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Statistics Unit, Bank of Finland
Setting up new peer-to-peer and crowdfunding statistics - a case study by the Bank of FinlandIFC-BNM Satellite Seminar on Fintech, Bank Negara Malaysia, 17.8.2019
Harri Kuussaari
Fintech landscape in Finland
17.8.2019 2
Crowdfundingand
peer-to-peer lending
Motivation Background
• Growth of alternative finance channels is changing the market
• New digital business models challenge existing structures
• New types of risks for investors• Risk of increased indebtedness
for households• New models make stability
analysis more complicated
• Ministry of Finance collected data for 2014-2016 to supportpreparation of national legislation
• Further demand from nationalusers for stability analysis
• Bank of Finland launchedcrowdfunding and peer-to-peerlending statistics in 2018.
• Experience from two compilationrounds so far
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Online alternative finance by country in Europe in 2017
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91010111215272833436177819192107142160173196197241280
595661
7060
0 2000 4000 6000 8000
PortugalSlovakiaRomaniaBulgariaNorway
SloveniaCzech Republic
RussiaAustria
DenmarkLithuania
SwitzerlandEstoniaBelgium
LatviaIrelandPolandSpain
GeorgiaSwedenFinland
ItalyNetherlands
GermanyFrance
UK
Source: Cambridge Center for Alternative Finance
2.232.503.453.743.753.97
7.077.207.537.999.119.85
16.3419.5121.6822.19
35.7046.6247.51
61.76107.04
0.00 20.00 40.00 60.00 80.00 100.00 120.00
NorwayCzech Republic
SpainAustriaPoland
ItalySloveniaGermanyDenmarkBelgium
SwitzerlandFrance
NetherlandsSweden
LithuaniaIreland
FinlandGeorgia
LatviaEstonia
UKPer capita –tasolla Suomi viidenneksi suurin Euroopassa
Volume in € millions Volume per capita (€)
… but compared to US and Asia, Europe is lagging behind
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1.1 2.8 5.4 7.7 10.43.2 9.730.0 31.8 39.5
4.120.3
94.6
221.7
320.9
0
50
100
150
200
250
300
350
2013 2014 2015 2016 2017
EuropeUnited StatesAsia
€ Billions
Source: Cambridge Center for Alternative Finance
A wide variety of business models under crowdfunding
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Alternative Finance Model Definition
P2P Consumer LendingIndividuals or institutional funders provide a loanto a consumer borrower.
P2P Business LendingIndividuals or institutional funders provide a loanto a business borrower.
Invoice TradingIndividuals or institutional funders purchaseinvoices or receivable notes from a businessat a discount.
P2P Property LendingIndividuals or institutional funders provide a loan secured against a property to a consumer or business borrower.
Balance Sheet Business LendingThe platform entity provides a loan directly toa business borrower.
Balance Sheet Property LendingThe platform entity provides a loan secured against a property directly to a consumer or business borrower.
Balance Sheet Consumer LendingThe platform entity provides a loan directly to a consumer borrower.
Equity-based CrowdfundingIndividuals or institutional funders purchaseequity issued by a company.
Profit Sharing CrowdfundingIndividuals or institutions purchase securities froma company, such as shares or bonds, and share inthe profits or royalties of the business.
Real Estate CrowdfundingIndividuals or institutional funders provide equityor subordinated-debt financing for real estate.
Debt-based SecuritiesIndividuals or institutional funders purchasedebt-based securities, typically a bond ordebenture at a fixed interest rate.
Mini-bondsIndividuals or institutions purchase securities from companies in the form of an unsecured retail bonds.
Donation-based Crowdfunding
Donors provide funding to individuals, projectsor companies based on philanthropic or civicmotivations with no expectation of monetary ormaterial return.
Reward-based CrowdfundingBackers provide finance to individuals, projectsor companies in exchange for non-monetaryrewards or products.
Lending
Investing
Donating
Bank of Finland’s data collection and statistics• Annual frequency, 15 platforms:
• € Volumes in four crowdfunding categories• Flows and stocks• Number of projects• Number and type of investors (household/other)• Interest rates and maturities for loan based funding
• Active cooperation and discussion with reporting agents• Legal basis: Act on Bank of Finland• Still ”experimental” statistics• Data published annually in March
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0
20
40
60
80
100
120
140
160
2014 2015 2016 2017 2018
Reward-based crowdfundingInvestment-based crowdfundingLoan-based crowdfundingPeer-to-peer lending to consumers
EUR million
Sources: Bank of Finland (2016–2018)* and Ministry of Finance (2014–2015). * The figures only include domestic parties seeking finance.
Funding volumes mediated in Finland through different forms of crowdfunding
+29 %+67 %
+40 %
+64 %
+4 % -27 %
+64 %-8 %
+65 % +24 %
+123 %
+56 %+68 %
+163 %
+85 %
+16 %
+50 %+75 %
+112 %+36 %
Growth %= “Funding against eg. a product or service to be delivered in the future”= “Funding against equity or debt securities or other instruments”= “Large group of investors lending to a company”= “Large group of investors lending to an individual”
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22 35 84 139 156
20,85718,634
17,298 17,08418,656
0.11%
0.19%
0.51%
0.83%0.84%
0.0 %
0.1 %
0.2 %
0.3 %
0.4 %
0.5 %
0.6 %
0.7 %
0.8 %
0.9 %
0
5,000
10,000
15,000
20,000
25,000
2014 2015 2016 2017 2018
Crowdfunding raised by Finnish CompaniesBanks' Loans to Finnish Companies during the yearCrowdfunding to Companies, % of Bank Loans (right hand scale)
€ Millions
Sources: Bank of Finland and Ministry of Finance
Crowdfunding versus traditional bank loans for companies
%
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3,7294,012 4,234
4,603 4,637
0.8 %0.9 %
1.5 %
2.3 %
3.2 %
0.0 %
0.5 %
1.0 %
1.5 %
2.0 %
2.5 %
3.0 %
3.5 %
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2014 2015 2016 2017 2018
Crowdfunding raised by Finnish HouseholdsBanks' Consumer Credit to Households (right hand scale)P2P Consumer lending, % of Bank loans (right hand scale)
€ Millions
Sources: Bank of Finland and Ministry of Finance
Crowdfunding versus consumer credit from banks
Interest rates higher and maturities shorter than in traditional bank loans
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Average interest ratesLoan-based crowdfunding for companies 8 %Traditional company loans from banks 1,60 %Peer-to-peer funding to households 12 %Traditional consumer credit from banks 4,80 %
Average maturitiesLoan-based crowdfunding for companies 21 monthsTraditional company loans from banks 55 monthsPeer-to-peer funding to households 32 monthsTraditional consumer credit from banks 75 months
Number of investors low, number of investments high…
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⇒ Investors typically have several investments and the average value of individual investment is low
Number of Investors Loan-based Investment-based P2PHouseholds 8 052 6 676 7 785Other 1 039 663 497
Number of Investments Loan-based Investment-based P2PHouseholds 362 288 9 403 1 481 150Other 75 705 931 417 875
Avarage Number of Investments per Investor Loan-based Investment-based P2PHouseholds 45 1 190Other 73 1 841
Avarage €-amount of Investment per Investor Loan-based Investment-based P2PHouseholds 172 3 638 57Other 476 19 429 156
Share of successful projects is very low in P2P, higher in loan based funding
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Successful 3%
Failed15%
Rejected82%
Successful59%Failed
18%
Rejected23%
Peer-to-peerconsumer funding
Loan-based fundingfor companies
Key messages
• There is keen demand and interest for new data even if the volumes are still relatively low.
• Market develops rapidly and new players emerge => challenge to keep up with reporting population
• Need to invest time in reporting agent cooperation.• Experimental statistics can be set up in a cost efficient manner• Data profiles of new funding channels are significantly different
from traditional bank lending data
17.8.2019 14
