This page contains a Flash digital edition of a book.
In Focus Consumer Credit

Pariahs of yesterday and pioneers of today

The short-term lending market has developed a speed and ease that is well in tune with younger customers’ expectations

Russell Hamblin-Boone Chief executive, Consumer Finance Association Russell.hamblin-boone

What does ‘good’ really look like in consumer credit today? This was an important question recently posed by the regulator at an industry roundtable.

There was general agreement that while good is a subjective judgement and open to interpretation, it can be quantified by positive outcomes for consumers.

But that is not the whole picture because, in order to define a positive outcome, we need to understand consumers and their needs, both now and in the future.

Under review

The Financial Conduct Authority (FCA) is reviewing the high-cost credit market, which, although as yet undefined, is usually taken to mean any unsecured credit product that is not available in the same terms from a mainstream bank or building society. It may not be immediately obvious that this description can be applied to a very broad range of consumers; especially to younger people with thin credit files and a minimal financial profile.

Our own research, carried out by the Social Market Foundation, reveals the typical non-standard finance customer is likely to be male, between 25 and 39, earn around £25,000 per year, and be in full- time employment.

Alternative lenders are designing products targeted to meet the needs of this generation of consumers and the generation to come. Labelled by economists and the media as millennials, ‘generation Y’, or ‘generation rent’, many young people are embracing new finance products more closely aligned to their lifestyle.


Alternative lenders are designing products targeted to meet the needs of this generation of consumers and the generation to come


The new era of alternative lending has followed this and resulted in some of the most user-friendly finance products to be developed in decades. The firms disrupting

Consumers have become used to accessing products they need in a matter of moments through the touch of a button. Nearly every task has an app associated with it.

The growth of Uber, Deliveroo, Amazon and even some companies, like Sainsbury’s, offering same-day delivery, have created an expectation for the ‘now generation’.

the mainstream markets use cutting-edge technology, data analytics and behavioural science to design products that match modern lifestyles.

The next generation of consumers will, no doubt, join an increasingly credit-driven economy where homeownership is no longer a realistic aspiration for them. They will have a shorter horizon on which to

plan their lives, and they will also use credit more readily, but in smaller sums over shorter periods.

Their careers will be characterised by short-term contracts, multi-skilled jobs, with many different employers and probably more than one career path.

In light of what we know about the generations to follow, the FCA’s review of high-cost credit must seek to future proof its regulatory framework and promote the kind of innovation that allows lenders to match the expectations of its customers. The payday lender of yesterday is the pioneer of today. CCR

March 2017

Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56