Get an overview of an emerging niche in fintech: stats, insights, takeaways.
The effects of Brexit and the COVID lockdown on the UK's economy resulted in a growing lack of financial stability - as many as 74% of people in the country are worried about keeping their budget in check. In these circumstances, payday loans have become a troublesome element of the economic landscape.
However, the market is in the midst of a progressive change, and this is thanks to digital alternatives: peer to peer loans, guarantor loans, and other fintech products. The goal of this report is to inspire the industry to look deeper into the payday loan sector and contribute to a more efficient and customer-focused digital lending market.
In the UK, unsecured debt comes mostly from personal loans. In 2012, as much as 46% of issued payday loans were not repaid in full and on time.
Customers are most likely to take a payday loan in a time of financial instability - either when they experience an increase in spending or a decrease in income.
Too many payday loan providers prey on their customers’ lack of basic knowledge and poor understanding of the actual loan cost. Only 53% of UK customers are fully aware of all the extra charges.
The payday lending market relies on customers who have poor credit ratings and experience problems when applying for regular loans or had difficulty repaying one in the past.
Payday advance apps have become an increasingly popular alternative to payday loans and we anticipate that they’ll become more popular. [...]
You’ll likely see the expansion of product offerings to include those that help their customers save more, ranging from budgeting tools to discounts.
83%
Loans taken online
£260
Average loan size
64%
Loans repaid in full and on time
8.5M
Part-time workers in the UK