In 2022, the global consumer finance market had a value of USD 1221 billion. With an anticipated CAGR of 7.16% until 2028, the market is poised for expansion. This growth is attributed to factors such as increasing demand for credit-based consumption, escalating disposable incomes, and robust economic growth. The sector is witnessing the emergence and growth of many new companies, including prominent peer-to-peer lenders and entirely digital entities.
Low interest rates aid the economy by making loans more accessible to customers. Reduced interest rates make borrowing less expensive, enabling people to spend and invest more freely. Additionally, interest rates have a long-term impact on the cost of borrowing money. People are more inclined to borrow money to finance large purchases like homes or cars when the interest rate is lower. When customers pay less interest, they have more money to spend, which can increase consumption across the economy. According to the data provided by World Bank, the lending interest rate in the United States was 3.3% in 2021, which is comparatively lower than in 2019. Thus, with the low-interest rates, people are opting for financial products.
The credit-based expenditure by individuals is driving the global consumer finance market as the rise in credit expenditures is increasing consumer spending power. According to a report, in France, over 1 million companies and SMEs use credit to fund their operations. Moreover, according to the Bank of France, the growth rate of consumer credit increased to 4.3% in September 2022. Additionally, according to the data provided by the American Bankers Association, by the end of 2020, there were 365 million active credit card accounts in the United States.
In terms of region, the market is segregated into North America, Europe, Asia-Pacific, South America, and Middle East & Africa. Among which, Asia-Pacific is anticipated to register a significant growth during the forecast period. The consumer financing market in Asia-Pacific has grown quickly. In addition, this demand is fueled by developing economies in the region, growing urbanization, rising income levels, competitive loan rates, and a burgeoning middle class.
Citigroup Inc., JPMorgan Chase & Co., Wells Fargo & Company, Bank of America Corporation, American Express Company, HSBC Holdings plc, Industrial and Commercial Bank of China, U.S. Bancorp, BNP Paribas, and TD Bank, N.A. are among the major market players in the global consumer finance market. The competition is expected to grow at a significant pace in the upcoming years owing to rising number of consumer finance online platforms as it is necessary for these companies to attract more and more business partners.
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