Table of Contents
Executive Summary
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- The market
- Estimated market growth of 12% in 2015
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- Figure 1: Forecast of the value of unsecured personal loans, by gross advances, fan chart, 2010-20
- Online is the most popular channel
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- Figure 2: Channel used to apply for loan, October 2015
- Key players
- Lloyds Banking Group remains the market leader
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- Figure 3: Value of outstanding balances for personal loans/unsecured lending (UK), by selected providers, 2013 and 2014
- Advertising spend increases by over half
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- Figure 4: Advertising spend on loans, 2010/11-2014/15
- High street retail banks continue to be most trusted and used brands
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- Figure 5: Attitudes towards and usage of selected brands, November 2015
- The consumer
- Most people have a credit/loan product
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- Figure 6: Loan and credit product ownership, October 2015
- Over half owe less than £3,000
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- Figure 7: Amount owed on all loans and credit products, October 2015
- Over a fifth have a loan to pay for a car/vehicle
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- Figure 8: Reason for loan ownership, October 2015
- Majority remain opposed to payday loans
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- Figure 9: Payday loan usage and consideration, October 2015
- No debt is seen as good debt
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- Figure 10: Attitudes towards borrowing, October 2015
- 15% would be interested in borrowing from a peer-to-peer lender
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- Figure 11: Attitudes towards peer-to-peer lending, October 2015
- What it means
Issues and Insights
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- Peer-to-peer platforms: turning lenders into borrowers
- The facts
- The implications
- Payday loans have scope to move away from being a last resort product
- The facts
- The implications
- Smart searches will resolve concerns over credit checks
- The facts
- The implications
The Market – What You Need to Know
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- Unsecured lending market growing
- Nearly half purchase online
- Competitive environment drives down the cost of loans
- Consumer confidence is increasing
- Write-offs in lending continue to drop
Market Size and Forecast
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- Unsecured lending market growing
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- Figure 12: Gross unsecured lending, 2011-15
- 16% growth for unsecured personal loans
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- Figure 13: Other consumer credit, 2011-15
- Market forecast
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- Figure 14: Forecast of the value of unsecured personal loans, by gross advances, fan chart, 2010-20
- Figure 15: Forecast of the value of unsecured personal loans, by gross advances, 2010-20
- Forecast methodology
Channels to Market
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- Online is the most popular channel…
- …but some still prefer to purchase offline
- Borrowers go direct
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- Figure 16: Channel used to apply for loan, October 2015
- Under-45s more likely to purchase online
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- Figure 17: Channels used to apply for loan, by age, October 2015
Market Drivers
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- Competitive environment drives down the cost of loans
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- Figure 18: £5,000 and £10,000 loan interest rates, LIBOR, and base rate, November 2009-November 2015
- FCA regulation hits payday lenders
- FCA to investigate the collection of unsecured debts
- Consumer confidence is increasing
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- Figure 19: Financial confidence, January 2009-October 2015
- Write-offs in lending continue to drop
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- Figure 20: Annual write-offs of other unsecured lending to individuals, 2010-14
- P2P loans maintain popularity
Key Players – What You Need to Know
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- Lloyds Banking Group remains the market leader
- High street banks target existing customers
- Advertising spend increases by over half
- High street banks have consumer trust
Market Share
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- Lloyds Banking Group remains the market leader
- Supermarket banks’ share of the market grows
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- Figure 21: Value of outstanding balances for personal loans/unsecured lending (UK), by selected providers, 2013 and 2014
Competitive Strategies
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- High street banks attract existing customers
- Price guarantees ensure competitiveness
- Guarantor replace payday loans
- PCWs lead the way in more transparent lending
Advertising and Marketing Activity
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- Adspend on unsecured loans increases by over half
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- Figure 22: Total above-the line, online display and direct mail advertising expenditure on loans, 2010/11-2014/15
- Subprime lenders dominate advertising space
- Supermarkets strong competitors for business
- P2P lenders increase spend
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- Figure 23: Top 20 spenders on advertising for unsecured and payday loans, 2012/13-2014/15
- Lenders spend on TV advertising
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- Figure 24: Advertising spend for loans, by media type, 2014/15
- Loan providers compete for online presence
- Nielsen Media Research coverage
Brand Research
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- What you need to know
- Brand map
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- Figure 25: Attitudes towards and usage of selected brands, November 2015
- Key brand metrics
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- Figure 26: Key metrics for selected brands, November 2015
- Brand attitudes: Tesco Bank noted for rewarding loyalty
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- Figure 27: Attitudes, by brand, November 2015
- Brand personality: Wonga most likely to be seen as unethical
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- Figure 28: Brand personality – macro image, November 2015
- Most brands located around competency, reliability and customer service traits
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- Figure 29: Brand personality – micro image, November 2015
Brand Analysis
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- High street retail banks continue to be most trusted and used brands
- Santander particularly stands out as being in an advantageous position
- Loan specialists suffer from stronger negative perceptions than other brands
- Brands aligned to retailers show potential for growth
- Yorkshire Bank has regional strength but is limited by narrower-reaching network
The Consumer – What You Need to Know
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- Nearly a fifth owe money on an unsecured loan
- Over half owe less than £3,000
- Over a fifth have a loan to pay for a car/vehicle
- Consumers consider brand reputation
- Payday loans usage not limited to those who are financially struggling
Loan and Credit Product Ownership
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- Nearly two thirds own a credit or loan product
- Nearly a fifth owe money on an unsecured loan
- Credit card deals rival personal loans
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- Figure 30: Loan and credit product ownership, October 2015
- Parents are twice as likely to have a personal loan
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- Figure 31: Loan and credit product ownership, by parent (of under-16s), October 2015
- Nearly half own only one type of credit or loan product
- Personal loan ownership higher among experienced borrowers
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- Figure 32: Loan and credit product ownership, by repertoire of loan and credit products ownership, October 2015
Amount Owed on Loan and Credit Products
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- Over half owe less than £3,000
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- Figure 33: Amount owed on all loans and credit products, October 2015
- Under-45s more likely to have lower levels of debt
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- Figure 34: Amount owed on all loans and credit products, by age, October 2015
Reasons for Loan Ownership
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- Over a fifth have a loan to pay for a car/vehicle
- Under-45s are more likely to be taking out a loan to help make ends meet
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- Figure 35: Reason for loan ownership, October 2015
Payday Loans – Usage and Consideration
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- Majority remain opposed to payday loans
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- Figure 36: Payday loan usage and consideration, October 2015
- Payday loans used by those with savings
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- Figure 37: Payday loan ownership, by value of savings and investments, October 2015
Attitudes towards Borrowing
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- No debt is good debt
- Consumers consider brand reputation…
- …but a competitive rate will provide opportunities for new brands
- Concerns about passing a credit check
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- Figure 38: Attitudes towards borrowing, October 2015
- Nearly a third of loan holders are considering taking out another loan
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- Figure 39: Agreement with attitudes towards borrowing statements, by unsecured loan ownership, October 2015
- Larger households would benefit from combining debts
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- Figure 40: Attitudes towards borrowing – CHAID – Tree output, October 2015
Attitudes towards Peer-to-Peer Lending
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- 15% would be interested in borrowing from a peer-to-peer lender
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- Figure 41: Agreement with the statement ‘I would be interested in borrowing money from a peer-to-peer lending site in the future’, by agreement with the statement ‘I am considering taking out a loan in the next 12 months’, October 2015
- IFISA will draw attention to P2P borrowing
- Traditional lenders have consumer trust
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- Figure 42: Attitudes towards peer-to-peer lending, October 2015
Appendix – Data Sources, Abbreviations and Supporting Information
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- Report scope and definitions
- Data sources
- CHAID analysis methodology
- Abbreviations
Appendix – Market Size and Forecast
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- Figure 43: Best- and worst-case scenario forecast – Value of unsecured personal loans, by gross advances, 2015-20
- Forecast Methodology
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