Consumer Finance Market

Consumer Finance Market size

The global Consumer Finance Market size was valued at USD 1342.34 billion in 2023 and is projected to grow from USD 1415.90 billion in 2024 to USD 2168.53 billion by 2031, exhibiting a CAGR of 6.28% during the forecast period.

The growth of the market is driven by several factors, including increased financial awareness, an expanding middle-class population, effective government initiatives promoting financial inclusion, and rapid technological advancements. Additionally, the rise of numerous fintech startups offering innovative financial products and personalized services is contributing to market expansion.

In the scope of work, the report includes products offered by companies such as Berkshire Hathaway Inc., Bank of America Corporation, JP Morgan Chase & Co., Citigroup Inc., ICBC, HSBC Group, Goldman Sacks, Wells Fargo, Banco Santander SA, China Construction Bank, and others.

Banks, financial corporations, and NBFCs are actively expanding services to underserved populations, fostering financial inclusion and economic growth. Rising demand for financial services among the growing middle class in emerging markets such as India, China, Indonesia, and Africa further boosts this expansion. Furthermore, companies are leveraging partnerships to develop innovative financial products and services, broadening their customer base.

• For instance, in October 2024, Mintos, a leading P2P platform, partnered with Upvest to enhance ETF portfolios across Europe. The partnership aims to automate processes and manage ETF portfolios effectively in the consumer finance market.

Consumer finance encompasses the savings, loans, and investment decisions made by individual households. Household income, consumption patterns, savings, asset, and debt levels are critical factors influencing consumer finance decisions. 

This market served by a diverse range of financial institutions, including non-banking financial companies (NBFCs), banks, and financial corporations, offering services such as credit facilities and deposit options to cater to the diverse consumer needs.

This market is broadly categorized into secured and unsecured finance, depending on the presence of collateral. Banks and financial institutions define collateral as an asset pledged by the borrower to secure a loan, granting the lender the right to seize and sell it in case of default.

Analyst’s Review

The consumer finance market is highly competitive, with companies constantly innovating to attract and retain customers. Consumers prefer availing finance products and services from banks over non-banking financial companies (NBFCs) due to lower interest rates, stringent regulatory oversight, and the trust and credibility of traditional banking institutions.

Banks are adopting a customer-centric approach, offering tailored financial products and services based on individual customer needs and financial situations. Furthermore, key players are implementing initiatives like enhanced digital banking platforms, personalized financial advice, and streamlined loan application processes.

The market is expected to move toward greater personalization, increased use of fintech solutions, and further integration of artificial intelligence for credit scoring and risk management.

• In November 2024, Tech Mahindra was granted the Best Mobile Banking App award (vendor category) at the Digital Banker Global Retail Banking Innovation Awards 2024. The winning mobile collections application provides agents with a comprehensive 360-degree view of borrowers, including linked loans, payment delays, broken promises to pay (PTPs), and other relevant data, facilitating more proactive customer engagement.

Consumer Finance Market Growth Factors

The expansion of the global market is primarily fueled by the rapid adoption of new technologies, along with rising financial literacy and inclusion among consumers. Banks, financial corporations, and NBFCs are increasingly adopting new technologies to enhance services such as online banking, mobile payments, and digital insurances.

Further, emerging fintech companies in the consumer finance market are offering AI-powered credit scoring, block chain based lending services, and digital lending platforms.

• For instance, SALT, an Indian fintech startup established in 2016, accepts cryptoassets as collateral for credit lines. Its lending platform provides business and personal loans, allowing borrowers to maintain ownership of their assets.

Furthermore, the burgeoning middle-class populations in emerging economies such as China, India, Indonesia, and Malaysia are fueling the demand for financial products and services, including savings deposit facilities, mortgages, and auto loans. Stringent regulatory measures enforced by central banks across these countries have strengthened consumer protection, fostering greater trust in the financial system.

The consumer finance market faces challenges such as cyber security threats, default risk and intense competition. To mitigate these obstacles, banks, financial corporations, and NBFCs are investing in technology to enhance risk management, adopting robust credit models, and expanding their product portfolios with personalized financial products.

Consumer Finance Industry Trends

Growing financial awareness is expanding the consumer finance market. Consumers are actively managing their finances, tracking credit scores, and participating in capital market investments. To capitalize on this growing financial literacy, fintech startups are offering innovative lending solutions, including AI-powered credit scoring, mobile-only lending platforms, and blockchain-based lending models.

• In August 2024, TransUnion CIBIL, a leading Indian credit information company, reported a 51% year-on-year increase in Indian consumers monitoring their credit score during the 2023-24 financial year. This growth highlights rising consumer awareness, sustainable credit expansion, and enhanced financial inclusion in the India consumer finance market.

Additionally, the rise of alternative lending models, such as buy-now-pay-later (BNPL) and peer-to-peer (P2P), is a significant trend influencing the consumer finance landscape. The widespread adoption of BNPL model by various e-commerce sites enhances flexibility and convenience in online shopping. Additionally, P2P platforms attract borrowers with competitive interest rates and offer investors attractive returns.

Segmentation Analysis

The global market has been segmented based on type, application and geography.

By Type

Based on the type, the market can be categorized broadly into secure consumer finance and unsecured consumer finance. The secured consumer finance segment dominated the consumer finance market in 2023, accounting for a substantial share of 67.68%.

Secured finance enables borrowers to access credit by providing collateral as a guarantee to the lender. This mitigates the lender's risk and often results in more favorable loan terms for the borrower.

Common examples of secured finance include mortgages, auto loans, equipment and inventory financing. The growth of secured finance is largely attributable to lower interest rates, increased borrowing capacity, and extended repayment periods.

By Application

Based on the application, the market has been bifurcated into bank & financial corporations and NBFCs. The bank and financial corporations segment recorded a revenue of USD 763.90 billion in 2023 and is expected to grow at CAGR of 6.35% over the forecast period.

Banks and financial corporations play a pivotal role in consumer finance by providing products and services essential for managing finances, making purchases, and achieving financial goals. The provide secure platforms for savings, enabling individuals to earn interest on deposits and manage diverse investment options such as mutual funds, bonds, and insurance policies, guided by financial market experts.

• For instance, in December 2024, State Bank of India (SBI), India’s largest public sector bank, launched the Quant Fund, an open-ended equity scheme driven by mathematical models. The fund aims to achieve long-term capital gains by investing in equity and related instruments.

Consumer Finance Market Regional Analysis

Based on region, the global market has been classified into North America, Europe, Asia Pacific, MEA, and Latin America.

North America consumer finance market accounted for a substantial share of 31.80% and was valued at USD 426.81 billion in 2023. This growth is primarily attributed to a mature financial infrastructure, a favorable regulatory environment, technological advancements, and high consumer spending.

Historically, the region has led the market due to its established financial systems and competitive landscape, characterized by a dynamic and competitive market with numerous players offering innovative offerings such as fintech solutions and digital lending platforms. High disposable incomes and a strong consumer culture further fuel demand for a diverse financial product, including credit cards, mortgages, and personal loans.

The Asia-Pacific consumer finance market is anticipated to grow at a fastest CAGR of 6.74% during 2024 to 2031. This growth is primarily fostered by rising financial awareness, supportive government policies for financial inclusion, and rapid technological advancements in the banking sector.

Developing economies such as China, India, Indonesia, and Malaysia are rapidly adopting new banking technologies. Furthermore, government initiatives aimed at enhancing financial literacy and promoting financial inclusion have facilitated greater access to financial services, enabling banks to reach rural and underserved areas effectively.

• According to United Nations Capital Development Fund (UNCDF) report published in June 2023, improved credit access has led to better financial health for 89% of consumers in Southeast Asian countries, including Cambodia, Indonesia, Myanmar, Vietnam and the Philippines.

Competitive Landscape

The global consumer finance market report will provide valuable insights with a major emphasis on the fragmented nature of the industry. Prominent players are focusing on several key business strategies, such as partnerships, mergers and acquisitions, product innovations, and joint ventures, to expand their product portfolio and increase their market shares across different regions.

Companies are implementing impactful strategic initiatives, such as expansion of services, investments in research and development (R&D), establishment of new service delivery centers, and optimization of their service delivery processes, which are likely to create new opportunities for market growth.

List of Key Companies in CONSUMER FINANCE MARKET

• Berkshire Hathaway Inc.
• Bank of America Corporation
• JP Morgan Chase & Co.
• Citigroup Inc.
• ICBC
• HSBC Group
• Goldman Sacks
• Wells Fargo
• Banco Santander SA
• China Construction Bank

Key Industry Developments

• September 2024 (Merger): Indian NBFCs Caspian Impact Investments and BlackSoil Capital announced a merger to create a larger entity with an Asset Under Management (AUM) of INR 2,000 crores. The merged company plans to expand its services to major cities such as Mumbai, Hyderabad, Delhi, and Bengaluru.
• July 2024 (Partnership): TransUnion CIBIL, a leading credit rating agency of India, partnered with SEHER, a women entrepreneurship platform. This collaboration aims to increase awareness around financial literacy, credit access, and management.
• June 2024 (Partnership): Mintos, a leading P2P platform, launched Mintos Smart Cash to offer attractive returns on cash investments. This cash management solution allows customers to invest in a money market fund.

The global consumer finance market has been segmented as:

By Type

• Secured Consumer Finance
• Unsecured Consumer Finance

By Application

• Bank & Financial Corporations
• NBFCs

By Region

• North America
  • U.S.
  • Canada
  • Mexico
• Europe
  • France
  • UK
  • Spain
  • Germany
  • Italy
  • Russia
  • Rest of Europe
• Asia-Pacific
  • China
  • Japan
  • India
  • South Korea
  • Rest of Asia-Pacific
• Middle East & Africa
  • GCC
  • North Africa
  • South Africa
  • Rest of Middle East & Africa
• Latin America
  • Brazil
  • Argentina
  • Rest of Latin America