Innovation and Digitisation in Credit: A Global Perspective

Alex LaPlante and Charlotte Watson

Digitisation and other forms of technological innovation have dramatically changed credit markets around the world, creating opportunities for consumers and new market participants but challenges for traditional financial institutions and regulators. In this chapter, we survey the growth trends of peer-to-peer (P2P) and other forms of alternative lending that have been enabled by digitisation, draw on a wide range of sources to provide a comprehensive overview of the global digital lending landscape, comparing and contrasting the major digital lending markets around the world, and review how regulators in these markets have responded to this new paradigm. We also discuss the role of user experience digitisation in driving growth in alternative lending, explore promising applications of new technologies such as machine learning and blockchain to lending and highlight the risks that these developments pose for consumers, firms and regulatory agencies.

INTRODUCTION

Digitisation has changed the game. It has fundamentally transformed how we engage with each other and do business, and has rewritten the rules of competition. Pair it with technological innovations such as big data