsecured loans to borrowing entities. Lending entities include establishments such as finance companies, personal credit institutions, loan companies and student loans companies. This market covers all types of loans including mortgage loans, personal loans, working capital loans, vehicle loans and industrial loans. Revenue generated from the lending market includes all the interest charges levied by the lending entities such as banks and financial institutions against the loans sanctioned, but not the value of the loans themselves. This market includes interest charged by the banks on credit card and other payment cards as well as mortgages and other loans. The lending market is segmented into corporate lending; household lending and government lending.

Western Europe was the largest region in the global lending market, accounting for 35% of the market in 2020. Asia Pacific was the second largest region accounting for 27% of the global lending market. Africa was the smallest region in the global lending market.

Participation lending, also known as syndicated lending, is gaining prominence as it reduces risks associated with lending large capital. Participation lending is the process of providing a loan by multiple lenders to one borrower. Participation loans are usually provided by one financial institution and administered by another. The popularity of participation lending is becoming popular as it provides a channel to offer diversified loan products and improves liquidity of the business. This partnership offers larger business lending opportunities to financial institutions by allowing them to share both funding and risk. It eliminates the need for manual tracking of information by optimizing the entire lending process. Some of the companies involved in participation lending are Coastway Community Bank, Shamrock Financial Corp. and Homestar Mortgage.

Banks and financial institutions are adopting digitization solutions to modernize their commercial lending business. This move is mainly a result of increasing competition among banks and growing demand for simplified and quick commercial lending process. Digitization enables faster approval of commercial loan, which can otherwise be a complex and slow process. It also enables banks to target new customer categories and offer customer centric solutions, which leads to improved efficiencies in the commercial lending business. Major companies which incorporated digitization in lending are Commonwealth Bank of Australia, Hana Bank and Fidor Bank.