By Ryan Weeks on Monday 13 November 2017
Millennials are driving digital transformation in consumer credit, while the need for speed spans all age groups.
At a time when levels of demand for consumer credit is causing concern, millennials look to be most demanding of all.
A new report from Equiniti finds that 30 per cent of consumers aged 18-25 have borrowed more than £1,000 over the past year. This equates to approximately 2 million people, according to estimates: the highest proportion of any generational group.
The report draws on data from a survey of 2,001 UK consumers in August 2017. 32 per cent were classified millennials, 34 per cent generation-x and 34 per cent baby boomers. 52 per cent were women, 48 per cent were men.
Since 2015, borrowing (of over £1,000) has increased by 17 per cent among millennials, 9 per cent for generation-x and just 1 per cent for baby boomers.
“There is no doubt that for many young people, money is tight at the minute, and so it is little surprise that the 18-25 age group has the highest rate of borrowing over £1,000 in the past 12 months,” said Richard Carter, managing director of Credit Services at Equiniti. “Wages are failing to keep up with inflation and so credit is one way in which the youngest can cope with financial shocks, to plug unexpected, short-term gaps.”
Meanwhile, we learn that 44 per cent of millennials would research loan options on a smartphone. The number dips to 29 per cent for generation-x and just 9 per cent for baby boomers. But the need for speed exists across all age groups. 63 per cent of those surveyed wish to see credit available less than 24 hours after approval, with 28 per cent expecting the grace period to be half a day, or less. The report’s authors write that this underlines the need for lenders to digitise their offerings.
In what may be seen as good news for fintech lenders, 47 per cent of respondents said that they would be willing to borrow from an unfamiliar lender, while 26 per cent have borrowed more than £1,000 from an alternative lender over the past 5 years. According to the report: “As time goes by, consumers appear to be increasingly receptive to the idea of borrowing from alternative sources of credit.”
Other interesting snippets include the finding that 86 per cent of respondents would use a price comparison site to compare loan rates, with 78 per cent believing they will get a cheaper rate from online lenders. This is significant as 54 per cent of respondents cited interest rate as the primary factor in whether or not to seek a loan.