Retail Credit Market Competition Analysis - February 2019 Insights
Explore the competitive landscape of retail credit services as assessed by the FTC. The study delves into the operations of different financial institutions and unveils customer demographics, preferences, and anticipated market trends. Insights suggest a less segmented market, prompting the need for further data validation from MFIs.
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Presentation Transcript
The Retail Supply of Credit February.19.2019 Presented by: Kevin Harriott Competition Bureau Chief| FAIR TRADING COMMISSION
OUTLINE Background I. II. Previous Studies in Financial Sector III. Summary of FTC s Study of MFIs IV. Conclusion
I. Background Consultancy in progress Objective: assess competition in the space in which commercial banks operate Study to focus on retail credit services Types of institutions operating in this space: 1. Commercial Banks 2. Building Societies 3. Credit Unions 4. MFIs?? (Data needed)
II. Previous Studies in Financial Sector Commercial Banks (2010) ~ information asymmetries Credit Union (2012) ~ no real issue MFI s (2017)
III. Summary of FTCs Study of MFIs Demographic profile of customers of MFIs 54% married 55% monthly earnings between $30K $90K 68% completed secondary education 44% older than 40 years
III. Summary (contd) Customer Survey: A. Differentiated Service (relative to other suppliers) Main reason for using MFI s 28% less restrictive eligibility requirements (access) 27% quicker processing time (quality) B. Anticipated Growth in Demand: 49% First time customers of MFIs INFERENCE: Retail credit market appears less segmented! Data needed from MFIs to confirm this
III. Summary (contd) INFERENCE: Retail credit market appears less segmented! Data needed from MFIs to confirm this
III. Summary (contd) Prior Beliefs Banks, CU, BS MFIs Traditional Customers Other Customers
III. Summary (contd) Speculation Banks, CU, BS MFIs Traditional Customers Other Customers
III. Summary (contd) Improving the Market MFIs suggestions: ~ Access of Cheaper Source of funds ~ Expansion of Clients of Credit Bureaus ~ Introduce regulations limiting number of MFIs
III. Summary (contd) FTCs suggestions RE: Draft MicroCredit Bill ~ Remove unnecessarily restrictive regulations
IV. Conclusion Need data to get MFIs on the radar (informed policy position)
