Credit, Collections & Insolvency News
Two in three people whose loan repayments have been declined say they have funds elsewhere, according to new research by Acquired.
The data showed that 61% of sub-prime borrowers, 64% of near-prime borrowers and 68% of prime borrowers said they have funds available elsewhere when a loan payment declines. In many cases, these funds can be used for repayments, however, many lenders continue to rely on rigid repayment systems that don’t accommodate today’s multi-account environment.
75% of near-prime borrowers and 70% of sub-prime borrowers use two or more lenders concurrently, indicating that credit is increasingly treated as a flexible tool for managing day-to-day financial needs. However, lenders continue to rely on long-term relationships with borrowers to achieve returns.
63% of prime respondents prefer Direct Debit, compared to 41% of sub-prime respondents, and older demographics have a stronger preference for Direct Debit. However, failed Direct Debit payments are not confirmed until two days after the charge date, slowing intervention time. Lenders need to implement intelligent payment options, like Pay by Bank, to increase visibility on delayed payments.
Despite rapid adoption in e-commerce and retail, lenders have been slow to adopt digital wallets for repayments, with many still relying on traditional methods like Direct Debit and card payments that require borrowers to manually input their details.
Greg Cox, CEO at Acquired, said “The lending landscape is evolving, and so must the tools and strategies used to navigate it. There has been some progress across the industry, but there’s still significant ground to cover. The path forward is clear: lenders who orchestrate intelligent, responsive repayment experiences will collect more, spend less, and build stronger borrower relationships. Those who continue with rigid, single-channel approaches will fall further behind—in collections, costs, and compliance.”
