The volume of financing provided through fintech platforms operated by non-bank parties has almost doubled in two years, according to new global research by DNB and the Financial Stability Board (FSB). In the Netherlands, this type of lending amounted to €2.3 billion by the end of 2023.
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Financing provided by or through these electronic platforms was studied for the first time in the FSB context. This financing largely consists of loans to SMEs and for the purchase of real estate, but also consumer loans. Mapping these relatively new types of financing is needed to monitor any shifts in lending towards less traditional parties due to digital innovation.
At De Nederlandsche Bank, we independently compile statistics on the Dutch financial sector and economy. This article is based on these statistics. More information on our statistics and all dashboards can be found on our Statistics homepage.
Three quarters of fintech loans granted to Dutch firms and households (€1.7 billion) were granted through platforms that only provide intermediation, so-called marketplace platforms (crowdfunding). They bring supply and demand together, in this case specifically for loans, but not for donations, for example, for which crowdfunding is also used.
The remaining loans (€0.6 billion) were granted by platforms that provided the loans from their own balance sheets and therefore bear the risk themselves. These are known as balance sheet platforms, and they provide their own loans without involvement of other parties.
While non-bank fintech loans have grown strongly over the past two years, loans made by banks to non-financial businesses and households (excluding residential mortgage loans) have declined by 2% over the same period. Even so, the outstanding amount of €2.3 billion only represents a small fraction (0.7%) of all bank loans.
Internationally, Dutch non-bank fintech loans make up about 3% of all mapped global fintech loans. A key observation is that, as yet, relevant figures are known for only 10 countries, including Brazil, Spain and Australia. Other countries do not yet gather this information.
Even for the Netherlands, the figures are not yet complete, in particular because they do not yet cover what are known as 'buy now, pay later' platforms. These are platforms that allow you to pay for a product in arrears or in instalments. More complete figures will be available in 2025.
A proportion of these fintech loans come under the category of non-bank financing in the Netherlands, which DNB and the FSB study each year (see box). Specifically, this refers to financial institutions that provide financing in a manner very similar to that of a bank, while formally they are not a bank.
The total amount involved in 2023 in the Netherlands was €411 billion, up 8.5% from 2022. This means that this market for non-bank financing grew relative to the Dutch banking system (€2,756 billion). While non-bank financing stood at 13.2% in 2022, by 2023 it grew to 14.9%.
Almost two-thirds of the increase in 2023 was driven by growth in investments in various types of open-ended investment funds (up €21 billion to €299 billion). These are funds from which investors can generally easily divest. Other categories of non-bank financing saw smaller increases.
Non-bank financing in a broad sense refers to all financing provided by non-bank financial institutions, such as pension funds, insurers, investment funds and other financial institutions.
In this news item, non-bank financing only includes financing by institutions that engage in activities that expose them to bank-like risks through liquidity and maturity transformation and leverage (raising relatively high amounts of borrowed capital), but fall outside prudentially consolidated banking supervision. Pension funds and insurers are not among them, for example, but non-bank financial institutions that have fintech loans on their balance sheets are. Previously, this non-bank financing was also referred to as shadow banking. In 2023, it constituted 5.2% of the total size of non-bank financial institutions.
These parties provide an alternative source of financing for the economy and can thus boost its shock resilience. However, it is important to pay close attention to the build-up of potentially new financial stability risks, such as vulnerabilities due to investments in credit markets. This is why the Financial Stability Board (FSB) conducts an annual study of non-bank financial intermediation (NBFI)
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