Marqeta (NASDAQ: MQ), the global modern card issuance platform, today released new data from a survey of European consumers on their lending attitudes and experiences. The findings, which will be detailed in a forthcoming report on the future of lending, show that many consumers still feel frozen out of the credit bubble, as outdated lending criteria and ratings – such as credit ratings – freeze them. B. Credit scores – are withheld. But change may be on the horizon, with 59% of European consumers saying they are more aware of new borrowing options due to the pandemic and 61% more willing to take advantage of them.
The survey of 2,000 European consumers, conducted by Propeller Insights on behalf of Marqeta, found that 32% said they had been denied credit because of their creditworthiness or affordability. However, 59% of those rejected felt the decision was unfair, while 79% believed they could have secured the loan if other factors had been considered. Worryingly, 33% of respondents who had difficulty obtaining credit said that being denied a traditional loan forced them to turn to more expensive options like a payday loan. Not surprisingly, most respondents (78%) noted that there must be a smarter way to evaluate loans than credit scores, and 72% said credit ratings do not reflect whether or not they can pay.
Anna Porra, European Strategy Director at Marqeta Remarks: “With the cost of living rising and many people struggling, it is imperative to provide access to finance for those who need it. Yet the current credit system often penalizes people, which is a sign that things are broken. It’s crazy that someone who lives frugally, pays rent and saves for the future is often pigeonholed in the same box as someone who lives beyond their means and doesn’t have a mortgage or other financial commitments – they’re not the same. With open banking and wider access to rich data, there are so many different factors that can help determine if someone can afford something. New credit alternatives have done a great job of leveraging this to give people more choice, but it’s clear that more education is needed to help people better understand their options.”
When looking at alternative financing methods, it became clear that awareness is growing and providers are selected based on very specific advantages. For flexible payment card users, flexible payment options were the main benefit they gained, while the main reason for buy now, pay later users was that it helped them better manage their finances. Users of open banking services said the main benefit is that it makes it easier for them to borrow. This indicates that the industry is moving towards a more flexible and inclusive lending model, more tailored to specific needs and outcomes.
Overall, the data shows that many consumers expect more from their lenders to allow for more control, personalization, and rewards:
- 76% of people surveyed agree that lenders should offer “no default bonuses” for good repayment records
- 67% of respondents want a more engaging, less transactional relationship with their lender
- 61% of respondents are interested in withdrawing money to a dedicated Visa or Mastercard card for better spending tracking, along with real-time financial behavior advice
- 69% of respondents are open to pre-agreed spending controls if it means more competitive pricing
- 71% of respondents like the idea of a Visa or Mastercard card that offers personalized rewards at specific merchants
Porra concludes: “While traditional banks remain popular, interest in digital offerings is growing. The winners of the future could be the companies that can get a really clear picture of their customers, their spending habits, and their affordability. By knowing their customers better, lenders can make fairer decisions while reducing risk. Cards offer banks the opportunity to modernize and fintechs to gain market share as they deliver real-time insights that enable equitable outcomes for both borrowers and lenders. Consumers want a better, more informed borrower experience, and cards are well positioned to deliver on those expectations.
https://techround.co.uk/finance/marqeta-79-denied-a-loan-say-outdated-affordability-criteria-was-a-key-factor/?utm_source=rss&utm_medium=rss&utm_campaign=marqeta-79-denied-a-loan-say-outdated-affordability-criteria-was-a-key-factor Marqeta: 79% of those who were denied credit say outdated affordability criteria were a key factor