Legacy IT systems lose UK lenders £157 million every year, reveals new Divido research

Divido, the multinational white label platform for point-of-purchase lending, has today released the findings of its latest research, The Global Lending Report. The report provides insights and trends into the future of the global point-of-sale lending market. Divido surveyed senior decision-makers in the banking/lending space across seven different regions, including the UK, U.S., Germany, France, Spain, Italy and the Nordics.

Point-of-sale finance is thriving

Fuelled by consumer push-back on credit cards and the desire to have more flexibility when it comes to spending, UK lenders have estimated point-of-sale finance will be worth over  £157 million to their individual business over the next 12 months.

Alongside this, UK lenders are set to invest an average of £19.6 million into their point-of-purchase IT infrastructure over the next year. That said, across the seven markets, investment into point-of-sale finance is top-of-mind for lenders, with two-thirds planning to invest up to £394 million into this space over the next 12 months.

Legacy IT Infrastructure is still a barrier to innovation

Complex legacy infrastructure remains one of the biggest barriers to innovation with 54% of UK lenders ranking it as the biggest challenge when it comes to delivering payments technology. UK lenders are also feeling the impact of increased regulatory clampdown, with 55% listing compliance with regulation as another hurdle to overcome when delivering payments technology.

“Banks are in a tough place. They’re facing competition from multiple directions but can be held back by increasingly expensive legacy systems that limit product development in-house,” said Christer Holloman, CEO and co-founder, Divido. “There is another option, banks can look to use third-party fintech companies to release the increasing pressure on internal legacy IT resources. By doing this, they can safely turn their attention to focus on more timely core business issues, such as defending market positioning, addressing regulatory changes and winning new deals.”

Concern around new fintech players

New entrants are a top concern for 75% of lenders, with Europe feeling the biggest impact in light of regulations such as PSD2. No lenders agreed that they are confident about their ability to compete with new market entrants, with 32% highlighting the ease at which new entrants can integrate with other businesses’ IT infrastructures as their biggest concern.

That said, global collaboration among lenders and fintechs is firmly on the rise, with two-thirds stating that they would consider partnering with a third party platform provider to deliver services to consumers. Overall, only 3% of lenders felt fintechs were their competitors, not their collaborators, paving the way for more partnerships to deliver better experiences to customers.

“This is decision time. Banks can double down on existing routes to deliver services such as point-of-purchase finance/loans, to the digital economy. Others can partner with fintechs,” continued Christer Holloman. “One way or another, banks will need to find ways to maintain and grow the lending relationship with the customer, or risk losing out to competitors and new entrants.”

Divido’s lending platform is quick to integrate with, works in multiple markets and with multiple lenders. It is currently available in the UK, Germany, France, Spain, Italy, the Nordics, and the U.S.

Divido is on track to process its first $1 billion worth of credit applications in 2019, as it realises its vision to become the world’s largest platform for point-of-purchase finance.

To read the full report and access the different market guides, including the UK one, please go to The Global Lending Report.

Author: Yash Hirani

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