In this week’s episode of Whiteboard Wednesday, Walshy makes his 2018 predictions for consumer credit. Who are the winners and who are the losers? Watch on to find out.
Welcome to Whiteboard Wednesday, I’m Paul Walshe, Founder and CEO of Fair Go Finance.So this is our final Whiteboard Wednesday session for 2017 so it’s timely we look forward to what’s happening in 2018 and give our projections as to what we see occurring, for what they’re worth.
Key Themes for Consumer Finance in 2018
So key themes we see as affecting 2018 are really a continuation of some of the things that have occurred over the last few years but are going to have an impact next year. They are technology, data sharing and regulation.
So in terms of technology we’ve got new payment platforms coming into effect early in the year and then you’ve got other currencies, cryptocurrencies and other apps that are coming into the market on the back of either new platforms or just in general innovations from lenders or finance providers.
In terms of data sharing, that’s Comprehensive Credit Reporting which has been building momentum for the last few years but we’ve seen a lot more commitment from lenders on the back of threats from government which are really driving a higher level, or expected higher level, of contribution next year.
And then regulation – NCCP changes (National Consumer Credit Protection Act changes) plus the royal commission changes are going to lead to a lot of activity in the regulation and attention required from lenders in general.
So in terms of winners and losers from these themes, or trends in the marketplace, we really see the winners being the tech savvy lenders and tech savvy borrowers. Those who have invested in platforms and technology to utilise data as it comes into the market as businesses are better able to provide services to customers as a consumer that group of consumers who are adopting technology from more or newer providers, less from the big 4 banks, are going to stand to win.
Importantly, customers with good payment history, irrespective of where they sit at the moment on the credit curve – bad credit, good credit, alike – if you’re managing that payment history then that’s going to reflect well when that data hits the bureau and your score should get an uplift and hence improve your access to finance.
The other category with all the regulation changes, no surprise, is your lawyers. So they always, when there’s a time of change, do stand to benefit.
In terms of those that are going to be negatively impacted or losers from these changes really are the banks – with all the change going on and the impact it’s going to have and distraction it’s going to have from them with new emerging technology being consumed quicker by smaller agile companies, surely they are going to stand to be impacted negatively as customers are stolen away.
The other category are customers or consumers or people, that either have a high level of debt or are missing payments/struggling to maintain payments. And that data is going to be shared with credit bureaus and then lenders and brokers and the like are going to access that. So access to finance and cost of finance to people in that group is really going to be challenged in the next 12 months as that data becomes more transparent.
How to make the best of 2018
So to be in the second group, or the winners category:
1) keep an eye out on technology that comes into the market and what’s going to make your life easier
2) If you have a high level of debt, get on top of that and make sure you’re managing your repayments
3) keep an eye out for offers from non-bank lenders as they can adapt and adopt to the new changes and make these available to you as a consumer.
So all the best for the holidays ahead, and I look forward to seeing you again in 2018.
Thank you very much.