Fastest ever start to a year for store credit 

Monthly updates from consumer finance trade body, the Finance & Leasing Association (FLA) showed that new business volumes reached £2.1m in the opening quarter of the year. It marks the highest ever level of borrowing for a Q1, and a double-digit increase of 12% compared to the same period in 2021.

This momentum was sustained early into the second quarter of 2022. All-time high new business volumes for both April (£731m) and May (£810m). Q2 2022 is on course to follow Q1 2022 in recording the highest ever volume of retail store and online credit for any previous second quarter.

Q2 2022 is also likely to set a record quarterly volume of new business for retail store and online credit in any quarter outside of Q4 – the final quarter of the year typically sees higher volumes than the rest of the year because shopping accelerates ahead of the Christmas period.

Freedom Finance said the strong figures demonstrate the high demand for products that offer flexibility and choice at all points throughout the customer journey.

The strong growth in the retail credit market is mirrored across the wider consumer finance market which expanded by 20% in May 2022 compared with the same month in 2021, reaching £10.4bn. 

Michael Davidson, chief revenue officer at Freedom Finance, said the data is evidence that the embedded finance revolution is creating an urgent need for retailers, and other sectors, to start providing and widening the range of financial services they offer customers.

“The retail credit market looks set for accelerated growth as embedded financial services are increasingly becoming the norm to meet the needs and wishes of customers,” he commented.

“Retail credit allows shops to offer their customers a convenient line of credit, often at the point of sale and on favourable terms.

“Retailers also frequently weave in incentives like vouchers or discounts to encourage repeat business and brand loyalty.

“Demand for easily accessible credit products which offer good terms and can help people manage their finances better is only likely to grow. Retailers will also be expected to start offering a greater variety of financial products to their customers, such as insurance, and embedding these services into their offering will be vital to their success in the future.”

“Delivering better finance options for customers at any touchpoint through their journey helps retailers enhance customer experience, build trust and loyalty with potential buyers and maintain relevance in the rapidly evolving consumer credit landscape.”