Lenders must focus on credit-denied consumers
Lenders are missing out by not focussing on applicants who have been declined credit
Lenders need to focus on the opportunities that lie within the applicants who are denied credit, according to outsourcer Equiniti Credit Services.
Equiniti’s latest research report, Great Expectations: The Demanding Market for Credit, highlights the variations in attitudes between age-groups that are creating new opportunities for established and alternative lenders alike.
Of these new opportunities, Richard Carter, managing director of Equiniti Credit Services, explained how lenders are missing out by not focussing on applicants who have been declined credit.
He added: “This is a mistake. 68 percent of those surveyed indicated that they would likely accept an alternative loan offer at a higher interest rate, if it was offered to them immediately.”
Carter explained that technology is key to helping lenders realise this. He said lenders need to both digitise and personalise their loan services to the varying characteristics of different customer groups.
Equiniti said lenders that have the foresight to invest in moulding their products for different customer segments while using agile technology to enhance their operational efficiency stand to prosper the most.
Carter said: “The power of this combination will enable much needed competitive differentiation in a rising market. Going digital is one thing. Going digital in a way that chimes with different customer groups is something different entirely.”
The report, which surveyed 2,00 people in August, found UK customer motivations for borrowing are nearly split evenly between funding aspirational items such as holidays and household goods (47 percent), and managing or consolidating existing debt (53 percent).
The report has also identified a stark age group difference in attitudes to technology with 73 percent of millennials and generation-x happy to research a loan on their smartphone, compared with just 9 percent of baby boomers.