Credit Strategy – CS – News


, Shard Financial Media

Consumers believe the lending industry is a decade behind online banking, according to new research from card-issuing platform Marqeta.

Its report further revealed that three-quarters (75%) of respondents wanted more clarity when they “turn off” when lenders use industry jargon. Four-fifths (80%) think lenders try to hide the final cost of a loan, and more than half (55%) said it takes too long for a loan to arrive after it has been accepted.

Marqeta pointed out that the pandemic was causing a change in attitude towards alternative forms of lending. Almost three-fifths (59%) of respondents said it had “opened their eyes” to alternative finance.

Younger generations were particularly keen to explore alternative lending, with 71% of respondents aged 18-34 saying they had opened their eyes to new ways to source finance.

Only 55% of respondents knew what their options were if a loan was refused. Asked about the different forms of financing, many were unaware of the alternatives.

Buy Now, Pay Later (BNPL) was the best understood alternative financing option, with 77.6% saying they had a good understanding of it. Almost half (47%) did not know what peer-to-peer lending was and 45% were unaware of salary funding.

However, BNPL has come under fire, with more than two in five people borrowing to meet payments.

Anna Porra, Director of European Strategy at Marqeta, said: “As the cost of living crisis continues and consumer confidence hits historic lows by some metrics, many will turn to loans as a source of financial support. ‘assistance. But our survey shows that more education about alternative options is needed.

“Unless consumers understand the options available to them, they may struggle to access much-needed financing or be forced to seek out more expensive options.

“With more than half of respondents saying it takes too long for money to arrive once a loan has been accepted, it is clear that more needs to be done to support those seeking funding, especially especially the younger generation.”

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