COVID 19 Crisis Creating Opportunity in Credit Market
As Coronavirus hit the world in 2020, whilst some countries took a slow approach to comprehend & dealing with the situation, UAE was one of the very few countries taking pivotal steps to minimize both health & economic risks in the country. However, as the global oil demand decreased drastically, the plunging oil prices impacted the UAE economy greatly. Therefore in order to combat the dual shocks (COVID & Oil Prices), CBUAE devised “Targeted Economic Support Scheme (TESS)” with the aim of providing relaxations in the form of 3 elements i.e. Bank’s reserve requirements for DD reduced by 50%, AED 50 Bn fund provided to banks via 0% interest collateralized loans & abiding by Central Banks suggested customer support measures in the form of reduced fees/compliance.
How pandemic is working in favor of Retail Loans?
On the credit supply side, decreased reserve requirements & buffer fund provisions are expected to encourage banks to lend more freely as compared to previously limited loan disbursals. Whereas on the demand side, the capping & relaxation on fees & charges (especially credit cards) is expected to increase retail loan demand with a rate of ~4% in the year 2020. The demand will further be supplemented as consumers suffering from pay cuts/job loss will resort to credit cards/personal loans to fulfill their daily utility expenses. SMEs contributing ~40% to GDP are one of the most impacted entities post-pandemic. With almost zero revenue generation during the lockdown phase, small enterprises are expected to rely on credit as they resume their operations thereby increasing SME loans by 15-20% in 2020.
A blessing in Disguise for Online Aggregators
The lockdown around the world taught industries the importance of online presence. This has created a huge opportunity for loan aggregators who work on the online operating model. Owing to health safety concerns, consumers now prefer minimal movement. Therefore, a significant shift in the consumer behavior can be seen with a growing preference for contact fewer services. As a typical loan involves multiply hidden and nonhidden charges, consumers approach online aggregators for price comparison & comprehensive analysis across multiple loan options. Analyzing the changing trends Ken Research forecasts the number of leads generated to grow at a whopping M-o-M level of 7%. However, with high growth during 2020, one can expect saturation in terms of loan demand (as loans from 2020 continue) thereby normalizing lead generation graph.
Analysts recommend, taking advantage of the scenario, key players to strengthen their technological landscapes by incorporating Artificial Intelligence, Machine Learning & Predictive Modeling to provide a customized advisory solution, match customer’s needs & choices and overall customer segmentation. Given the online aggregator’s highly scalable model and loan demand expected to rise worldwide, players can also, consider expanding geographically initially to GCC countries.
Companies Covered: –
Policy Bazaar UAE
UAE Cash Loans
Time Period Captured in the Report: –
Historical Period: 2015–2019
Forecast Period: 2020-2024
Key Topics Covered in the Report: –
UAE Online Loans Market
UAE Online Loans Industry
UAE Online Loans Market Major Players
COVID 19 Impact on UAE Loan Industry
UAE Retail Loan Industry Analysis
Online Brokers vs Online Aggregators UAE
Online Brokers in UAE
Commission Rate Online Aggregators UAE
Credit Outstanding in the UAE in AED
UAE Retail Loans Market Share
Impact of COVID 19 on UAE Loan Industry
UAE Online Aggregator Services Market
YallaCompare Credit Cards Online Revenue
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Related Reports by Ken Research: –
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Ankur Gupta, Head Marketing & Communications