After sluggish growth in 2020, marketplace lending in Switzerland experienced a strong recovery last year, with total volume up 20% between 2020 and 2021.
This increase is mainly due to the improvement in equity loan volumes, particularly in real estate and loans to small and medium enterprises (SMEs), and to the growth of the market for loans to public entities and medium and large enterprises, a new report from the Lucerne University of Applied Sciences and Arts and the Swiss Marketplace Lending Association shows.
The total volume of new debt capital issued on online platforms in 2021 reached CHF 18.1 billion, compared to CHF 15.4 billion in 2020. Within the sector, the crowdlending segment saw the strongest growth with a total volume up sharply by 35.5% between 2020 and 2021 (from CHF 448 million to CHF 607 million) compared to growth of only 7% observed between 2019 and 2020.
These figures show that crowdlending has regained some of its strength in 2021 after the market experienced a downturn in 2020. This downward trend is attributed to the COVID-19 pandemic which saw the Swiss government launch a program of lending that attracted SMEs to traditional banking institutions and then halting the growth of the SME lending market, the report said.
This is evidenced by the 40% drop in SME loan volumes recorded in 2020, which fell from CHF 159.7 million in 2019 to just CHF 95.9 million in 2020. In 2021, the market recovered, with volumes up 15% to CHF 110.4 million. Despite encouraging figures, the figures remain low compared to pre-COVID-19 levels (CHF 159.7 million in 2019 and CHF 134.4 million in 2018).
Besides the rebound seen in SME lending, perhaps most notable is the surge seen in the home lending space. Between 2020 and 2021, total mortgage loan volumes increased by 41% to CHF 418 million. This figure represents an 18-fold increase from CHF 23.1 million in 2017. The data shows that real estate crowdlending began to gain momentum in 2019 and has since maintained its momentum.
In addition to crowdlending, the loans and bonds segment for medium and large companies as well as public entities also recorded notable growth, with volumes increasing by 28% between 2020 and 2021 (from CHF 9.4 billion to CHF 12 billion). billion).
Mortgage lending through online brokers saw more modest growth, registering a small increase of 6.7% in total loan volume.
In the future, online mortgage brokers are expected to become increasingly important in Switzerland due to their current relatively low market share.
Compared to other European countries, the platforms represent only a small share of the Swiss mortgage market (around 5% of annual sales), according to consultancy Deloitte. This suggests huge potential for growth. By comparison, platform usage accounts for around 45% of annual sales in Germany, a proportion that rises to around 65% in France and the Netherlands, and 75% in the UK.
The study identifies 12 different mortgage lending platforms on the market in Switzerland. MoneyPark, which was launched in 2012 and offers both online mortgages and face-to-face advice at branches, is currently Switzerland’s most established mortgage brokerage firm, the report said. Other notables include UBS’s Atrium platform, PostFinance’s Valuu, as well as independent players like HypoPlus and Hypotheke.
According to the report, another emerging trend to watch is the rise of sustainability, an increasingly important consideration in the debt market.
In Switzerland, the first initiatives have already been launched. In the mortgage sector, UBS launched its so-called “green mortgage” offering on Atrium last year, offering borrowers an interest rate reduction if they meet specified environmental criteria. In the area of SME lending, some platforms have incorporated sustainability into their risk models, the report notes.
Going forward, new innovative sustainable lending products should continue to emerge, he predicts, and platforms will continue to integrate sustainability risk into risk assessment.
Environmental, social and governance (ESG) investing is a rapidly growing market in Switzerland as investors increasingly seek long-term value and alignment with their values. In 2021, the volume of sustainable investments in Switzerland increased by almost a third, reaching a record high of 1.98 trillion francs, according to a study by the professional group Swiss Sustainable Finance (SSF).
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