Consumer Credit Market Expected to Reach $24.3 Billion by 2032—Allied Market Research

According to a new report published by Allied Market Research, titled, “Consumer Credit Market, Credit Type (Revolving Credits, and Non-Revolving Credits), Payment Method (Direct Deposit, Debit Card, and Others), and Issuers (Banks, NBFCs, and Others): Global Opportunity Analysis and Industry Forecast, 2023-2032." The consumer credit market was valued at $11.8 billion in 2022, and is estimated to reach $24.3 billion by 2032, growing at a CAGR of 7.8% from 2023 to 2032.

Consumer credit is a loan taken by a borrower to purchase goods and services. Any type of personal loan taken to buy everyday goods and services can be considered consumer credit. Consumer credit is extended by banks, financial institutions, and non-banking financial corporations (NBFCs) that enable consumers to purchase goods immediately and pay off the cost over time with interest. It allows borrowers to get an advance on income based on their credit score and transaction history.

Furthermore, increasing demand for loans from individuals and small businesses and numerous benefits provided by consumer lenders are boosting the growth of the global consumer credit market. in addition, the increase in use of digital transformation technology the positively impacts growth of the consumer credit market. However, changes in interest rates and regulatory constraints and lack of security and privacy issues are hampering consumer credit market growth. On the contrary, expansion of the Internet and growing adoption of smartphones are expected to offer remunerative opportunities for the expansion of the consumer credit market during the forecast period.

Depending on payment method, the debit card segment holds the largest market share, owing to surging usage of virtual currencies and growing penetration of the internet. However, the debit card segment is expected to grow at the highest rate during the forecast period, due to the increasing digitization of businesses and strong expansion of communication infrastructure have raised the risk of cyberattacks and exposed companies to several new risks and threats.

Region-wise, the consumer credit market size was dominated by North America in 2022 and is expected to retain its position during the forecast period, owing to presence of the most successful consumer credit businesses in the region. These companies include Bank of America, JPMorgan Chase, and Citigroup. These businesses have a great need for innovative banking system software products that may help them optimize their business processes and boost their level of competitiveness. However, Asia-Pacific is expected to witness significant growth during the forecast period, owing to increasing government initiatives in the banking industry and an increasing number of mobile and internet users in developing nations such as India and China are accounted development of private and rural banking.

The COVID-19 pandemic has a negative impact on consumer credit, owing to economic slowdown, unpredictability in global financial sectors, and highly volatile markets. Furthermore, coronavirus lockdown has resulted in an acute financial crisis, massive fears of unemployment, and salary cuts among individuals. Moreover, lenders are unable to acquire customers through small ticket lending and to target younger & low-income borrowers with short term credit needs, these are becoming major challenging factors to the consumer credit market trends.

Therefore, demand for consumer credit product offerings has declined tremendously during the global health crisis. Thus, governments in various countries took strict actions toward the defaulters of COVID-19 regulations, and natural language processing technology is helped financial institutes to scan their internal policies as well as claims documents to check their compliance with different regulatory policies. However, COVID-19 pandemic made it even harder for larger insurers to keep pace, and even more difficult for midsize and smaller insurers to adopt AI/ML technologies, owing to long development timelines and high investment requirements.

The COVID-19 pandemic is expected to significantly impact the overall economy of the consumer credit market, owing to surge in need for analyzing large data sets of genuine claims and to reduce risks and costs related to frauds and achieve superior results. For instance, according to survey of Prudential Regulation Authority (PRA) by Bank of England in August 2020, 16% of banks reported an increase in funding for advanced technologies such as AI and ML to increase efficiency and improve digital customer channels, as they manage the cost and revenue impact of COVID-19. In addition, nearly 60% of banks reported that COVID-19 had a positive impact on planned investment in customer engagement applications. In addition, technologies such as IoT, chatbots, and other voice assistants collate massive volumes of data to generate significant insights, which provide cost-saving opportunities, thus propelling the growth of the consumer credit industry.

Moreover, investments in deep learning became popular day by day, owing to an increase in attention toward data to help financial institutes find out the future performance of the firm to take corrective measures at an early stage in case of any probable crisis in future, which, in turn, is contributed toward the growth of the industry. Furthermore, algorithms used to get meaningful insights from real-time and historical data helped financial institutes to handle various critical issues related to customer insights during COVID-19 pandemic, which is driving the growth of the market. Furthermore, according to a research report, around 1 trillion connected devices are anticipated to be deployed by 2025 across the globe, which is expected to help financial institutes to understand the clients more deeply, resulting in new product categories, more personalized pricing, and increasingly real-time service delivery, which are expected to provide lucrative opportunity for the market. Moreover, various public and private entities are expected to come together to create ecosystems to share data for multiple use cases under a common regulatory and cybersecurity framework, which, in turn, is expected to provide lucrative opportunity for the growth of the global consumer credit market.

Key Findings of The Study

• By credit type, the revolving credit segment accounted for the largest consumer credit market share in 2022.
• Region-wise, North America generated the highest revenue in 2022.
• Depending on the payment method, the debit card segment generated the highest revenue in 2022.

The key players that operate in the consumer credit market analysis are Bank of America, Barclays, BNP Paribas, China Construction Bank, Citigroup, Deutsche Bank, HSBC, Industrial and Commercial Bank of China (ICBC), JPMorgan Chase, Mitsubishi UFJ Financial, and Wells Fargo. These players have adopted various strategies to increase their market penetration and strengthen their position in the consumer credit industry.