subject: Non-standard Lending 2010: New Opportunities For Alternative Lenders [print this page] Introduction Introduction
Non-standard lending comprises home credit and payday advances, as well as second charge loans and credit cards aimed at those excluded from mainstream credit. Many of these providers have found conditions demanding as arrears and defaults rise, while other lenders have successfully expanded their activities. The next few years promise to be equally challenging for the sector.
Features and benefits
Defines and measures the non-standard population and projects its future growth.
Analyses the recent performance of home credit and payday advance providers, as well as assessing the credit card and secured loans markets.
Provides five-year forecasts for growth in lending across the various non-standard lines of credit.
Highlights
The non-standard population is growing in size, as shifts towards self-employment, growing unemployment and increasing arrears combine to exclude ever more borrowers from mainstream credit.
Home credit lending has seen only modest growth over the last few years, with outstanding balances rising by only 5% a year on average during 2005-9. The market was affected by crises at two of the four biggest lenders, as well as greater risk-aversion on the part of other providers. Future growth in lending will be low in what is a mature market.
There has been an extremely rapid increase in payday advances over the last five years, with gross lending rising by a factor of four between 2005 and 2009. Further strong growth is expected in coming years, as growing variability in pay leads to increased demand for short-term finance to smooth out these fluctuations.
Your key questions answered
Make informed market entry decisions by understanding the future size of the non-standard sector across each line of credit.
Increase revenue by assessing which credit lines offer the greatest opportunity for growth.
Identify the factors that have contributed to the success of some the largest non-standard lenders.
Table of Contents :
Overview 1
Catalyst 1
Summary 1
Executive Summary 2
The number of non-standard consumers has been steadily growing 2
Growth in the home credit market has been slow 4
High rates of growth in payday lending are attracting large numbers of new players 5
Market Overview 12
The non-standard population comprises many disparate groups 12
The number of non-standard consumers has been steadily growing 13
The industry has broadly welcomed the findings of recent regulatory investigations 16
Home Credit 21
The main home credit providers have weathered the downturn with varying degrees of success 21
Smaller lenders have managed to maintain market share 25
Some home credit providers have started to offer pre-paid cards 26
Pricing is consistent among the main national players 27
Growth in the home credit market has been slow 28
The outlook for the home credit market over the next few years looks subdued 29
Datamonitor predicts small increases in home credit lending over the next few years 30
Payday Lending 33
Payday lending has grown rapidly over the last few years 33
The payday loans market is less fragmented than appears at first sight 34
High rates of growth in payday lending are attracting large numbers of new players 36
Large numbers of suppliers are likely to enter and exit the market over the next few years 41
Increased variability in income suggests encouraging prospects for future growth 42
Datamonitor expects to see marked growth in payday lending over the next few years 42
Other Non-standard Lending 45
The unsecured loans market has contracted for several years 45
Secured lending has collapsed since the onset of the banking crisis 49
There are now several credit cards specifically aimed at the non-standard market 52
