UK consumers looking for personal loans are increasingly shifting away from traditional banks towards digital loan providers according to Zopa, the pioneering financial services company.
Research on the price comparison sector* shows loan sales obtained via price comparison sites have doubled in the last two years.
The data highlighted by Zopa shows that over 113,000 loans were sold through price comparison sites in the 6 months to April 30 2017, representing a 139% increase compared to the same period in 2015, whereas the overall unsecured personal loan market grew only by approximately 20% in the same period.
According to Zopa, customers are turning to price comparison sites for better value products and a more efficient and personalised experience than they could get from traditional banks.
Zopa says that while there has been fierce price competition amongst all lenders providing personal loans, digital lenders are now not only challenging the traditional banks on price, but also on experience by providing more seamless loan application journeys.
As a result, digital challengers are taking market share from the traditional banks as more and more savvy borrowers turn to aggregators to find the best deals. For example, MoneySuperMarket now supports its customers in their decision-making by showing them the likelihood of their application being accepted, along with which loan provider can offer them a quote without leaving a mark on the customer’s credit file, otherwise known as a soft search.
Zopa is one of the few consumer loan providers whose technology is fully integrated with MoneySuperMarket, meaning customers can see whether they will be pre-approved for a loan in seconds, all without affecting their credit score.
Jaidev Janardana, Zopa’s CEO, commented: “Consumers are no longer content to sit around waiting for their traditional bank to offer what they need. Instead, consumers are heading online to find products and a customer experience similar to what they receive from other businesses in the digital economy.
“Finance providers which put customers first when designing their products and services are already winning market share from traditional banks. And that’s set to continue with the arrival of Open Banking in January giving customers more control of their data. This will make it easier for consumers to choose the best financial products for them, and manage their accounts in a finance app of their choosing, regardless of who provides the underlying product.”
*eBenchmarkers