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Diversifying Growth: The 3rd Asia Pacific Alternative Finance Industry Report

Diversifying Growth: ASPAC Alternative Finance Report

This study, based on a survey of over 1,000 online alternative finance companies across the Asia Pacific, including Australia, reveals that the Australian alternative finance market reached over US$1 billion, capturing 32 percent of the Asia Pacific market share (excluding China), having grown by 88 percent against the previous year.

Ian Pollari

National Sector Leader, Banking and Global Co-leader, KPMG Fintech practice

KPMG Australia


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ASPAC Alternative Finance Industry Report 2018 abstract image

This report marks our third year of tracking the growth and development of the online alternative finance industry in the Asia Pacific region. This year’s report illustrates the geographically uneven yet considerable growth of online alternative finance in many countries across the Asia Pacific region. Based on the survey data collected from 340 entries from APAC’s 29 countries and 782 entries from China, the analysis contained in this report will provide a snapshot of the rapidly changing and highly fluid Asia Pacific alternative finance market.

The research was conducted by a research team from the Cambridge Centre for Alternative Finance, the Academy of Internet Finance at Zhejiang University, and the Asian Development Bank Institute, in collaboration with KPMG, Invesco and CME Group Foundation.

Key insights

Australian alternative finance leading in innovation and R&D

In 2017, the Australian alternative finance market reached over US$1 billion, capturing 32 percent of the Asia Pacific market share (excluding China) and becoming the second largest market in Asia Pacific. Having grown by 88 percent against the previous year, the Australian alternative finance industry enjoys a highly diverse market and leads the region in terms of product innovation and R&D. Innovation is a driving force for alternative finance market development across the Asia Pacific region, with firms pursuing changes to both their business models and the products on offer.

In addition to having one of the most diverse alternative finance landscapes in terms of business models, Australia’s volume increase was driven largely by the Balance Sheet Business Lending model in 2017. This was driven in large part to a booming P2P Property Lending and Real Estate Crowdfunding market, where a handful of large deals propelled the rapid growth.

Growth in China is slowing down

In 2017, China's alternative finance industry accounted for 99 percent of the overall Asia Pacific region market volume, reaching US$358 billion in 2017. This slowing annual growth is reflective of consolidation across the sector amidst an array of regulatory measures to tackle problematic activities within the sector.

Rapid growth in the rest of the Asia Pacific region

In contrast, the rest of the Asia Pacific region has experienced rapid growth, having increased year-on-year by 81 percent from US$2 billion in 2016, to US$3.6 billion in 2017. This overall market volume is derived from 29 countries or territories outside of China with data from 10 new countries covered in the survey for the first time. We also observed a 134 percent increase in the number of platforms participated in the survey outside of China in the Asia Pacific region.

Alternative finance regulatory environment

Regulation remains a hot-button topic across the region, with varying degrees of satisfaction from firms depending upon their country and/or business model type. In China, recent regulatory clampdowns has led to a dramatic fall in the number of platforms operating in the country. In fact, 79 percent of firms surveyed viewed the future of regulation as ‘unclear or unstable’ and an estimated 15 percent of their operating budget are related to costs of regulatory scoping, licensing and ongoing reporting. Meanwhile, in countries like Malaysia, Singapore and Australia, there is a more positive outlook towards regulation.

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