Three Things We’re Hearing
- Consumers still value travel rewards cards
- Competition in the credit card sector is back
- Personal loan issuers remain hesitant
Four Things We’re Hearing
- Consumers have shifted credit card rewards preferences away from travel rewards and towards cash back on non-travel categories such as groceries
- Lending executives are generally finding the “work from home” model to be more effective than previously thought
- Alternative lenders continue to be absent from new customer acquisition markets
- Lenders continue to back away from select products, including HELOC’s and private student loans
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Consumer Credit Card Behaviors
- Epic fielded research this week on consumer preferences regarding credit card features
- The results show a shift towards the cash back feature, with over half selecting cash back as their preferred feature
- In a nod to the impact of stay at home orders, we’re seeing a significant shift in preferences away from travel, gas, and dining and towards groceries
Click here to view the full report
- The continued decline in online search volume for “travel rewards card” further reflects this shift, with a decline of over 80% since February
Lending Industry Developments
- Lenders’ ease of transition to a “work from home” model has varied, with some doing so seamlessly and others having more of a problem
- Some established banks with a traditional call center model have had more difficulty maintaining service levels
- “Newer” companies with more agile outsourced servicing models have tended to fair better
- Executives appear to be in no rush to return to centralized offices, with some, such as Barclays’ Jes Staley questioning the “large downtown headquarters” model’s long-term viability
- Capital One CEO Richard Fairbank announced that non-essential workers in the U.S., Canada, and U.K. will not return to the office until after Labor Day
- Banks are actively planning for a return to branch banking by removing seating in lobbies to discourage loitering, providing masks for customers, and erecting additional physical barriers such as plexiglass
- While the physical modifications are straightforward, the issue of identifying customers wearing masks continues to be a debate without obvious solutions
- There have not yet been widespread layoffs in the lending industry
Alternative Lenders
- Many alternative lenders continue to be absent from the personal loan table on LendingTree
- Most of those still present have higher rates than the competition
Lenders Continue to Back Away
- In addition to JPMorgan Chase and Figure, Wells Fargo stopped accepting new HELOC applications as of May 1st
- Bank of America has raised its FICO cutoff for HELOC’s from 660 to 720
- SunTrust has also discontinued making private student loans
Going Forward
- After a dramatic shift in lending markets and work environments, lenders are settling into the new paradigm
- As states begin to re-open, changes in employment and economic trends will further impact the lending markets
Thank you for reading.
Let us know what you think.
Jim Stewart
www.epicresearch.net
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