UK Consumer Credit 2020: Review, Forecasts, and Future Opportunities
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The total consumer credit was valued at GBP240,233 million in 2020 and is expected to grow at a CAGR of more than 5% during the forecast period of 2021-2025. Lloyds Banking Group remained the leader for personal loans with a share of more than 15% in 2020. Lloyds has maintained its market share ranking in each year as it continues to dominate the market. In 2020, credit cards dominated the UK consumer credit by line of credit followed by used car finance and new car finance. The economic crisis driven by the effects of COVID-19 significantly amplified the need for debt advice, but the availability of credit from mainstream lenders shrunk throughout the majority of 2020, making room for alternative fintech lenders and BNPL options to enter the market and offer alternative lending options to consumers in the UK.
Overview of the UK consumer credit market
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What are the market dynamics of the UK consumer credit market?
In 2020, the FCA stated that the impacts of the pandemic had forced approximately 9 million people in the UK to increase their borrowing, with many of these people being Britain’s most impoverished. Sectors in the unsecured market that had previously thrived pre-pandemic have faced many obstacles since, including peer-to-peer (P2P) lending and payday loans. The CAGR forecasts for both sectors have significantly declined, with payday loans showing a significant decline in growth.
With credit cards, it has been seen in the FY2020 financial results from banks that many credit card consumers were paying them off. Still, tighter lending restrictions from traditional banks have meant that fewer people have access to mainstream credit. The market has seen growth in the number of alternative options. Therefore, those who do not have access to mainstream recognition during difficult times may have been accepted by alternatives or opted for BNPL options with less stringent credit checks. Data provided by credit reference agencies shows that in March and April 2020, the number of enquiries and applications for credit dropped significantly but has since picked up. As the unemployment rate is set to increase further over the next few years, we believe the demand for lender support and debt advice is also likely to increase.
What are the key lines of credit of in the UK consumer credit market?
By line of credit, credit cards dominate the UK consumer credit market in 2020 followed by used car finance and new car finance. The use of credit cards has been common across the UK over the decades, and by 2015, the FCA’s Credit Card Market Study found there were over 30 million card holders in the UK. Moreover, there has been growth in credit card borrowing over the last 25 years, with a contraction in 2020 because of the COVID-19 pandemic. The consumer car finance market reported growth, with used car finance new business volumes were found increasing at their fastest rate. Data from GlobalData’s UK Consumer Credit Analytics also showed that growth in new car finance is expected to pick up as the economy slowly rebounds. At the same time, the pandemic has impacted the supply of microchips in the motor sector, and therefore, overall registrations for the first half of the year are down by more than 26%.
UK consumer credit market, by line of credits
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Which are the key players in the UK consumer credit market?
Lloyds Banking Group remained the leader in 2020 followed by Santander (UK), RBS Group, HSBC (UK), Barclays, Tesco bank, and Nationwide for the UK consumer credit market. Lloyds Banking Group remained the leader for personal loans with share of more than 15% in 2020. Lloyds has maintained its market share ranking in each year as it continues to dominate the market. Tesco Bank has seen a decline in share percentage. In 2020, Tesco Bank had one of the lowest personal loan interest rates, making borrowing much more affordable.
UK consumer credit market, by key players
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Market report scope
Market Size (year – 2020) | GBP240,233 million |
CAGR | >5% from 2021 to 2025 |
Base year of estimation | 2020 |
Key lined of credit | Credit Cards, Used Car Finance, New Car Finance, Retail Finance, P2P, Payday loans, and Home Credit and Others |
Key players | Lloyds Banking Group, Santander (UK), RBS Group, HSBC (UK), Barclays, Tesco bank, and Nationwide |
Scope
This report explores the key trends in the UK consumer credit sector in 2020, providing insight into supply and demand scenarios and the factors that drove these scenarios during COVID-19 and the majority of the year.
- The coronavirus pandemic harmed credit card borrowing worldwide in 2020. But according to the data provided by the BOE, growth had already started to impact credit cards in the UK, as there were already signs of slowing growth. According to BOE data, the annual increase in credit card lending peaked at almost 10% in 2018, but it had more than halved to 4.5% by the start of 2020.
- The coronavirus pandemic harmed credit card borrowing worldwide in 2020. But according to the data provided by the BOE, growth had already started to impact credit cards in the UK, as there were already signs of slowing growth. According to BOE data, the annual increase in credit card lending peaked at almost 10% in 2018, but it had more than halved to 4.5% by the start of 2020.
Reasons to Buy
- Identify factors affecting growth in 2020 in the consumer credit sector while looking at the BOE Credit Conditions Survey implications on supply and demand and examining the impacts of COVID-19 on UK consumers’ savings and debt levels.
- Analyze expected CAGRs for 2021-25 for all lines of credit in the UK with further analysis on potential factors driving the growth.
- Highlights key innovations that launched in 2020 around new credit propositions.
Monzo
TSB
Virgin Money
HSBC
Barclays
Santander
Nationwide
Lloyds
Updraft
Koto
Table of Contents
Figures
Frequently asked questions
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What was the output of the UK consumer credit market?
The total consumer credit was valued at GBP240,233 million in 2020.
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What is the growth rate of the UK consumer credit market?
The total consumer credit is expected to grow at a CAGR of more than 5% during the forecast period of 2021-2025.
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Which are the key lines of credit of the UK consumer credit market?
By line of credit, credit cards dominate the UK consumer credit market in 2020 followed by used car finance and new car finance.
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Who are the key players in the UK consumer credit market?
Lloyds Banking Group remained the leader for personal loans in 2020 followed by Santander (UK), RBS Group, HSBC (UK), Barclays, Tesco bank, and Nationwide.
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