Alternative Lending at a Turning Point: No Progress Without Digital Infrastructure

Non-bank lending is growing rapidly, yet refinancing still relies on largely analog structures. Why the digitalization of these processes is becoming a central prerequisite for efficiency, transparency, and growth in the credit market.

Europe’s credit landscape is in the midst of a quiet but profound transformation. Alongside banks, a dynamically growing market has emerged in recent years that is increasingly shaping large parts of corporate financing for small and medium-sized enterprises (SMEs). Under the umbrella of non-bank lending, or “alternative lending,” various models are developing that make capital available in more flexible, data-driven ways and outside traditional banking structures.

A key driver of this development is stricter capital requirements under Basel III and IV, which have noticeably limited the lending capacity of traditional banks. According to the latest Bank Lending Survey by the Deutsche Bundesbank, the net percentage of banks tightening their lending standards stood at three percent, affecting SMEs exclusively. What follows from this? In its “ifo Credit Constraint” survey, KfW found that only 19.5 percent of surveyed SMEs held discussions with banks about corporate loans in the third quarter of 2025, the lowest level since the end of 2023.

Financing needs, however, persist. This creates both room and an urgent need for alternative providers, particularly in segments that banks avoid for regulatory reasons, such as short-term working capital financing or data-driven working capital solutions.

The volume of corporate lending from non-bank sources in Europe has more than doubled since 2015. Today, around 23 percent of lending to non-financial companies in the EU comes from these sources, according to the European Systemic Risk Board. Research & Markets projects that this growth will continue rapidly, from USD 89.4 billion in 2024 to USD 126.5 billion in 2028, representing annual growth of around nine percent. Platforms for SME financing, buy now pay later, and factoring are expanding particularly strongly.

In Germany, the factoring sector recorded turnover growth of EUR 398.8 billion in 2024, an increase of 3.7 percent, while buy now pay later transactions reached an estimated volume of around EUR 25 billion, according to the EHI Retail Institute. Across Europe, lending is thus gradually shifting into new structures that are more flexible, more decentralized, and closer to the needs of the real economy.

While non-bank lending itself is becoming increasingly digital, the underlying refinancing processes between alternative lenders and their institutional capital providers are lagging far behind. Excel spreadsheets, PDF reports, and individual data requests still dominate the flow of information between lenders, servicers, and institutional investors. This lack of standardization reduces transparency, slows risk analysis, and constrains growth.

Many fintechs, factoring, and buy now pay later providers have long since automated their customer-facing interfaces. On the debt side, however, where capital is tied up and restructured, analog systems and isolated solutions still prevail. This is the Achilles’ heel of non-bank lending. Without digital infrastructure, efficiency stalls halfway.

Non-bank lending can only become a true alternative if refinancing reaches the same technological standard as lending itself. Efficiency alone is not enough. What matters is the systematic identification of credit risks, the standardization of data flows, and the creation of trust between lenders and capital providers. Only when portfolio data can be processed in real time does a robust foundation for growth emerge, one that allows risks to be identified and managed at an early stage.

Expectations among institutional investors are also changing. Asset managers, insurers, and family offices increasingly want continuous insight into their exposures, not just quarterly reports. They are looking for platforms that map capital allocation and risk management in a seamless, end-to-end data flow.

The next stage in the development of the credit market therefore lies not in product innovation, but in the professionalization of infrastructure. Digitalized and automated refinancing processes form the basis for transparency, traceability, and regulatory certainty. They connect capital sources and credit portfolios on a shared, data-driven layer and thereby increase efficiency across the entire value chain.

Non-bank lending is thus at a turning point. What began in payments a decade ago, the opening of closed systems in favor of interconnected, standardized platforms, is now repeating itself in lending. The digitalization of refinancing processes is the final, decisive step in this evolution.

 Find the original published article in German on Handelsblatt.