Are the big 5 Banks set to lose market share to alternative providers of finance?

In a recent report titled The Changing World of Money, KPMG claimed the UK’s big five banks could lose over 10 per cent of their market share to alternative finance by 2020.

 

This assumes that new providers (both old and new brands) will utilise new, often web-based technology, to create leaner operations that are both cheaper to operate and customer centric, but importantly very fast. The digital loan. They will also not carry the baggage and associated overheads of a cash based business operating across multi-financial disciplines from high street bricks and mortar edifices. Read More

How to find a loan shark

Look for the man with the baseball bat accompanied by ‘Terry’ the minder; sorry read Bentley convertible and Cartier watch, accompanied by Harry the martial arts expert. He may well be operating in a pub near you.

 

“Ok, payday loans are no longer viable since the interest rate cap and absolute maximum on charges was introduced at the start of the year. This means payday loans will dry-up and the loan sharks will take over”.
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Is big best? We don’t think so.

We have noticed a couple of the bigger Guarantor lenders, including Amigo, are not offering the most flexible and therefore cost effective options to potential borrowers. So take Amigo for example; you can now only borrow in increments of £250 and periods of whole years; 1,2,3,4 or 5 years.

 

This means if you wanted to borrow, say £1,300 over 14 months, you would have to chose £1,500 over 2 years. Cost in interest £725.28
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Payday lending is dead; Long live the loan sharks !

Few will mourn the demise of the Payday loan companies who can no longer operate profitably after changes introduced by law. Well, few except those that relied on them to manage each month. Changes in the law introduced recently set a maximum interest rate of 0.8% per day and a cap on certain charges that has dramatically changed the dynamics of Payday lending; but the killer blow is likely to be the overall cap that restricts the total that can be demanded at twice the original loan. So, will those same Payday borrowers who can’t get regulated Payday loans now be forced, as some believe, to use the unregulated market by entering the murky world of the ‘Loan Shark’.

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