Released today, the Australian Consumer Credit Pulse 2019 report from Equifax also revealed that, despite an overall downturn in the credit market (-5.9 per cent year-on-year to June quarter 2019), 11 per cent of consumers intend to apply for credit in the near future. Of these, 53 per cent are looking to switch providers when they make their application.

“Our research shows that 10 per cent of consumers have switched credit products in the past year, and even more intend to apply for credit in the coming months. This presents an opportunity for lenders to attract new customers,” said Moses Samaha, Executive General Manager Customer and Solutions, Equifax.

According to the report, the younger the individual, the more likely they are to be active in market for credit products, with 18-34-year olds being particularly mobile. Younger consumers are also more likely to switch lenders – of those who had switched in the past 12 months, 43 per cent were aged 18-34, and 32 per cent were aged 35-50.

This demographic also has the greatest appetite for credit – younger consumers who have recently switched providers are more likely to apply for credit again in the near future than their older counterparts. Of this group, the largest volume is looking to apply for a home loan (41 per cent), followed by a credit card (25 per cent).

“Younger consumers tend to have fewer financial responsibilities and tend to have a greater appetite for credit to fund their lifestyles,” Mr Samaha said.

“This activity can make younger consumers an attractive market for lenders; however, this group may also be less financially savvy or put themselves at risk of over-extending their credit limit. Having a clear view of current and potential customers in this segment can help lenders to position the right products more effectively,” Mr Samaha added.

Areas of opportunity

Of the 10 per cent of consumers who have switched credit providers in the last 12 months, home loans and credit cards stood out as the big movers. A quarter (26 per cent) switched their home loans and nearly half moved their credit cards.

“Our research shows the correlation between the decline of credit cards and the growth of buy now, pay later. While there are a number of factors at play here it does support the growing belief that consumers are opting out of traditional credit cards,” Mr Samaha said.

Home loans are also a popular product among the 11 per cent of consumers intending to apply for credit in the coming months, making up 49 per cent of intended applications.

For switchers of home loans or personal loans, those aged 18-34 were most likely to prefer a building society or credit union (42 per cent for home loans, 41 per cent for personal loans). Consumers aged 35-50 were more likely to prefer a small bank for their home loans (55 per cent) and personal loans (39 per cent).

Exploring consumer segments

The report also revealed that there are two key population segments, identified by Equifax Landscape profiles, that are both credit active and comparatively low risk – inner city professionals and suburban families.

Inner city professionals tend to be young singles or defacto couples who have a ready cash flow and are credit hungry. Building a social and professional profile is important to them; they work long hours, often in well paid jobs, and are not afraid of using credit to fund their lifestyle. 

At the other end of the spectrum, suburban families largely comprise of couples with children. They tend to be well-off, with both parents working in high paying jobs, and many are in large, established homes. Family is their focus, and any extra time or money is dedicated to improving their family lifestyle.  

“Offering one-size-fits-all products is no longer a feasible approach for lenders looking to attract and retain customers. Which consumer segments are most active in market, what is important to them and their relative credit risk are all pieces of the puzzle for lenders wanting to take advantage of a changing market,” Mr Samaha said.  

 

Download the full report

About the research

Equifax credit information is drawn from exclusive Equifax demand trends, generated by its credit bureau for the purpose of conducting research in relation to credit (using aggregated results), January 2016 – April 2019

Projections based on data up to and including June 2019. Forward-looking statements reflect, among other things, Equifax’s current views with respect to future events, future economic performance and projections of various financial items. Readers are cautioned not to unduly rely on these forward-looking statements. Past performance cannot be relied on as a guide to future performance. Except as required by applicable regulations or by law, Equifax does not undertake any obligation to publicly update or review any forward-looking statements, whether as a result of new information or future events.

Equifax Marketing Services Landscape provides detailed segment profiles that clearly articulate distinct media preferences, buyer behaviours, attitudes and demographics of each consumer group as categorised by it.

ReachTEL poll commissioned by Equifax was undertaken in May 2019. ReachTEL conducted a survey of 4,922 respondents nationally. The survey was conducted during the week of Monday 27 May to Friday 31 May 2019. Credit intentions were polled in relation to the next three months – June to August 2019.

About Equifax

Equifax is a global information solutions company that uses unique data, innovative analytics, technology and industry expertise to power organisations and individuals around the world by transforming knowledge into insights that help make more informed business and personal decisions.

Headquartered in Atlanta, Ga., Equifax operates or has investments in 24 countries in North America, Central and South America, Europe and the Asia Pacific region, with the acquisition of Veda, a data analytics company and the leading provider of credit information and analysis in Australia and New Zealand. Combined the companies bring close to 170 years of data and insights experience to the marketplace.

Equifax is a member of Standard & Poor's (S&P) 500® Index and its common stock is traded on the New York Stock Exchange (NYSE) under the symbol EFX. For more information visit www.equifax.com.au.

About Equifax Marketing Services

Equifax Marketing Services brings together data and advanced measurement tools to build insights that help drive marketing success.  With the largest volume of financial behavioural data in the region, we help customers identify and maximise their insights to better target, acquire and measure marketing and business outcomes.

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