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The session, which had a particular focus on the obstacles and opportunities that the sector is facing, was chaired by Marc Gaudart, Vice President of Decision Analytics, Experian, and featured representatives from the Association of Consumer Credit Information Suppliers, Société Générale (France), Santander (Spain), ASSOFIN (Italy), Wirecard (Germany) and Lloyds TSB (UK).
During the session, it was identified that European countries can be segmented into three groups – the credit hungry ‘old’ Europe, the established ‘old’ Europe and the fast-growing ‘new’ Europe. Up for discussion was whether a European consumer credit market actually exists, and, if it does, is it already saturated or is there still room for growth?
Dirk Mayer, Risk Manager for Wirecard, said that in the past, consumer credit has been unwillingly offered and neglected in the German market and that a dramatic change took place in the 1990s. The market moved from being demand-led to offer-led, and that there was a general loss of consumer confidence. Customers now are well informed often using price comparison platforms. Today there is an increasing trend towards bankruptcy, with an expected 20% increase from 2007 to 2009.
Mike Bradford, President of ACCIS, commented that since deregulation of the market, there are now 7,000 mortgage and 300 credit card issuers and that household debt in the UK has seen more than a 150% rise in the decade since 1997 – now accounting for over 30% of EU credit. He went on to say that despite numerous risks coming from the credit crunch, including the puncturing of the housing market bubble, successful business can be achieved if the right sub-groups or markets are targeted with the right products.
Focussing on the new challenges being faced by the market today, Khalid Saad Zaghloul, Head of Decisions at Santander, stated that intensified competition would play a major role, with the recurrence of comfortable margins and European leaders having models that are easily exportable to other countries. Economic factors such as the sub-prime crisis and uncertainty about interest rates would also play a significant role, as would strict regulatory considerations surrounding data and consumer protection, Basel II and the new European Directive.
"Every single national market still drives the growth of its own consumer credit market in its own distinctive way..."
Giuseppe Piano Mortari from the Italian Finance Companies Association (ASSOFIN) presented a picture of the Italian market. He said that the overall size of the Italian consumer credit market still remains at a low level when compared with the other European countries. However, it has experienced double-digit growth each year in the last five years, this essentially being driven by the development of the direct finance segment. It was interesting to note that although the weight of credit on a household’s balance sheet is limited, there is currently a strong debate in Italy concerning overindebtedness being driven by the wider exposure of consumers to credit availability.
The overall consensus was that although there is a strong alignment of practices and tools throughout Europe and a push represented by the European Directive on consumer credit, every single national market still drives the growth of its own consumer credit market in its own distinctive way.
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