Increasing Access to Data Is Driving Growth in Credit Cards and Auto Loans While Lenders Fight for New Deposits
As consumers and banks embrace the new digital landscape, the way in which lenders are originating these loans is changing to keep pace. Zoot Enterprises recently published a new whitepaper that takes a fresh look at the current realities of credit cards, white label/retail cards, auto loans and demand deposit accounts in light of the changing origination landscape.
Long gone are the days of waiting in a branch lobby to open a new checking account – today’s customers expect to achieve this in minutes through any device. Zoot examined some of the other trends affecting the lending industry, and here’s what they found.
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1. The war for deposits rages on
Within the demand deposit space, the current climate is one of fierce competition. Banks and other financial institutions are scrambling to attract and retain new deposit dollars, while market forces like shifting Federal rates, digital competition and consumer preferences all have an impact on their ability to win new business.
2. Consumer appetite for credit cards is growing
When it comes to credit cards, growth is the name of the game. Steady increases in consumer card numbers, as well as increases in total card debt, continue to make credit cards an attractive line of business for FIs. With white label and retail cards, the story is similar, although balances are on the decline. Differences from traditional cards include APR ranges and prevalence of minority and thin/no file customers using white label/retail credit products.
3. Auto loans may become a sub-prime play
Auto loans continue to shine as a line of business, with steady volume, increasing outstanding balances and generally longer terms. But the number of newly delinquent loans is on the rise, and many FIs are showing a risk-aversion strategy that is opening doors for other lenders willing to provide loans to consumers that fall below super-prime and prime credit segments.
4. Increased access to data is driving profitability across the board
While origination across all these lines of business continues to mature, one common thread is the increasing amount of – and access to – available data to inform credit risk decisions. With advancing technology, people are relying on things like biometrics, behavioral biometrics and more to manage and protect their financial assets.
Like you, Zoot is continually examining the state of origination in financial services. Whether the account origination of the future involves microchip-embedded fingerprint scans, retinal scans or some yet-to-be-developed technique, one thing is certain: Change.
