UK business landscape: consumer credit

This year has seen the rise of frictionless payment platforms offering ‘buy now pay later’. Big players in the market include Klarna, AfterPay, and QuadPay – all of which are being adopted by online retailers with Gen Z and Millennials. However, over half of UK SMEs are being left behind by the digital revolution, allowing more tech-savvy and large retail chains competitors to win new customers at their expense

Large retailers do not require the cheapest lending options and the opportunity for the buyers to compare the those, rather than making them buy more. Moreover, large retailers are capable of heavy investments into costly integrations. Be it BNPL products, credit products, or acquiring, large retailers get it cheap due to the volume of the transactions they process.

So, what about the costly consumer credit?

In contrast, JO1N focuses on the SME segment as a form of supporting and empowering local consumption patterns and offering better customer experience, increased sales, customer loyalty, and higher LTV. SME marker historically lacked features that large players benefited from. We strongly believe in transparency and that hard-working SMEs also have the right benefit from Open Banking and our partnership in that space (read more in the following articles consumer credit and post-purchase experience. It is our priority to digitalize sales processes for the most vulnerable market players.

Together with our partner company, we are working on the “single window to many lenders right at the checkout” propositions in other geographies for 6+ years and we are willing to offer that innovation to the UK consumers.

Woolard’s review

The publication of the FCA Woolard Report makes it seem highly likely that the regulatory landscape for the UK BNPL Sector will change particularly if (as expected) this includes the regulation of the BNPL product. Analysts predict that this will have a major impact on the current Business/Operating models of UK BNPL lenders and is likely to change their view of the sector as a whole given the background in regulated lending of multiple large incumbents. Further clarity is required from the UK Regulators (FCA) on actioning the recommendations in the report and in the meantime many of the lenders are conducting their internal review of the sector to assess our appetite for entry.

JO1N = Innovation

Before entering the UK market, we have conducted a detailed market assessment. We have not found any company on the UK market that would transparently advertise the opportunity for the buyers to choose the lenders they want to borrow from right at the checkout when buying goods.

JO1N has all the technology in place, to offer the regulated financing option while removing frictions at the checkout for our buyers. For example, the majority of the existing lenders requested adding up to 5 steps for the first-time users, as they have to provide the (1) pre-agreement document during the application process by law, then (2) agreement draft, while (3) some lenders don’t support the 2-factor authentication for the final part of the agreement – signing.

Certain aspects cannot be avoided due to the regulated credit requirements from the FCA for the first-time buyers, however, the returning customer would not be required to fill in all the details again and again. Entering the credit details only once, the buyer could advance to the page where she/he can choose the lender to borrow from and sign the contract almost instantly due to the Open Banking 90-day consent. In the meantime to benefit from the lower fees, unlike the average of 24% APR on credit cards.

All in all, we have to admit that traditional consumer credit is going to stay with us for a while. is dead, long live consumer credit. Thus, we think that the consumer credit proposition has a bright future, and JO1N is here to make it easy and so handy to borrow at the checkout using just your phone.

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Image credit: wsfurlan at iStockphoto