Following the best part of a decade of uninterrupted growth, the UK consumer credit market is no longer a growth industry. Outstanding unsecured borrowing fell by more than £500 per household over the last year.

Borrowing was set to contract by a further 2-3% or £200 per household in 2011 as consumers continue to repay debt and the supply of credit remains constrained. Given the historical significance of debt fuelled consumption to the UK economy, this prolonged contraction may impede retail sales and could be a drag on economic growth.

Total unsecured gross lending will rise from £179.5 billion in 2011 to £229.9 billion in 2016, equating to a compound annual growth rate of 4.6%. Unsecured personal loans are expected to perform best of all, doubling from £27.1 billion in 2011 to £56.1 billion in 2016. New car finance is also set for growth, with car manufacturers using this to stimulate demand.

While credit card lending is falling, gross lending in the other segments of consumer credit reports growth in 2012 as consumers, although keen to reduce debts, struggle to support their living standards in a context of stagnant wages, rising unemployment and rising cost of living.

For some consumers, they have to rely on credit facilities to pay for everyday living. As a result, other personal lending saw further growth in 2012, up by over 4%. Personal loans represent 87% of other personal lending, followed by overdrafts, while payday loans are the fastest growing category.

The major UK lenders are Banco Santander, Barclays, HSBC, Lloyds Banking Group, Nationwide and Royal Bank of Scotland, and together they accounted for around 70% of the stock of lending to businesses, 45% of the stock of consumer credit, and 75% of the stock of mortgage lending at the end of December 2011, according to the Bank of England.

The rest of the market is highly fragmented, due to the presence of other financial service providers such as insurance companies, supermarket chains and large retailers which expanded into consumer credit, such as Tesco Personal Finance and Marks & Spencer Financial Services.

Consumers are likely to keep their use of consumer credit to a minimum through to 2016. They do not want to take on new debt and will instead try to pay off their outstanding debts as much as possible. However, this could be challenging as consumers are facing rising unemployment and inflation, while wages remain stagnant.

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

FICO (NYSE:FICO), the leading provider of analytics and decision management technology, and Efma have announced the results of the sixth European Credit Risk Survey, which indicates retail bankers’ risk management priorities for 2013. In the survey, which queried credit risk professionals from 27 countries in September and October, 61 percent of respondents said cross-selling products to existing customers will be a priority in 2013, and 54 percent said they will analyse Big Data to better understand customers’ needs and risk.

“In this risk-averse period, banks are looking for credit growth primarily from existing customers, on whom they have more data,” said Frans Labuschagne, general manager for FICO in Europe, the Middle East and Africa. “But customers are risk-averse too, so banks need to really dig into customer needs to identify offers that might work. That’s where Big Data comes in — it’s a new resource that, if used wisely, can guide much more customer-centric offers and services.”

In the survey, 71 percent of respondents said demonstrating a higher return on capital is a priority for next year, making this the top priority for 2013. The other highest priorities identified were using mobile channels (49 percent) and increasing capital to meet Basel requirements (just 40 percent, but 21 percent put it as a top priority).

On the risk front, at least 40 percent of respondents saw delinquencies rising in the next six months on mortgages, auto loans, credit cards, small business loans and overdrafts. “This represents an improvement on the prior survey, released in July, when these numbers were above 50 percent,” said Labuschagne. “For example, 44 percent of respondents forecast an increase in mortgage delinquencies, compared to 55 percent in the last survey.”

The biggest change in the credit demand and supply picture occurred in the so-called “credit gap” between the percentages of respondents forecasting a rise in demand for credit vs. a rise in supply. The credit gap forecast for small businesses fell sharply in this survey, to the lowest point this year, just 9 points. The respondents forecasting an increase in volume of credit requested by small businesses fell from 37 to 35 percent, while those forecasting an increase in credit granted rose from 16 to 26 percent. However, the credit gap forecast for consumer lending rose to a full 20 points. Now, 35 percent of respondents predict a rise in the amount of credit requested by consumer, compared with just 15 percent who predict the amount granted will rise.

“Governments continue to pressure lenders to expand credit to businesses, and recent programmes like the UK small business lending scheme announced by the Bank of England should help,” added Patrick Desmarès, secretary general of Efma. “However, FICO and Efma believe lenders can and should do more to make capital available to small and medium-sized businesses, which can fuel economic growth and which continue to struggle to get credit.”

A detailed report, including specific results for the UK, Germany/Austria/Switzerland and Spain/Portugal, is available online. Participants included credit-granting institutions ranging from local banks to global institutions. Around 70 representatives from 27 European countries and 55 companies responded to this survey.

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

Small business domestic turnover increased by 5 per cent between Q2 and Q3 2012 according to The Cashflow Barometer, a quarterly study by Invoice and Asset Based Lender, ABN AMRO Commercial Finance.

This increase was bolstered by the recruitment and services sectors, which have continued to see turnover grow since hitting their lowest points in 2009.

Peter Ewen, Managing Director at ABN AMRO Commercial Finance comments: “The latest Cashflow Barometer supports recent reports that the UK economy is recovering.

“The recruitment and services sectors in particular have been the real success stories in recent months, demonstrating consistent turnover growth. But not all businesses have been so fortunate and the product-based sectors have continued to struggle.”

The Cashflow Barometer is a quarterly indicator of the financial performance of UK small businesses, based on analysis of 700 companies.

Rise of the recruiters

The services sector experienced a rise in turnover of 4 per cent between Q2 and Q3 2012, and 3 per cent on the same time last year.

Meanwhile, recruitment companies’ turnover increased by 10 per cent between Q2 and Q3 2012, and 7 per cent against the same period in 2011.

The manufacturing and distribution sectors also saw a slight increase in turnover against the previous quarter (5 per cent and 3 per cent respectively).

However, engineering experienced a decrease in turnover of 2 per cent against Q2. In fact, since Q3 2011, each of the product-based sectors (manufacturing, engineering and distribution) faced a decline in turnover of 9 per cent, 8 per cent and 12 per cent respectively.

Distribution has fared particularly badly, having seen its lowest average turnover for five years, falling 13 per cent since Q3 2007.

Peter Ewen comments, “Although it’s encouraging to see such a positive outlook for the service segment of the UK’s SMEs, clearly more needs to be done to support businesses.

“Recruitment sector growth is likely to be based on increasing demand for temporary workers and isn’t guaranteed to last in the long-term. Similarly, engineering and manufacturing need a significant boost if we are to see the promised export-led recovery.

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

Women are less scared of business failure than men, a far-reaching report into the potential of entrepreneurs has revealed.

They do not fear failure as much as their male counterparts and 74% believe they have the skills and talent to set up their own business.

The business battle of the sexes has become much more balanced over the last decade with female entrepreneurs entering the market and scoring corporate success.

Only 22.6% of women listed fear of failure as a barrier to starting up a business compared to 26.9% of men in the Amway European Entrepreneurship Report 2012.

More men than women are likely to go it alone in business but the gap is only two per cent and, significantly, the motivating factor of fitting work around family life is equal in both men and women.

But the annual report, which is commissioned to spot trends and examine ways of unlocking entrepreneurial potential, also discovered that women still believe that commerce, funding and finance are weighted against them.

They have a lower confidence when it comes to dealing with administration, economic know-how and believe there is a lack of advice specifically geared to them.

“We have already seen women breaking down the barriers that existed in business and making a huge contribution in terms of ideas and the drive to make them work,” said Andy Goldstein, director of the Entrepreneurship Centre at Munich’s Ludwig-Maximilians University.

“The research shows that they have the courage of their convictions and do not see personal failure in quite the same way as men. If they have an idea they are prepared to run with it and this is something the UK and the rest of Europe must harness.

“It is clear that the bureaucracy around business which impacts those first crucial steps can be daunting for women so we must make them easy for anybody with a good business idea.”

The UK has almost 700,000 women-led small and medium sized businesses, which contribute GBP50 billion annually to the economy, but the government believes the figure could be doubled. Home Secretary Theresa May last year launched a GBP2 million scheme to provide mentoring help for female entrepreneurs.

The lack of start-up capital is the main obstacle to new business with 57% citing the difficulty to gain financial support as a reason why they would not pursue a commercial idea.

Uncertain economic conditions were preventing 44% of people taking the plunge, the study added.

“Strengthening entrepreneurship contributes to economic growth and wealth but we need to do more to tap its full potential,” said Michael Meissner, Vice President Corporate Affairs, Amway Europe. “We need to encourage people to follow their business aspirations and reduce the bureaucracy and lack of support that holds them back.”

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

With Christmas approaching, and all expectations pointing to another bumper season for e-commerce and credit card transactions, fears are rising that most UK businesses are taking inadequate steps to safeguard customers’ credit card details.

Analysis by Ground Labs, the identity protection specialists, has found that the vast majority of UK businesses hold consumer credit card data unwittingly.

Holding credit card details in this way is a breach of Payment Card Industry Data Security Standards (PCI DSS) compliance obligations and can attract up to a £500,000 fine by the Information Commissioner Officer (ICO) in a case of a data breach.

Latest figures show that £341 million was stolen in the UK in 2011 through credit card fraud. There is a global black market for credit card data and hacking incidents have risen by 19% in the past six months. The UK is consistently among the top three most targeted countries and in August 2012 suffered 69% of worldwide phishing attacks.

Retention of credit card data is an issue for businesses of all sizes. A random survey of security experts who use Ground Labs software across more than 100 consumer-facing businesses found that every one of them had credit card details unwittingly stored on IT equipment. On average more than 1,000 credit card records were found by Ground Labs’ software within each business sampled.

Even businesses that claim to be compliant with agreed global standards for credit card data security hold rogue details, the Ground Labs survey has found. There are various possible reasons for this, all linked to standard computer processes such as browser caches or email duplications.

Amongst the worst examples uncovered was a company that firmly believed it had no records. It was found that the business actually held more than 20 million credit card numbers on servers throughout its network.

“We have more than 1,000 businesses across the UK and Europe that have used our software and every single business found erroneous card records in its IT systems”, said European Director for Ground Labs, Mohamed Zouine. “What we have found is that even those businesses that believe that their systems are clean are carrying records that could be easily acquired by hackers.”

Many UK businesses have adopted an open mind, accepting there may be hidden data, and have already taken steps to identify and resolve any possible problems. Ground Labs is advocating the use of a simple software programme called Card Recon as part of the standard systems maintenance routine to detect and remove credit card details.

Mohamed Zouine added: “We believe a routine check should be as frequent as anti-virus checks. There are many ways in which card details can remain on business’s IT infrastructure unwittingly. Transaction logs sent back from banks, browser caches, email duplications and more can hold sensitive data that has a black market value in the wrong hands and can be used to defraud consumers.”

Zouine added: “The issue for small businesses is that they are far less protected than large corporations. It is relatively easy for an entrepreneurial thief to steal IT equipment or hack in to a business and retrieve valuable credit card data.”

The software is also beneficial for consumers. A similar routine test of 50 PCs and laptops found that all but one of them held credit card details without the owner’s knowledge. “It is surprising to learn that many businesses continue prompting customers to email their credit card information as part of completing a transaction such as a hotel reservation for example’, Zouine commented.

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.