Global NBFC Market 2024–2033

Reports Description

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.

Non-banking financial companies (NBFCs) are financial institutions that render banking services without a license to operate banking. These companies provide a wide array of financial services, such as loans and advances, asset financing, microfinance, investment services, and insurance. The role of NBFCs is crucial in the whole financial system, particularly in markets where traditional banking services are limited or insufficient.

The bank can cater to retail customers and big corporations while being flexible, with access that would not usually be possible using a traditional bank. Global trade grows and thus needs more trade finance solutions to drive such activity through instruments like letters of credit, export credit, and import financing. To that extent, NBFCs typically fill in the void and provide these facilities, particularly to SMEs.

Global NBFC Market – Significant Growth Factors

The Global NBFC Market presents significant growth opportunities due to several factors:

• Increasing demand for credit: In recent times, the demand for credit has been on the rise in many sectors, particularly small and medium enterprises (SMEs) and private individuals who do not have adequate measures to access traditional banking services. The NBFC sector has very well filled the credit void, especially in developing nations where the banking systems are slow in lending to deserving applicants.

• Growing Financial Inclusion Initiatives: Government establishments have made efforts to enhance the financial situation of their citizens by introducing different loan schemes and policies. These, in turn, have boosted the number of NBFCs. These companies efficiently cater to the needs of the population by providing services to unbanked or underbanked customers, hence expanding their range and client base.

• Significant Growth in Economies: With an increase in growth rates, there are increased expectations of credit for consumables or investments. NBFCs provide loans and advances for personal and business financing. They also finance infrastructure projects, predominantly in developed economies, the payoffs of which support economic development by providing the much-required infrastructure.

• Rising Disposable Income: Rising income levels lead to more expenditures, which skews the shift and demand towards consumer finance. Consumers tend to borrow more for personal, auto, and mortgage loans, creating an upsurge in the growth of NBFCs’ lending units with varied loans.

• Rapid Digital Transformation: Digital technologies also enhance service delivery for Non-Bank Financial Companies (NBFCs) conducting business through digital channels. They support integrating services with financial technologies such as artificial intelligence, big data, and blockchain, which help create and sustain market leadership in the context of dynamic changes in financial services provision.

• Favorable Government Initiatives: Digital platforms improve operational efficiency and customer experience for Non-Banking Financial Companies (NBFCs). Collaborations with fintech companies enable the use of advanced technologies like AI, machine learning, and blockchain, enabling innovative financial solutions and competitiveness in the evolving financial landscape.

Global NBFC Market – Mergers and Acquisitions

The Global NBFC Market has seen several mergers and acquisitions in recent years, with companies seeking to expand their market presence and leverage synergies to improve their product offerings and profitability. Some notable examples of mergers and acquisitions in the Global NBFC Market include:

• On July 17, 2024, Allianz announced a voluntary cash general offer to acquire 51% of Singapore insurer Income Insurance shares, subject to regulatory approval. The acquisition is expected to elevate Allianz’s presence in the fast-growing Singapore insurance market and establish the company as one of the largest composite insurers in Asia. The acquisition will leverage Allianz’s underwriting, product development, and data analytics capabilities with Income Insurance’s market reach and strengths in distribution, partnerships, and people.

• In May 2024, Brookfield Asset Management and Castlelake L.P. agreed to acquire a 51% stake in Castlelake’s fee-related earnings, with a capital investment of around $1.5 billion. The partnership will allow Castlelake and Brookfield to collaborate and expand Castlelake’s asset-based investment business.

• In April 2024, AXA Investment Managers (AXA IM) acquired W Capital Management LLC, a US-based private equity firm specializing in GP-led and direct secondary investments. WCP will join AXA IM Prime, AXA IM’s integrated investment solutions provider across private markets. The acquisition aims to diversify AXA IM’s private market offering in the growing secondary sector, which has raised over $85 billion and $111 billion in transaction volumes in 2023.

These mergers and acquisitions helped companies expand their product offerings, improve their market presence, and capitalize on growth opportunities in the Global NBFC Market. The trend is expected to continue as companies seek a competitive edge.

COMPARATIVE ANALYSIS OF THE RELATED MARKET

Global NBFC Market – Significant Threats

The Global NBFC Market faces several significant threats that could impact its growth and profitability in the future. Some of these threats include:

• Rising demand for credit: In recent times, the demand for credit has been on the rise in many sectors, particularly small and medium enterprises (SMEs) and private individuals who do not have adequate measures to access traditional banking services. The NBFC sector has very well filled the credit void, especially in developing nations where the banking systems are slow in lending to deserving applicants.

• Heightened Financial Inclusion initiatives: Government establishments have made efforts to enhance the financial situation of their citizens by introducing different loan schemes and policies. These, in turn, have boosted the number of NBFCs. These companies efficiently cater to the needs of the population by providing services to unbanked or underbanked customers, hence expanding their range and client base.

• Remarkable Expansion in Economies: With an increase in growth rates, there are increased expectations of credit for consumables or investments. NBFCs provide loans and advances for personal and business financing. They also finance infrastructure projects, predominantly in developed economies, the payoffs of which support economic development by providing the much-required infrastructure.

• Increasing Income Levels: Rising income levels lead to more expenditures, which skews the shift and demand towards consumer finance. Consumers tend to borrow more for personal, auto, and mortgage loans, creating an upsurge in the growth of NBFCs’ lending units with varied loans.

• Explosive Growth in Technology: Digital technologies also enhance service delivery for Non-Bank Financial Companies (NBFCs) conducting business through digital channels. They support integrating services with financial technologies such as artificial intelligence, big data, and blockchain, which help create and sustain market leadership in the context of dynamic changes in financial services provision.

Global NBFC Market – Segment Analysis

By Type

• NBFCs Accepting Public Deposit (NBFCs-D): NBFCs-D, or Non-Banking Financial Companies, play an important role in organizing public savings for lending activities, particularly across regions with limited banking infrastructure. This type of NBFC offers deposit products such as fixed and recurring deposits and draws customers seeking higher interest rates.

• NBFCs Not Accepting/Holding Public Deposit (NBFCs-ND): NBFCs-ND, institutions that do not accept public deposits, constitute a relatively larger segment of the Global NBFC Market. They depend on sources of funds other than the parent company or its promoters, such as borrowings from banks and other financial institutions, commercial papers, debentures, and equity capital. They provide a more open field with greater flexibility and fewer regulatory constraints.

By Service Type

• Lending Services: lending services are the foundation of the Global NBFC market. Within the wide category of credit products tailored to fulfil diverse financial needs, services include personal, business, financing for automobiles and homes, as well as microloans. Mainly, these types comprise of: personal loans, business loans, auto finance, home loans, and microloans. These institutions are significant because they provide credit services that are easily accessible, mostly in areas where other banking services are either not available or highly restricted. To assist underserved groups such as SMEs, low-income earners, and others in the future, NBFCs can use advanced credit scoring models, data analytics, and bespoke customer service.

• Investment Services: NBFCs have invested in all possible investment services such as wealth management, asset management, mutual funds, portfolio management, and investment advisory that could help an individual institution grow its capital. They now use high-value analytical tools and market studies to make prudent decisions. Digital platforms make it easier to access and faster for efficient service delivery. Volatility in markets, compliance with regulations, and competition from traditional institutions make it a continuous challenge for these NBFCs to innovate and strategically adapt to shift their base continuously.

• Insurance Services: NBFC will provide insurance products ranging from life, health, and general insurance to assist individuals and companies in dealing with uncertainty and financial loss. As a facilitator, the NBFC collaborates with its providers to create customized solutions and flexible premium payments. It will be challenging for the NBFC to comply with regulations, maintain competitive pricing, and manage customer expectations.

• Leasing Services: NBFC offers leasing services for equipment, vehicles, and property to individual and corporate customers to secure assets without large capital outlays. The operations offered are operational, finance, and sale-and-leaseback deals through which the business can retain flexibility, observe cash flow, and gain access to technology without a burden. Planning and risk management are required for such challenges as asset deprecation, lease agreement, and residual value.

• Others: The others are classified in the Global NBFC Market. Other niched financial services include factoring, bill discounting, trade finance, and microfinance services. They cater to specific market needs, such as financing against receivables, small business support, and international trade transactions. Still, they innovate by introducing solutions in peer-to-peer lending or crowdfunding platforms. It has problems with niche market volatility and regulatory compliance, as well as with traditional financial institutions and fintech solutions.

By Deployment Mode

• Online Deployment: Online Deployment in the International Market for NBFC delivers financial services through digital channels, such as websites, mobile apps and online portals. Online deployment is essential because it is easy, accessible, and efficient. Customers can apply for loans, manage investments, buy insurance products, or carry out other miscellaneous financial activities without visiting physical branches.

• Branch-Based Deployment: Branch-Based deployment describes the vintage model in which NBFCs operate through physical branches where customers come face to face with service representatives. This model provides a personal touch to customers by offering ready-in-person access to face-to-face assistance for loan applications, investment advice, and insurance processing. Although digital solutions are catching up, branch-based deployment is indispensable as it reaches customers who prefer to interact personally or lack access to digital technologies.

• Hybrid Deployment: Hybrid Deployment is a customer experience model for NBFCs that deploys service with both digital and physical delivery to meet divergent customer preferences. It offers the advantage of an integrated experience with better reach and satisfaction for customers and lets the customer seamlessly navigate different service channels without any hurdles.

• Agent-Based Delivery: Agent-based delivery involves using agents/intermediaries to distribute financial services on behalf of NBFCs. Agents are indispensable for delivering to unbanked or distant areas where the reach of a physical branch network cannot be extended. Customers find all sorts of loan applications, sell insurance policies, and get investment advice and other financial services from an agent who may be very local and relationally closer.

• Others: Other products in the Global NBFC Market are unconventional delivery mechanisms, including ATMs and kiosks, retail partnerships, and pop-up branches. These flexible products originated from specific market needs and customer demand but are prone to operational logistics and service consistency issues that impact delivering a particular financial product’s unique value proposition.

By Application

• Consumer: Consumer lending is defined as that part of the Global NBFC Market that seeks to provide direct consumer financial products and services. This may cover a wide array of personal loans, auto loans, housing loans, credit cards, and other consumer finance products. It provides funding for most large-ticket purchases, such as houses and vehicles, and also looks to provide small short-term loans for other product categories.
• SME & Commercial Lending: SME & Commercial Lending provides business financing options designed for small and mid-sized businesses and, indeed, for larger commercial entities. Business loans, working capital financing, equipment financing, and trade finance are some of the offerings NBFC provides to these clients. Due to limited access to flexible credit in the traditional banking system, NBFC has emerged as the primary vehicle through which SMEs acquire financing required for growth and ongoing operation.

• Wealth Management: Wealth management NBFCs Provide investment advisory portfolio management, financial planning, and asset management solutions, catering to high-income individuals (HNWIs), affluent clients, and institutional investors seeking professional guidance on optimizing their investment strategies and achieving their financial goals. Services related to wealth management are considered to be services based on personalized advice, sophisticated financial products, and comprehensive planning.

• Others: Other portions of the Global NBFC Market include a wide range of niche financial services and applications, which fall outside the broad categories of consumer, SME & commercial lending, and wealth management. Such a niche includes microfinance, factoring services, trade finance, and newer financial technology innovation applications, including peer-to-peer lending and crowdfunding platforms. These NBFCs offer niche products targeted at specific needs in a market. For example, small loan offerings to underprivileged groups, supply chain financing, or financial support at the seed stage for start-up companies through alternate finance channels.

Report Scope

Global NBFC Market – Regional Analysis

The Global NBFC Market is segmented into various regions: North America, Europe, Asia-Pacific, and LAMEA. Here is a brief overview of each region:

• North America: The North American Global NBFC Market has a robust financial structure and financial access and offers multiple services. Its primary markets are the US and Canada, with products and services that include consumer loans, financing to SMEs, investment services, and wealth management. The US has robust legislation on regulation and capital markets, while Canada relies on NBFCs for emergent sources of financing, especially for SMEs. Like FINRA and FCAC, other governmental organisations still protect customers and investors together while bringing order to the markets. It is also influenced by factors like interest rates and business cycles within the economic world of the business.

• Europe: The Global NBFC Market for the European region is huge and fragmented, and some of the prime countries for NBFC include the United Kingdom, Germany, France, and Italy. The NBFC sector in the UK offers consumer credit and investment products, whereas Germany and France offer working capital credit and investments for SMEs. How have increased fintech and digital banking services increased European competition and innovation? Other factors include European monetary measures formulated by the European Central Bank as well as economic issues, for example, Brexit. Another investment area is the sustainability and green finance market due to the EU climate action policy and sustainable development investments.

• Asia-Pacific: The emergence of NBFCs in the Asia Pacific region has resulted from economic growth, increased urbanization and prosperity of the middle-income population. The People’s League of China, India, Japan, South Korea and Australia are primary markets. China’s NBFC sector is increasing, especially in consumer financing, SME financing, and investment for its consumer finance companies. Various GOs introduced by India’s government are primarily concerned with financial inclusion and its enhancement in the form of digital payments. Both leasing and asset management and leasing are performed in Japan and South Korea. Fintech, along with digital transformation, can be categorized as the primary trend in the region. The market category of economic factors such as currencies, trade policies and conditions of regional economies follows this.

• LAMEA: Latin America, Middle East, and Africa. The Global NBFC Market in the LAMEA region is fragmented and growing, with a prime market presence in Latin America, the Middle East, and Africa. NBFC markets in Latin America provide consumer loans, SME financing, and investment services. The Middle East market is emerging concerning investment services, asset management, and leasing. Africa’s Global NBFC Market is emerging with a microfinance focus on SME lending and financial inclusion. Although regulatory inconsistencies, economic volatilities, and infrastructure limitations have been affecting the development of NBFCs in the LAMEA region, there is immense growth potential for NBFCs with rising financial inclusion, economic development, and technological advancement.

Competitive Landscape – Global NBFC Market

The Global NBFC Market is highly competitive, with many manufacturers operating globally. Some of the key players in the market include:

• 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

These companies operate in the market through various strategies such as product innovation, mergers and acquisitions, and partnerships.

New players entering the Global NBFC Market are adopting innovation and development to differentiate themselves and gain traction. These players often focus on automation and process optimization, digital platforms and mobile solutions, and collaboration with fintech companies.

NBFCs are increasingly partnering with FinTech firms to enhance their service offerings and leverage innovative technologies. These collaborations enable NBFCs to access advanced tools for credit assessment, fraud detection, and regulatory compliance. By working together, traditional NBFCs and FinTechs can create a more robust financial ecosystem that promotes financial inclusion and improves service delivery.

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