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  • Adapting to technological advances and changing consumer preferences in a dynamic market
  • Market size is projected to reach approximately $1.30 billion by 2030

Consumer finance is the process of borrowing money from banks or other financial companies to purchase items for personal use. Consumers often borrow money from banks, credit cards, and online lenders. The most common example is a car loan. Generally, people use their income to pay for everyday expenses such as rent, utilities, food, and transportation. To purchase items, they need that are not an expense, they borrow money from banks, credit cards, and online lenders.

The consumer finance market refers to financial services and products that are specifically designed to meet the needs and demands of individual consumers. This market encompasses a wide range of activities, including lending, borrowing, saving, investing, and insurance. The main goal of consumer finance is to provide individuals with the necessary tools and resources to manage their personal finances effectively and make informed financial decisions.

In addition, the consumer finance market plays a crucial role in promoting financial literacy and empowerment among individuals. It offers various educational resources and tools to help consumers understand financial concepts and improve their financial well-being. Furthermore, the consumer finance market fosters competition among financial institutions, leading to better products and services for consumers. It also plays a vital role in economic growth by providing individuals with access to credit and capital, which stimulates consumption and investment. Overall, the consumer finance market is essential for individuals to achieve financial stability and achieve their long-term goals.

Digital era

In the current digital era, how consumers carry out financial transactions has undergone a significant transformation. The emergence of online lending platforms and mobile payment solutions has widened the access that consumers have to financial services. This shift in technology has had a revolutionary impact on the consumer finance market, providing individuals looking for loans or making payments with enhanced convenience, efficiency, and speed.

The rise of Fintech companies focusing on mobile payment solutions has intensified the competition for traditional banking institutions. Consumers are increasingly inclined toward the convenience and simplicity of using smartphones to handle their finances and make payments. Furthermore, the enhanced security features offered by mobile payment solutions, including biometric authentication and encryption, appeal to individuals who prioritize the safety of their financial transactions. As a result, the consumer finance market is transforming, and this technology is becoming more accessible and user-friendly on a global scale.

However, shifts in consumer preferences and behaviors can impact the demand for certain financial products. For example, a trend toward cashless transactions or a preference for alternative financial services may influence the traditional consumer finance market. This can lead to a decrease in the demand for traditional banking services such as personal loans and credit cards. Additionally, the rise of digital banking and Fintech companies has provided consumers with more options and flexibility in managing their finances. As a result, traditional financial institutions may need to adapt and innovate their offerings to meet the changing needs and preferences of consumers.

Market projection

The global consumer finance market size was valued at $1,235.23 billion in 2022 and it is projected to reach approximately $1.30 billion by 2030, at a CAGR of 6% from 2022 to 2030.

Additionally, the consumer finance market is influenced by various factors, including consumer spending patterns, economic circumstances, and regulatory policies. Therefore, it is crucial for financial institutions and policymakers to extensively observe and comprehend the dynamics of this market. This understanding enables them to make informed decisions and ensure the stability and growth of the economy. Moreover, financial institutions adapt their offerings to cater to the evolving needs of consumers, closely monitoring their spending habits. Thus, having a comprehensive understanding of the dynamics of the consumer finance market is vital for both financial institutions and policymakers to establish a resilient and prosperous consumer finance system. Projections say that the total card payment value will increase by USD18 trillion over the next five years with the growth nearly evenly split between credit and debit cards. Cash reached the lowest rate in 2022 as a portion of consumer payment value at 22% as consumers turn to electronic and card alternatives. The high level of card conversion for consumer payments does not match B2B payments which heavily favor electronic direct and paper channels over financial cards offering an opportunity for card networks, issuers, and digital payment platforms.

Global consumer paper payment value dropped by $3.8 trillion from 2017 to 2022. The decline was not confined to certain markets, with only eight of the 47 researched gaining in consumer paper payment absolute value over the previous five years. Singapore had the highest drop in consumer paper value over the same time frame with an 89% decline.

The migration of consumer payments to financial cards and electronic direct channels has been accelerated by government efforts to increase transparency and security of consumer payments overall. Also driving the conversion is the access to financial services and efforts to make card acceptance universal. Fintech has played a leading role in making financial products and services easier to use and lowering the overall cost for consumers.

The migration of retail online contributed to rising m-commerce which has increased globally by $3.5 trillion from 2017 to 2022. Together with the ease of access offered with mobile devices, this is expected to further drive use to reach USD10 trillion by 2027.

While a large portion of M-commerce growth will come through proximity m-commerce, it will grow slower than remote m-commerce and is expected to account for 35% of the total by 2027, down from 39% in 2022. The single market that is driving m-commerce payment value is China, which accounted for 55% of all m-commerce in 2022. However, with greater global adoption the country’s share is expected to fall to 47% by 2027.

However, the consumer finance market around the world has been on the upswing since spending fell due to Covid-19. Nearly all the major payment companies are seeing a reduced processed value, but with more people using cards instead of cash to purchase goods, an additional increase in volume is projected. There has been a significantly high volume of retail, particularly in the Asia Pacific area. The shift to online and financial service innovation is expected to drive greater volume going forward.

After the pandemic, the global consumer finance market is growing steadily, fueled by increasing disposable incomes and high economic growth. The market is experiencing rapid growth due to the entry of new payers, including major peer-to-peer lenders, and pure digital players. There is increasing disposable Income and a growing demand for credit-based consumption.

Challenges and opportunities

Financial institutions are shifting upwards in unprecedented ways, with credit demand also increasing as a result. The rise of the affluent middle class and growth in the rural economy is changing what people will buy and this is causing consumption growth. For example, India’s credit growth is mainly driven by retail loans and the increasing rate of credit card penetration in that country. In India, consumption expenditure is more than double what it is in countries like Brazil.

Many consumers are experiencing a wide range of challenges due to the changing economic and technological landscape. For example, many people are having a difficult time securing credit because lenders often check their credit scores before approving loans. In addition, many people struggle with finances and may not be able to make ends meet. Furthermore, some students are burdened by student loans and often find it difficult to repay these loans. Finally, many consumers are struggling with finding safe and ethical ways to make money.

Even though banks provide financing solutions to a significant share of the population, a lot of people in the world don’t have access to any services. New-to-market lenders can identify these gaps in the lending markets and then try to bridge them. Lots of potential customers want a tailored solution to their needs, which often doesn’t come cheap when taken from a traditional bank. Newcomers in the industry can quickly design new products and are not weighed down by legacy processes or infrastructure.

Based on type, the market is bifurcated into secured consumer finance and unsecured consumer finance. Secured consumer finance is expected to hold a significant revenue share in 2022, due to the level of security it offers both lenders and borrowers, lenders can reduce their risk and feel more confidence in issuing loans by requiring collateral, such as a house or car. This, in turn, allows them to offer more favorable interest rates and terms to borrowers. Additionally, secured consumer finance often allows for higher loan amounts, making it an attractive option for individuals looking to fund major purchases or consolidate debt.

Based on application, the market is bifurcated into bank and financial corporations, and non-banking financial companies. The bank and financial corporations segment has registered the highest market share in 2022. As these institutions have a strong reputation and brand recognition among consumers. Many individuals feel more comfortable entrusting their finances to well-established banks that have been around for decades. Additionally, these institutions often have a wide range of financial products and services, allowing consumers to conveniently access all their banking needs in one place. This convenience factor is a major advantage for banks and financial corporations as it saves consumers time and effort in managing their finances.

Regional insights

Based on region, the global consumer finance market is classified into North America, Europe, Asia Pacific, MEA, and Latin America.

North America held the largest market share in 2022 as the region has a highly developed and robust financial infrastructure, with a well-established banking system and a wide range of financial institutions. This allows for easy access to credit and other financial services, which, in turn, drives consumer spending and economic growth. This creates a thriving market for consumer finance products and services, attracting both domestic and international financial institutions to operate in the region.

Asia-Pacific is anticipated to register the fastest growth rate over the forecast period as the region has experienced rapid economic growth in recent years, leading to an increase in disposable income. Additionally, the increasing demand for consumer goods and services has led to a surge in demand in APAC region. Moreover, the region’s substantial population offers financial institutions a wide customer base to cater to, thereby fueling market expansion.

Since 2017 Asia Pacific has been responsible for at least half of all consumer payment value. The region’s share of card payment value has consistently increased and is projected to account for 63% by 2027. While China accounted for 81% of the payment value in the region, the country’s share is expected to decline as other emerging markets in the region achieve higher rates of financial service adoption. Generating the most card payment value has created the world’s largest card issuers and network by processed value and contributed to rapid innovation in acceptance and access.

56% of all consumer card payments came from the Asia Pacific region in 2023. This is expected to accelerate to 61% over the next five years, increasing the region’s position as the hub for financial card development and innovation.

Future trends

Economic experts identified $32 trillion in commercial paper payment value globally with the vast majority of other B2B taking place electronically. This is two times the opportunity for card and electronic payment providers who have traditionally focused on capturing the remaining $15 trillion in consumer paper payment value. In 2022, commercial card value only accounted for 2% of global B2B payment value. Increasing the cards’ share of total B2B will require developing compelling incentives and rewards for merchants, primarily small and medium businesses.

M-commerce continues to grow exponentially and expected to go up to $11.2 trillion by 2028; benefiting from the continued migration of retail online and increased capabilities of mobile devices. The nearly universal adoption of smart devices enables consumers all over the world to make purchases from anywhere quickly, easily, and securely.

With a greater portion of personal payments converted to financial cards or electronic channels, there has been a growing interest in converting B2B payments, of which only 2.7% took place on financial cards in 2023. The total outstanding balance of consumer credit reached new highs in 2023 to reach 417 trillion in outstanding balance. The single largest category in 2023 was financial card lending, accounting for 32%.

The consumer finance industry across the ASEAN region is characterized by its notable diversity, reflecting the distinct economic developments and varied banking landscapes unique to each country.

In developed nations like Singapore, where the banking population is high, there’s a noticeable decline in the demand for personal loans, leading to reduced borrowing activities. On the other hand, emerging countries such as Malaysia, Thailand, and Vietnam are experiencing a surge in the demand for short-term credit. This trend is largely driven by a significant unbanked population and increasing household indebtedness.

Southeast Asia’s consumer finance industry is marked by a dynamic, evolving landscape influenced by diverse regional factors and a blend of traditional and innovative financial services.  With growth driven by technological advances, regulatory shifts, and changing consumer behaviour, the industry faces both opportunities and challenges ahead.

One of the emerging technologies making inroads into the online lending market is P2P lending, a platform-based application that allows borrowers to post loan requests for investors to review and fund. These platforms are increasingly preferred due to streamlined processes, suitability for smaller loans, and quicker funding times, appealing to consumers with lower credit scores and small and midsize enterprises (SMEs). The global P2P lending market is forecasted by Precedence Research to expand rapidly, particularly in the Asia-Pacific region, with an estimated CAGR of about 27% from 2023 to 2032, with Singapore leading the Southeast Asian market.

The author, Nazir Ahmed Shaikh, is a freelance, writer, columnist, blogger, and motivational speaker. He writes articles on diversified topics. He can be reached at