Global NBFC Market Size Likely to Reach at a CAGR of 2.15% By 2033

According to current market research conducted by the CMI Team, the Global NBFC Market is expected to record a CAGR of 2.15% from 2024 to 2033. In 2024, the market size is projected to reach a valuation of USD 218.98 Trillion. By 2033, the valuation is anticipated to reach USD 265.19 Trillion.

NBFC Market: Growth Factors and Dynamics

• Increasing Credit Demand: The need for credit is on the rise especially in the new emerging markets, which is one of the main factors promoting the NBFC market. This means that as people and companies require credit for different purposes such as; personal loans, car financing, and business enhancement, are all in the NBFC’s market special area of specialty, that conventional banks may not be able to fulfil adequately.

• Financial Inclusion Initiatives: NBFCs are very useful in enhancing the government objective of financial inclusion since they offer credit facilities to the unserved and underserved population. Given that new generation MFBs are capable providing services in rural and semiurban areas where conventional banking services may not be available, they are in a good position to penetrate new market segments and assist in the development of an economy.

• Rapid Digital Transformation: Mobile Banking, Online platforms, Fintech solutions, etc are some of the innovations that are in the fashion of changing the NBFCs. Increased demand and strong market growth has been fuelled by the ability of digital platforms to increase customer convenience, improve efficiency, and ultimately, decrease cost.

• Increasing Disposable Income and Changing Consumer Preferences: Hence, as incomes become disposables at an international level people need to make financial products and services infrastructures such as personal loans, mortgages, and investment more so. To meet this demand, we find NBFCs providing varying services as follows: Presently customers demand flexible and individual financial services. NBFCs are adjusting with differential areas tailored solutions and adopting data analytics as key applicable tools.

• Innovations in Coffee Processing and Brewing Techniques: technological breakthroughs in most coffee processing techniques, including the natural process, honey process, and unique brewing like pour over, cold brew, and specialty espresso products that led to product differentiation as well as consumers’ interest.

• Favorable Government Policies: Barring polices to improve the financial standings, polices for SME sector and investment policies can boost the NBFC industry in the country. Possibilities are generated by the programs and subsidies made available by governments for the NBFCs to deliver more services.

• Rising Demand for Alternative Financing: The demand for non-bank financing sources continues to increase as an extension of the conventional methods of receiving money from a bank in the form of a loan. This is an opportunity that NBFCs must seize and offer new products, such as P2P lending, BNPL, and crowdfunding to meet new trends in the market.

• Availability of Specialized Financial Solutions: Moreover, NBFCs considers business possibilities in a bouquet of the specified area of operations, which includes the asset-based lending, invoice financing and trade finance. Specialized products serve certain organized requirements and are extra sources of income.

NBFC Market: Partnership and Acquisitions

• In April 2023, Generali acquired Conning Holdings Limited (CHL) and its affiliates from Cathay Life, a subsidiary of Cathay Financial Holdings. All CHL shares were contributed to Generali Investments Holding S.p.A. (GIH) in exchange for newly issued shares. Cathay Life became a minority shareholder of GIH, with a 16.75% stake. The acquisition includes Conning, Octagon Credit Investors, Global Evolution, and Pearlmark.

• In December 2023, L&T Finance Holdings Ltd. has completed the merger of its three subsidiaries, L&T Finance Limited, L&T Infra Credit Limited, and L&T Mutual Fund Trustee Limited, with itself. The merger, effective from December 4, will create a single lending entity, housing all lending businesses under one operating Non-Banking Financial Company. The merger was approved in January and received RBI approval in March.

• In October 2022, Oracle and HSBC have announced a strategic collaboration to accelerate the bank’s digital transformation. Under the multi-year agreement, HSBC will upgrade and migrate select database systems to Oracle Exadata Cloud@Customer, a cloud platform delivered as a managed infrastructure service in its own data centers. This deployment will support and scale the bank’s mission-critical systems and services, ensuring data locality and security regulations are met.

Report Scope

NBFC Market: COVID-19 Analysis

The COVID-19 pandemic has significantly impacted the NBFC Market, with the industry experiencing both positive and negative effects. Here are some of the key impacts:

• Disruption in Operations: There were several operational challenges in NBFCs… Transition to remote work put emphasis on the necessity of digital change management and strong IT backing of such a change for the remote business to sustain operations.

• Service Disruption: The pandemic also affected the delivery of services through which, many NBFCs face the impact while processing the loan, to answer the customers’ inquiries, and to execute the transactions. This had placed the satisfaction levels of the customers alongside the overall efficiency of the operations betwixt the two extremes.

• Impact on Lending & Credit: The economic downturn resulted to massive lay offs and thus resulted to high default rates on loans and credit facilities. They became challenging for individuals and businesses for credit repayment resulting into creaking NPAs for NBFCs.

• Accelerated Digital Adoption: It also disrupted digital financial products and services because costs using traditional approaches escalated at the same time that consumers gravitated towards anything easy, touchless, and remotely operated. DOI Due to this shift, the NBFCs were forced to improve on their online presence and include online products and services.

• Increased Demand for Certain Products: The covid has influenced the demand for some of the financial products like emergency loans, and health insurance. They changed their products to fulfill new needs and serve affected clients in NBFC s.

• Capital and Liquidity Pressure: There was higher risk in defaults and lower lending activities pressuring the capital and liquidity of NBFCs. As for the essential sources of financial instability, Langley underlines that the demand for sufficient capital levels and, also, for strict regulation of the liquidity became decisive for further evolution.

• Digital Transformation Acceleration: The measures used in the COVID-19 outbreak highlighted the need for NBFCs to go digital. This generally forced companies, especially in the banking industry to up their game in adopting mobile banking, online lending platforms and other automations to help them serve their customers optimally and possibly increase their operational efficiency.

• Innovation in Financial Products: The crisis catalyzed the innovation of products and services offered in the financial marketplace including contactless payment, digital insurance, and inclusion of fintechs. Some of the NBFCs sought for new means of operation in order to provide for the emerging and altering customer needs within the ever keenly developing market.

In conclusion, the COVID-19 pandemic has had a mixed impact on the NBFC Market, with some challenges and opportunities arising from the pandemic.

List of the prominent players in the NBFC Market:

• Allianz
• AXA
• Bank of America
• Berkshire Hathaway
• Brookfield Asset Management
• China Life Insurance
• Citigroup
• Freddi Mac
• Generali Group
• HSBC
• ICBC
• L&T Finance Holdings Limited
• Morgan Stanley
• Ping An Insurance Group
• Wells Fargo
• Others

The NBFC Market is segmented as follows:

By Type

• NBFCs Accepting Public Deposit (NBFCs-D)
• NBFCs Not Accepting/Holding Public Deposit (NBFCs-ND)

By Service Type

• Lending Services
• Investment Services
• Insurance Services
• Leasing Services
• Others

By Deployment Mode

• Online Deployment
• Branch-Based Deployment
• Hybrid Deployment
• Agent-Based Deployment
• Others

By Application

• Consumer
• SME & Commercial Lending
• Wealth Management
• Others

Regional Coverage:

North America

• U.S.
• Canada
• Mexico
• Rest of North America

Europe

• Germany
• France
• U.K.
• Russia
• Italy
• Spain
• Netherlands
• Rest of Europe

Asia Pacific

• China
• Japan
• India
• New Zealand
• Australia
• South Korea
• Taiwan
• Rest of Asia Pacific

The Middle East & Africa

• Saudi Arabia
• UAE
• Egypt
• Kuwait
• South Africa
• Rest of the Middle East & Africa

Latin America

• Brazil
• Argentina
• Rest of Latin America