The second wave of Experian’s 2020 Global Insights Report highlights the impact of the global pandemic on consumer spending habits and potential implications for financial institutions
SINGAPORE, 19 October 2020: Consumers in Asia Pacific (APAC) have reported difficulties in paying their bills and almost a quarter (23 per cent) are reducing their discretionary spending since the start of the pandemic, according to latest data from Experian. One in five are doing so due to job loss or an anticipated shift in their financial circumstances, and 29 per cent are spending less due to lifestyle changes imposed by social distancing measures such as dining out, entertainment or travel. The survey also found that there has been a 50 per cent increase in the number of APAC consumers who face challenges in paying personal loans and mortgages since COVID-19 started.
Experian – a leading global information services company – surveyed 3,000 consumers and 900 executives working in retail banks, e-commerce, consumer technology and telecommunications. Respondents spanned Australia, Brazil, France, Germany, India, Japan, Singapore, Spain, the United Kingdom and the United States. This report is the second of three in a longitudinal study exploring the major shifts in consumer behaviour and business strategy pre- and post-COVID-19, with economic perception at the epicentre.
Since the beginning of the pandemic, governments across the region have instituted loan moratoriums for businesses and consumers, observed in several markets including Singapore, Malaysia, Australia, Japan, China and India.
Ben Elliott, CEO Asia Pacific, at Experian, says: “This crisis has created huge challenges for everyone. Consumers are doing the right thing to protect their financial health by re-prioritising their spending. For those facing challenges in paying their bills, the loan deferrals available in some markets enables them to discuss a short-term payment suspension, or to defer or reduce payments, and this should not impact their credit history if they agree on the terms with their lender.”
The impact of the pandemic on the relationship between consumers and brands that can support them is already visible. Majority (89 per cent) of consumers who have opted for financial assistance or payment deferment support stated that they would recommend these services to others. Moreover, 41 per cent of APAC customers would give an organisation more business if they felt they were treated fairly during the pandemic.
Mr Elliott adds: “As customer profiles change rapidly, lenders face the prospect of steep provisioning. We have been helping banks and lenders to understand that during a downturn, it is important for them to utilise a decisioning system to identify financially stressed customers with early-warning indicators, respond quickly to change, predict future customer behaviour, and deliver the right treatment at the right time. We’ve found that this helps with building greater trust and ensuring loyalty in the long run, and also improves their customer retention.”
The report found that businesses in APAC are increasingly prioritising investments in analytics to better determine customer affordability and hardship. Sixty-two per cent of businesses are increasing their budget for analytics and customer creditworthiness in the next six months and nearly half (48 per cent) of APAC businesses are looking to recalibrate and improve their existing analytics models.
MoneyPlace, one of Australia’s fastest growing personal loan providers, is an example of a fintech company successfully leveraging Experian’s data, cloud-native decisioning platform, and analytics to manage existing and new customers. The technology enables them to identify suitable customers instantaneously, with risk-based pricing to offer low-interest personal loans with fixed rates and no ongoing fees, enabling customers to tide through tighter economic situations. Speed and agility are key to MoneyPlace’s success, as potential customers can obtain a personalised interest rate online in two minutes, with the whole loan application process completed in 10 minutes.
Stuart Stoyan, founder and CEO at MoneyPlace, says: “Experian provides us with an enterprise grade, cloud-based platform to combine customer data at the point of application with credit, fraud, and internal data, enabling us to obtain a comprehensive view to make informed decisions quickly. This is especially important during the current environment, where a broad range of data sources are needed to appropriately assess a loan application, whilst fulfilling customer expectations of a seamless online experience.”
Read more about findings from the Global Insights Report – Wave 2 here.