The European market has demonstrated a significant increase in consumer credit in the last couple of years. And the period of 2019-2021 shows that the volume of consumer debt has grown around four times. Since the demand for consumer credit has been dramatically high, many crediting institutions took advantage of it and started to provide more loan offers with various options. Since the start of the pandemic at the end of 2019, many financial institutions have revised their crediting requirements to avoid any risks. They have increased the demands from the consumers’ debt load and overall credit history, which allowed the consumers to conveniently use their services without having the risks of not being able to pay the loans on time.
This subject of consumer credit changes has shown how important it is for the e-commerce market, as the current demands show that this market has a significant influence on the financial sector. By the end of 2021, regardless of the impact of Covid-19 around the world, consumer loans have been significantly demanded. Finalizing the year 2021, financial institutions, banks, and lending companies recorded a major increase of 67% in loans. This result is around two times higher in comparison to the results of 2020. Many specialists say that the reason for this significant increase is the drop in the rates on market programs provided by many banks. Not to mention the financial crisis associated with the pandemic which started at the end of 2019.
What studies have specialists done?
Based on the recent research done by Finnish company Laina Finance, throughout the entire year of 2021, they have been regularly checking the changes in the marketplace. Since there was a drop in the interest rates in the financial market, the demand for refinancing programs of consumers’ previous loans has increased. The global financial crisis started more than a decade ago and the high debt levels around Europeans are still increasing. The experts declare many reasons for this matter. The main idea is that many financial institutions offer low-interest rates, which is always a tempting action for consumers. The other idea is that many banks and lending companies started to implement new business models, which also grabbed the attention of people. Living in the digital world, many financial institutions are always looking for new and innovative ideas which will help them to find new sources for revenue. Normally they are doing it by coming up with new service fees, additional loan charges, and etc.
Other studies done by the specialists at Laanius show that in the upcoming years, there may be more increases in consumer loan demands, depending on how the pandemic will influence the global financial situation. Having the results of the current state of the financial market, the growth of loan demands will be unavoidable.
There are, of course, many questions about the increase of the interest in making the consumer lending options digitally. Many specialists confirm that this is one of the most modern solutions for financial institutions. Given the circumstances of the pandemic, this option can be one of the most significant tools in consumer credit. With the development of loan digitalization, the overall financial market can have an extensive increase in consumer loan demands. And many financial institutions and lending companies have already started to implement such methods. According to the specialists, this is something that will benefit both the institutions and consumers since there will be a demand for loans, and consumers will have an easier way to receive credit.
In conclusion, the experts state that there are no ways to avoid the increase of consumer lending, given the global crisis and high demands among the population. It will surely be an advantage for the financial market to have growth in their yearly statistics. And the financial specialists will constantly monitor the changes in the market and show the results based on their studies and expertise.
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