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UK Consumer Attitudes Towards Credit Products Market Report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Consumer Attitudes towards Credit Products market, and the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry and how fast are its rates of growth? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Products covered in this report

This Report examines both secured and unsecured lending. For the purposes of the Report, these two types of credit are defined as follows:

Secured lending – lending that is secured against a property, ie the ownership of the property is at risk if repayments are not made to clear the debt. This is primarily mortgages used to purchase properties, but also includes homeowner loans where homeowners borrow additional funds secured against their home.

Unsecured lending – any type of lending that does not fit the definition of secured lending, ie lending that is not secured against a property. This includes a wide range of consumer credit products such as credit cards, personal loans, and current account overdraft facilities. Please note that this definition also includes car finance plans which can be secured against the vehicle being purchased.

What you need to know

Cheap credit and rising consumer confidence has ensured continued growth in unsecured lending over the last few years, with the market reaching £272 billion in 2017. However, annual growth has fallen for the second year running, signalling a decrease in appetite for credit. Similarly, growth in mortgage lending has continued, but at a much slower rate than in 2016.

In November 2017, the Bank of England increased the base rate for the first time in 10 years. This has prompted concerns about the impact of rising interest rates, and Mintel’s consumer research shows that the majority of people are hoping to clear or reduce their debt over the next two years.

However, despite these good intentions, the overall amount outstanding in unsecured debt continues to rise. Financial pressures on households are making it hard for people to reduce their debt, and when compared to Mintel’s 2017 consumer research, fewer people than before expect to fully clear debt, recognising that they will continue to rely on credit to help manage the cost of day-to-day expenses.

This Report analyses the current state of the unsecured and secured lending markets, and the key drivers affecting growth. It explores consumers’ attitudes towards credit products and their previous and expected borrowing going forward. It looks at what is important to people when choosing a credit provider, and the opportunities that Open Banking has created for innovation in helping people to manage their credit products.

Expert analysis from a specialist in the field

Written by Jessica Galletley, a leading analyst in the Financial Services sector, her extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Slower annual growth in lending signals a fall in demand, as concern around the potential impact of rising interest rates grows. But, affordability constraints will still make it difficult for many people to clear their debt and significantly reduce their borrowing. Open Banking gives lenders an opportunity to develop tools and services that can help people manage their debt more effectively and find products most suitable to their needs. Jessica Galletley
Financial Services Analyst

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this report
      • Executive Summary

          • The market
            • Open Banking and GDPR combine to create new data sharing environment
              • The consumer
                • Current accounts are the primary point of interaction with providers
                  • Figure 1: Retail banking product ownership, September 2018
                • 37% consider banks to be at least somewhat innovative
                  • Figure 2: Ranking of how innovative firms are in different sectors, September 2018
                • Most use contactless cards but are cold to further payment innovation
                  • Figure 3: Banking innovations used in the last 12 months, September 2018
                • Most consumers are slow to pick up new services
                  • Figure 4: Approach to new banking innovations, September 2018
                • Half want to see improved security
                  • Figure 5: Interest in future banking innovations, September 2018
                • Open Banking still hamstrung by attitudes towards data sharing
                  • Figure 6: Attitudes towards banking innovation, September 2018
                • What we think
                • Issues and Insights

                  • Innovation cannot be allowed to threaten financial inclusion
                    • The facts
                      • The implications
                        • Security is still the key barrier to adopting new services ...
                          • The facts
                            • The implications
                              • …but innovation is generally seen to be positive
                                • The facts
                                  • The implications
                                  • The Market – What You Need to Know

                                    • Open Banking and GDPR combine to create new data sharing environment
                                      • HSBC leads the way on the high street
                                      • Market Environment

                                        • Regulatory context
                                          • Open Banking and PSD2 come into force
                                            • GDPR provides consumers with greater control and protection over data
                                              • Payments
                                                • Cash is far from falling out of favour
                                                  • Figure 7: Use of payment methods, February 2018
                                                • Channel preferences
                                                  • Online platforms are favoured for almost all banking needs…
                                                      • Figure 8: Channel preference in retail banking, by activity, June 2018
                                                    • …but branches remain highly valued
                                                    • Recent Developments

                                                      • FCA welcomes the fourth cohort of regulatory sandbox participants
                                                        • Open Banking launches
                                                          • HSBC leads the way on the high street
                                                            • Marketplaces point towards a fully realised Open Banking environment
                                                              • Other major brands have been slow to develop new services
                                                              • The Consumer – What You Need to Know

                                                                • Current accounts are the primary point of interaction with providers
                                                                  • 37% consider banks to be at least somewhat innovative…
                                                                    • Most use contactless cards but are cold to further payment innovation
                                                                      • Most consumers are slow to pick up new services
                                                                        • Half want to see improved security
                                                                          • Open Banking still hamstrung by attitudes towards data sharing
                                                                          • Retail Banking Product Ownership

                                                                            • Current accounts are the primary point of interaction with providers
                                                                              • Figure 9: Retail banking product ownership, September 2018
                                                                            • Consumers acquire more products with age
                                                                              • Figure 10: Number of surveyed retail banking products owned, September 2018
                                                                              • Figure 11: Number of surveyed retail banking products owned, by age, September 2018
                                                                          • Banking Innovation in Context

                                                                            • 37% consider banks to be at least somewhat innovative…
                                                                                • Figure 12: Ranking of how innovative firms are in different sectors, September 2018
                                                                              • …rising to half of under-25s
                                                                                • Figure 13: Agreement that banks are quite innovative or very innovative, by age, September 2018
                                                                              • Access influences perceptions of innovation
                                                                                • Figure 14: Ranking of how innovative credit card companies are, by gross annual household income, September 2018
                                                                              • Borrowers more likely to see banks and building societies as innovative
                                                                                • Figure 15: Agreement that banks and building societies are quite innovative or very innovative, by retail banking product ownership, September 2018
                                                                            • Innovative Banking Activities

                                                                              • Opposition to payment innovation is entrenched
                                                                                • Figure 16: Payment innovations used in the last 12 months, September 2018
                                                                              • Younger consumers more likely to use payment innovations
                                                                                • Figure 17: Payment innovations used in the last 12 months, by age, September 2018
                                                                              • Has mobile banking reached a plateau?
                                                                                • Figure 18: Banking innovations used in the last 12 months, September 2018
                                                                              • Analytic tools have space to grow
                                                                              • Approach to Banking Innovations

                                                                                • Most consumers are slow to pick up new services
                                                                                    • Figure 19: Approach to new banking innovations, September 2018
                                                                                  • Millennials are the key innovation trialists
                                                                                    • Figure 20: Approach to new banking innovations, by generation, September 2018
                                                                                  • Contactless cards are a must-use technology…
                                                                                    • Figure 21: Banking innovations used in the last 12 months, by approach to new banking innovations, September 2018
                                                                                  • …while Early Adopters are starting to get on board with Open Banking
                                                                                  • Interest in Banking Innovations

                                                                                    • Most can identify areas for improvement …
                                                                                      • …but not always areas for innovation
                                                                                          • Figure 22: Interest in future banking innovations, September 2018
                                                                                        • Early Adopters and Early Mainstreamers show healthy interest in most innovations
                                                                                          • Figure 23: Interest in future banking innovations, by approach to new banking innovations (Early Adopters and Early Mainstreamers), September 2018
                                                                                        • Laggards can be tempted with security innovations
                                                                                          • Figure 24: Interest in future banking innovations, by approach to new banking innovations (Late Mainstreamers and Laggards), September 2018
                                                                                      • Attitudes towards Banking Innovation

                                                                                        • Open Banking still hamstrung by attitudes towards data sharing
                                                                                          • Two thirds think banks should walk before they run
                                                                                            • Figure 25: Attitudes towards banking innovation, September 2018
                                                                                          • Innovation is appreciated, but concerns abound
                                                                                            • Even Early Adopters doubt the potential of digital services
                                                                                              • Figure 26: Attitudes towards banking innovation, by approach to new banking innovations, September 2018
                                                                                            • Half say innovative brands have a competitive edge
                                                                                            • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                              • Abbreviations
                                                                                                • Consumer research methodology