First Research US Industry Profile

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Consumer Lending
SIC Codes: 6141
NAICS Codes: 522291
Last Quarterly Update: 7/11/2022
Companies in this industry make unsecured cash loans to consumers. Major companies include DFC Global, EZCORP, FirstCash, OneMain Financial, and Sallie Mae (all based in the US), along with Orient Corporation (Japan), and Provident Financial and Tesco Bank (both based in the UK).
Global debt has reached over $300 trillion in 2021 due to pandemic-driven factors, according to the Institute for International Finance. In the US, total consumer debt accounted for $15.6 trillion in 2021, according to the Federal Reserve's New York District. Consumer lending companies generally do business locally or within their country of origin, but globalization and greater access to the internet are spurring companies to pursue international growth.
The US consumer lending industry consists of more than 14,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $37 billion.
Competitive Landscape
Demand is driven by consumer income and demographics. The profitability of individual companies depends on the correct assessment of repayment likelihood and effective collections activities. Large companies enjoy economies of scale in securing access to capital. Small companies can compete effectively by choosing favorable locations or targeting niche markets. The US industry is highly concentrated: the 50 largest companies account for about 85% of revenue.
The federal financial reform law passed in 2010 created a tougher business environment for consumer finance firms. The regulations restrict credit card companies from imposing interest rate hikes and fees and seek to rein in alleged predatory lending practices by payday and auto title loan companies by requiring lenders to determine if a borrower can repay a debt before extending credit, among other measures. The law also created the Consumer Financial Protection Bureau (CFPB) to take over consumer-protection responsibilities from other federal agencies. The sweeping regulatory reforms, along with evolving technology, are changing the competitive environment of the consumer finance industry.
The internet and increasing consumer connectivity have given rise to a growing number of financial technology (fintech) companies that use technology to deliver financial services more efficiently and may consider alternative measures of creditworthiness. Fueled by venture capital, numerous fintech start-ups are disrupting the financial services and consumer lending industries by offering alternative business models for lending and payments. The average personal loan balance increased by about 4% in 2021 to about $17,000 as consumers began to recover from economic uncertainty caused by the COVID-19 pandemic, according to Experian.
Products, Operations & Technology
Major products include installment loans and payday loans. Installment loans carry fixed interest rates and are paid off through a series of fixed monthly ... plus:
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Historical Profiles (PDF format)

02/28/2022
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