The secured lending market is on course to hit $34.3tn (£25.9tn) by 2033, according to a report by Allied Market Research, more than double its current size.
According to the report, the secured lending market was valued at $12.4tn in 2023, and is estimated to grow at a compound annual growth rate of 10.5 per cent from 2024 to 2033.
Lower interest rates and longer repayment periods in addition to a rise in the adoption of digital platforms and advancements in financial technology have driven the demand for loans secured by collateral, according to the report.
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Financial institutions are partnering with technology firms to introduce embedded card payment solutions, creating seamless checkout experiences, spurring growth in the sector.
At the same time, the integration of data analytics and artificial intelligence is enhancing risk assessment, optimising loan terms, and improving the overall experience for borrowers.
However, the risk of asset loss in case of default and longer processing time to access the value of the collateral remain concerns for industry players, the Allied report found.
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Financial institutions are focusing on enhancing collateral management systems and developing more efficient strategies to mitigate risks.
The largest secured lending market is in North America, particularly the United States. The US secured finance market was estimated to be nearly $4.9tn in 2022.
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