Consumer Credit Market

Global Consumer Credit Market:

The global consumer credit market size reached US$ 11.5 Billion in 2023. Looking forward, IMARC Group expects the market to reach US$ 16.8 Billion by 2032, exhibiting a growth rate (CAGR) of 4.1% during 2024-2032. Improving economic conditions of consumers, rising number of micro, small and medium enterprises in the developing countries, and expanding prevalence of financial management services, are some of the key factors propelling the market growth.

Consumer Credit Market Analysis

• Major Market Drivers: Significant growth in the banking, financial services, and insurance (BFSI) industry is one of the key factors creating a positive outlook for the market. In addition to this, high economic growth for micro-enterprises, especially in developing nations, is also providing a boost to the market.
• Key Market Trends: Integration of smart technologies, such as Artificial Intelligence, Machine Learning, and Cloud Computing with banking platforms, are benefiting banks and fintech as they can process vast amounts of customer information. This data and information help the institutions manage individual credit cases, real-time pricing, and capital management.
• Geographical Landscape: According to the report, North America currently dominates the global market. The growth of the region can be attributed to the rise in the adoption of consumer credit in small & medium enterprises to ensure an effective flow of financial activities. Moreover, the increasing number of individuals opting for loans for personal use in North America is significantly high.
• Competitive Landscape: Some of the leading consumer credit market companies are Bank of America, Barclays, BNP Paribas, China Construction Bank, Citigroup, Deutsche Bank, HSBC, Industrial and Commercial Bank of China (ICBC), JPMorgan Chase, Mitsubishi UFJ Financial, and Wells Fargo, among many others.
• Challenges and Opportunities: The credit consumer market faces challenges like rising debt levels and creditworthiness concerns amid economic uncertainties. However, opportunities arise from innovative fintech solutions, personalized lending models, and improved financial literacy initiatives, fostering responsible borrowing habits and enhancing access to credit for underserved populations.
   

Consumer Credit Market Trends:

Digitalization in Consumer Credit

The lending landscape has changed drastically over the years due to the rapid adoption of digitization in the banking, financial services, and insurance (BFSI) industry. Furthermore, changing consumer expectations and behavior due to the several benefits of digitizing banking and financial services is also contributing to the market growth. Customers ranging from diversified backgrounds may require the loan for various purposes ranging from personal loans to SME finance and home loans, amongst many others. According to a survey by IDC commissioned by Razorpay, each SME spends around 816 hours and Rs 32 lakh on banking on an average per year. Besides this, the implementation of favorable government policies is also augmenting the increase in digital behavior. For instance, in January 2023, the Reserve Bank of India announced a working group (WG) on digital credit through online platforms and mobile apps. The committee is responsible for suggesting specific regulatory measures. The move is the latest in the central bank's attempt to tackle fly-by-night lending apps offering various digital loans to underserved customers. Additionally, the integration of next-generation technologies, including Artificial Intelligence, Machine Learning, and Cloud Computing with banking platforms is benefiting banks and fintech, which is further propelling the consumer credit market share. This data and information aids in managing individual credit cases, real-time pricing and capital management of multi-asset portfolios and minimizing firm-wide risks through consistency, automation, and transparency. 

Growth of Micro, Small, and Medium Enterprises

High economic growth for micro-enterprises, especially in developing nations, is also providing a boost to the market growth. Banks and other financial institutions are investing in micro, small, and medium enterprises (MSMEs) to minimize the credit gap with local vendors. Microbusinesses often require credit to cover operational expenses, such as inventory purchases or equipment upgrades. Additionally, access to credit enables them to expand their business, manage seasonal fluctuations, and seize growth opportunities. Consequently, the expanding number of micro-enterprises is positively impacting the consumer credit market outlook. MSMEs created 120 million jobs across all industries in India. Micro and small enterprises play an important role in the economy because of this and account around 33% for India's GDP. Medium-sized enterprises only consist of 1% of MSMEs compared to micro firms for about 4.5% and MSMEs for over 90%. In line with this, the increasing number of startups is also creating a positive outlook for the market. India has witnessed rapid growth in startups. According to the Ministry of Commerce and Industry, the recent startups of around 10,000 were approved in 156 days in opposition to the initial 10,000, which got approved in 808 days. Also, the Tier-2 and Tier-3 cities in India are said to account for 49% of the startups. Similarly, according to the US Census Bureau's "Statistics about Business Size (Including Small Business)" and the US Census Bureau's "Nonemployer Statistics, approximately 92% of US businesses are microbusinesses. 

Increasing Use of Social Media Platforms by Consumer Credit Agencies

The increasing utilization of social media platforms by consumer credit agencies for better market connectivity and penetration is catalyzing the consumer credit market demand. Moreover, social media allows banks to connect with their existing or potential customers, increase touchpoints, build trust, and offer value without compromising on quality and security. Various well-established banks are increasingly investing in creating their online presence on social media and making consumers aware of their credit consumer services and benefits. For instance, in July 2017, a new mobile-only bank, kakaobank, was launched in Korea. In the first 24 hours, it attracted more than 300,000 subscribers. Within a fortnight, it surpassed two million customers, amassing ₩1 trillion (US$ 930 Million) in savings and providing ₩770 billion (US$ 701 Million) in loans. Today, it is well on the way to having 10 million customers, in a country of just over 50 million people (economically active population is 25 million). Similarly, numerous US banks, including Bank of America, Citibank, Varo, Current, and Chase, are also present on Instagram, with a massive following and excellent engagement rate. Such initiatives are anticipated to propel the consumer credit market revenue in the coming years.

Consumer Credit Market Segmentation:

IMARC Group provides an analysis of the key trends in each segment of the global consumer credit market report, along with forecasts at the global, regional, and country levels from 2024-2032. Our report has categorized the market based on credit type, service type, issuer, and payment method.

Breakup by Credit Type:

• Revolving Credits
• Non-revolving Credits
   

Non-revolving credits currently hold the majority of the total market share

The report has provided a detailed breakup and analysis of the market based on the credit type. This includes revolving credits and non-revolving credits. According to the report, non-revolving credits currently hold the majority of the total market share.

Non-revolving credit refers to a type of loan where the borrower receives a fixed amount of money upfront, typically for a specific purpose. It repays it in fixed installments over a predetermined period. Unlike revolving credit, such as credit cards, where the available credit replenishes as payments are made, non-revolving credit does not replenish once it's paid off. Examples include installment loans for cars, education, or home improvements. Consumer credit market statistics indicate that the increasing number of auto and education loans is primarily driving the growth of this segment. For instance, according to the Reserve Bank of India, vehicle loans from banks have witnessed an impressive 137% increase over the past three years, reaching Rs 5.08 lakh crore. Similarly, on average, Americans took out US $55.0 Billion in new auto loans each month in the fourth quarter of 2023. Such a massive inclination towards owning a vehicle and opting for higher education is anticipated to propel the consumer credit market recent price in the coming years.

Breakup by Service Type:

• Credit Services
• Software and IT Support Services
   

Credit Services exhibit a clear dominance in the market 

The report has provided a detailed breakup and analysis of the market based on the service type. This includes credit services and software and IT support services. According to the consumer credit market report, credit services exhibit a clear dominance in the market.

The business of providing loans, other forms of credit, and information about credit to people and companies comes under credit services. The increasing number of people seeking loans to complete their education, own a vehicle, buy/renovate a house, etc., catalyzing the growth of this segment. For instance, in 2020, an estimated 9.43 million people in Great Britain had a loan. Similarly, 58% of American adults (18-29 years) have student loan debt. Moreover, according to a survey by Saral Credit, a fintech platform, 67% of Indians rely on personal loans for funding needs. 

Breakup by Issuer:

• Banks and Finance Companies
• Credit Unions
• Others
   

Banks and finance companies currently account for the majority of the global market share

The report has provided a detailed breakup and analysis of the market based on the issuer. This includes banks and finance companies, credit unions, and others. According to the report, banks and finance companies currently account for the majority of the global market share.

Banks and finance companies are institutions that provide financial services such as lending, borrowing, and investing. They offer benefits like secure storage of money, access to credit for personal and business needs, and opportunities for wealth growth through various investment vehicles. Additionally, they facilitate transactions, both domestically and internationally, fostering economic activity.

Breakup by Payment Method:

• Direct Deposit
• Debit Card
• Others
   

Debit card holds the largest market share

The report has provided a detailed breakup and analysis of the market based on the payment method. This includes direct deposit, debit card, and others. According to the report, debit card holds the largest market share.

One can easily pay EMIs with debit cards with low-interest rates. Various banks are offering EMI services on debit cards, either with no-cost EMI options for a shorter duration or with minimal interest rates if the loan is borrowed for a longer duration. For instance, HDFC bank, one of India’s leading private banks, offers EASYEMI, in which a customer can shop in full and pay in parts by converting transactions into easy installments. It works for both online and in-store purchases. Moreover, the debit card maintenance charge is quite low compared to credit cards. 

Breakup by Region:

• North America
  • United States
  • Canada
• Asia Pacific
  • China
  • Japan
  • India
  • South Korea
  • Australia
  • Indonesia
  • Others
• Europe
  • Germany
  • France
  • United Kingdom
  • Italy
  • Spain
  • Russia
  • Others
• Latin America
  • Brazil
  • Mexico
  • Others
• Middle East and Africa
   

North America represents the largest segment

The report has provided a detailed breakup and analysis of the market based on the region. This includes North America, Asia Pacific, Europe, Latin America, and Middle East and Africa. According to the report, North America currently dominates the global market.

The growth of the region can be attributed to the rise in the adoption of consumer credit in small & medium enterprises to ensure an effective flow of financial activities. Moreover, as per the consumer credit market overview, the increasing number of individuals opting for loans for personal use in North America is significantly high. For instance, the United States’s total loans were reported at US$ 12,305.379 Billion in March 2024. Additionally, the presence of well-established banks in the region, such as Citi Bank, Bank of America, Goldman Sachs, Morgan Stanley, etc., is also creating a positive outlook for the market. Additionally, these banks are increasingly investing in expansion and increasing their customer base. For instance, in January 2024, Citigroup announced its plans to deepen its involvement in China’s financial markets with the launch of an investment banking unit in the country.

Competitive Landscape:

The market research report has provided a comprehensive analysis of the competitive landscape. Detailed profiles of all major companies have also been provided. Some of the key players in the market include:

• Bank of America
• Barclays
• BNP Paribas
• China Construction Bank
• Citigroup
• Deutsche Bank
• HSBC
• Industrial and Commercial Bank of China (ICBC)
• JPMorgan Chase
• Mitsubishi UFJ Financial
• Wells Fargo
   

(Kindly note that this only represents a partial list of companies, and the complete list has been provided in the report.)

Consumer Credit Market Recent Developments:

• November 2023: Funding Circle and Atom Bank unveiled a lending collaboration to extend GBP 150 million (US$ 180.87 Million) in fresh funding to small businesses. Combined with the previous lending of GBP 350 million (US$ 422.03 Million) facilitated through the Funding Circle platform, this new commitment boosts Atom's total lending via Funding Circle to GBP 800 million (US$ 964.65 Million).
• November 2023: The banking sector is expected to witness rise in co-lending deals between Non-Banking Financial Companies (NBFCs) and banks after the Reserve Bank of India (RBI) Governor Shaktikanta Das asked shadow banks to reduce their over-dependence on bank funding.
• August 2023: Turkish FinTech Colendi announced its plan to launch the country’s first digital deposit bank. Colendi said that it aims to leverage artificial intelligence (AI) technology to introduce a range of services accessible through the digital deposit and service banking model.

Consumer Credit Market Report Scope:

Key Benefits for Stakeholders:

• IMARC’s report offers a comprehensive quantitative analysis of various market segments, historical and current market trends, market forecasts, and dynamics of the consumer credit market from 2018-2032.
• The research study provides the latest information on the market drivers, challenges, and opportunities in the global consumer credit market.
• The study maps the leading, as well as the fastest-growing, regional markets. It further enables stakeholders to identify the key country-level markets within each region.
• Porter's five forces analysis assist stakeholders in assessing the impact of new entrants, competitive rivalry, supplier power, buyer power, and the threat of substitution. It helps stakeholders to analyze the level of competition within the consumer credit industry and its attractiveness.
• Competitive landscape allows stakeholders to understand their competitive environment and provides an insight into the current positions of key players in the market.