Banks and credit unions lose scale in lending as fintech grows


One of the 9 exhibits included in this document

Buy Now Pay Later (BNPL) was a wake-up call for credit card issuers. BNPL was a recasting of a trade finance model used long ago by companies like GECC (now Synchrony) and Household Finance Corporation (acquired by Capital One). Now fintechs are moving in the same direction with installment loans.

Mercator Advisory Group published a report on trends in installment loans entitled Installment Loans: Fintechs Gaining Ground on Loans $212 Billion Forecast. The research explains the state of consumer installment loans in the United States and how fintechs and finance companies now outperform banks and credit unions in installment loans. Additionally, this research examines how companies are offering integrated financial products like CCaaS to allow customers the ability to offer their own credit card product. Through four evaluation criteria, general advice is provided for those seeking a relationship with a fintech provider.

“Banks used to dominate consumer lending, with installment loan products priced much lower than credit cards, but that’s not the case anymore,” says Brian Riley, director of the credit practice at Mercator Advisory Group and author of the research report. “Buy Now Pay Later (BNPL) was a wake-up call for credit card issuers. BNPL was a recasting of a trade finance model used long ago by companies like GECC (now Synchrony) and Household Finance Corporation (acquired by Capital One). Now fintechs are moving in the same direction with installment loans,” says Riley.

Highlights of the research note include:

  • US consumer debt trends
  • Fintech and financial company trends versus financial institutions
  • Why banks and credit unions should define the consumer lending space, not follow fintech trends
  • Strengths, weaknesses, opportunities and threats for established banks and fintechs
  • Comparison of installment and revolving loan products
  • Consumer survey data on installment loan users and top fintech lenders

This document contains 28 pages and 9 annexes.

Companies mentioned in this research note include: Acima Credit, Affirm, American Express, Avant, Bankrate, Blend Labs, Bread, Capital One, Citi, Discover, Equifax, Experian, FIS Global, FICO, Fiserv, GECC, HFC, JPMorgan Chase, Jack Henry, Klarna, Lending Club, LightStream, Mastercard, NerdWallet, Opportun, Prosper, Regions Bank, Rocket Companies, SoFi, Synchrony, TSYS, Truist, TransUnion, Upgrade, Upstart, Visa, Wells Fargo, Worldpay, Zopa

Members of Mercator Advisory Group’s Credit Advisory Service have access to this report, as well as upcoming research for the coming year, presentations, analyst access and other membership benefits.

For more information and media inquiries, call Mercator Advisory Group’s main line: (781) 419-1700 or email [email protected]

For industry news, opinions, research, company information and more, visit us at http://www.PaymentsJournal.com.

Follow us on Twitter @ http://twitter.com/MercatorAdvisor.

About the Mercator Advisory Group

Mercator Advisory Group is the leading independent research and advisory services firm focused exclusively on the banking and payments industries. We provide pragmatic and timely research and advice designed to help our clients uncover the most lucrative opportunities to maximize revenue growth and contain costs. Our clients range from the world’s largest issuers, acquirers, processors, merchants and payment associations to leading technology providers and investors. Mercator Advisory Group is also the publisher of the online payment and banking news and information portal PaymentsJournal.com.

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