Filipino consumers’ appetite for alternative loans increases

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TransUnion’s Philippine Consumer Pulse study in the third quarter found that consumer awareness and appetite for alternative lending methods is growing.
TransUnion Consumer Pulse Study

He said the ‘Buy Now, Pay Later’ facilities are very well known to consumers, with 74% of Millennials and 78% of Gen Xers reporting they have heard of BNPL services. Almost half (45%) of all respondents also said they had used BNPL’s services in the past 12 months. Filipinos’ perceived access to credit – or lack of access to credit – may also have something to do with the great knowledge and use of BNPL’s services. Over half (55%) of respondents to TransUnion’s latest Consumer Pulse study thought access to credit is important to meeting their financial goals, but only just over a third (36%, or an increase of three percentage points from the second quarter of 2021) reported having sufficient access to credit and loan products. Despite this, nearly half (46%) of those surveyed said they plan to apply for new credit or refinance an existing one in the next year. Financial institutions extending BNPL as an alternative form of lending should pay particular attention to millennials and Generation Z (born 1995-2003). The survey found that among those who have used BNPL’s services in the past 12 months, they are the most curious generations with 40% and 38% respectively, stating that they have used BNPL because they “just wanted the to try “. Meanwhile, Gen X was the generation most likely to make larger purchases with service at 34%. Baby boomers are the generation that most reported using BNPL to spread payments over time (60%). Over 30% of each generation surveyed said they used Buy Now, Pay Later services because it was easy to request. “The growing popularity of Buy Now Pay Later coincides with the convenience, availability and smoothness of transactions that consumers expect from digital services. Lenders looking to implement campaigns in this evolving and growing field must be able to establish an underwriting system capable of identifying the right clients in order to maintain that reasonable balance of risk and opportunity and excellent customer experiences, ”said Pia Arellano, President and CEO of TransUnion Philippines. . Invoices and loans In the latest round of the TransUnion study, the percentage of Filipino consumers reporting their household income has declined reached 64% in the third quarter of 2021. While many were hoping that a faster deployment of the COVID- vaccine 19 would stimulate economic recovery, the majority (54 percent) of consumers believed that their household income would be negatively affected by the pandemic in the future. About half of all consumers surveyed (48%) were concerned about paying their bills or loans in full. The top bills and loans that consumers said they would not be able to pay among those with these bills / loans were car leasing (36%), personal loan (35%), and car loan (35%). Meanwhile, 21% of consumers said they had received a financial accommodation, such as a postponement, forbearance, payment holiday, or eviction prevention in the past year. Mortgages (20%), private student loans (19%), auto loans (16%) and personal loans (16%) were the top bills and loans registered in financial housing in the past year among consumers with this invoice / loan. In order to pay regular bills or loans, 47% said they would use their savings and 40% would borrow money from friends / family, while 41% said they would pay a partial amount. More than one in 20 consumers (6%) said they did not know how they were going to pay. “With BNPL gaining traction, we see a growing opportunity for financial service providers and even marketers to support consumers during this difficult time. In more mature global credit markets, retailers have even extended BNPL to products or services that go beyond the usual consumer goods, such as veterinary care, ”said Arellano. “There is tremendous growth potential for BNPL, and TransUnion strives to help lenders meet the changing needs of consumers by helping them make informed risk decisions so that the economic viability of BNPL loans can. be maintained. Lenders who use advanced information and knowledge and digital integration technology can increase their market share, while protecting themselves and consumers from fraud. Done well, consumer loans have the ability to stimulate economic activity and benefit the nation as a whole, ”she said. Fighting Fraud TransUnion has consistently warned of the prevalence of fraud in the digital space. Scammers have not failed to notice the exponential increase in online transactions over the past year and have tried to capitalize on trends as they arise. In the latest Consumer Pulse study, nearly half (48%) of Filipino respondents said they had been the target of a digital fraud attempt in the past three months. Among those targeted, phishing (44%) and scams by third-party sellers on legitimate online retail websites (43%) were the two most common tactics used by online scammers. “Technology has provided us with solutions that meet ever-changing market needs and consumer demands. Many BNPL companies are now using real-time decision making, but all financial institutions should keep in mind that their risk management strategies should always include multi-level defenses against fraud while maintaining an optimal customer experience. . At TransUnion, we have found that leveraging device intelligence, in addition to our own desktop data and alternative data from our partners, exposes links of fraud and fraud that cannot be detected by mere face or identity scans. We are committed to continuously innovating to provide our members with the tools they need to grow their businesses and protect them and the consumers they serve from fraud, ”said Arellano. TransUnion’s Global Consumer Pulse Study quantifies the continued financial impact of COVID-19. The online survey of 1,100 adults in the Philippines was conducted August 11-17 by TransUnion in partnership with a third-party research provider, Qualtrics Research-Services. TransUnion is a global information and analysis company that makes trust in the modern economy possible.

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