The more lenders know about their customers, the better equipped they are to align those consumers with the most relevant products and services.
In the alternative financial services (AFS) market, demographic data is essential to help define who consumers are, including the average age of borrowers, the type of credit channels and products they prefer (segmented by generation), average incomes by product type and how credit scores correlate with these various trends.
For example, data consistently shows that younger borrowers prefer online lending channels, but if online lenders think millennials are their heaviest users, they are mistaken. Generation X dominates the online channel, and carries the most debt of any generation overall. However, millennials run a close second, and relative to its size, this group takes out more loans per person than any other generation.
Storefront lenders should note that baby boomers compose their core market. Storefronts conduct business face-to-face, which older generations tend to favor. Because of this familiarity, storefronts generally have fewer stipulations and less conservative underwriting approaches. This could explain why storefront loan amounts for both installment and single pay increased from 2016 to 2017, despite the fact that storefront borrowers consistently have lower incomes than their online counterparts.
Learn even more about how different generations use credit and whether your business is positioned for success.