TransUnion research reveals consumers’ increased appetite for alternative lending

TransUnion’s Q3 2021 “Philippine Consumer Pulse study* has uncovered that consumer awareness and appetite for alternative lending methods are broadening. Specifically, Buy Now Pay Later (BNPL) facilities have high awareness among consumers, with 74% of millennials (born 1980–1994) and 78% of Gen Xers (born 1965–1979) saying they’ve heard of BNPL services.

Nearly half (45%) of all respondents also reported they have used BNPL services in the past 12 months.

“The growing popularity of Buy Now Pay Later coincides with the convenience, availability, and smooth transactions that consumers have come to expect from digital services,” said Pia Arellano, president and CEO, TransUnion Philippines. “Lenders looking to implement campaigns in this evolving and growing area must be able to establish an underwriting system that can identify good customers in order to sustain that reasonable balance between risk and opportunity and great customer experiences.”

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Filipinos’ perceived access to credit (or lack thereof) may also have something to do with the high awareness and use of BNPL services. Over half (55%) of respondents in TransUnion’s latest Consumer Pulse study believed access to credit is important to achieve their financial goals, but only just over a third (36%, an increase of three percentage points from Q2 2021) said they have sufficient access to credit and lending products. Despite this, nearly half (46%) of respondents said they plan to apply for new or refinance existing credit in the next year.

The survey revealed that among those who have used BNPL services in the past 12 months, millennials and Gen Z generations are most curious with 40% and 38%, respectively, saying they used BNPL because they “just wanted to try it.” Gen X was the generation most likely to make larger purchases with the service at 34%. Baby Boomers (born 1944–1964) was the generation who most said they used BNPL in order to spread payments over time (60%). More than 30% of each generation surveyed said they used Buy Now Pay Later services because it was easy to apply for it.

“With BNPL gaining traction, we are seeing a growing opportunity for financial services providers and even marketers to support consumers during this difficult time,” Arellano said. “In more mature global credit markets, retailers have even been extending BNPL to products or services beyond the usual consumer goods, such as vet care. There is a huge growth potential for BNPL, and TransUnion is focused on helping lenders accommodate evolving consumer needs by helping inform risk decisions so that the economic viability of BNPL lending can be sustained. Lenders that use advanced information and insights and digital onboarding technology can grow market share, while also safeguarding themselves and consumers from fraud. Done right, consumer lending has the ability to stimulate economic activity and benefit the nation as a whole.”