Research Reveals Consumer Finances Stabilising but Highlights Need for Finance Providers to Prepare for Next Phase

The latest research from global information and insights provider TransUnion suggests that consumers who have weathered the initial shock of COVID-19 are feeling more financially stable, but those experiencing financial difficulties face some challenging months ahead.

In its latest report, which marks almost six months since UK lockdown and social distancing measures were first imposed, TransUnion’s Financial Hardship Study* found the number of households negatively impacted financially at its lowest (53%) since March, and those not yet impacted but expecting to be in future (13%) at less than half of what it was when lockdown began (28%).

However, the number impacted that are struggling to pay bills remains almost as high as it was at the start of the pandemic (70% in March versus 68% at the end of August) with utility bills (39%), credit card payments (37%) and rent (27%) remaining the areas of most concern. Of those expecting to be unable to pay, almost half (47%) think that will happen within one to three months.

Shail Deep, chief product officer at TransUnion in the UK said: “While for most people the picture is stabilising, the financial pressure that still exists for many is concerning, and suggests the potential for significant increases in defaults and arrears in the next few months. Finance providers responded quickly with emergency measures at the outset of the pandemic and as we enter this next phase, they must again be ready to act, and to use the insights and tools available to understand the challenges their customers are facing. In such a rapidly changing environment, it’s essential that lenders are getting the most comprehensive picture possible of the customer’s circumstances, and can spot any early warning signs of financial distress.”

TransUnion’s TrueVision is one of the tools that finance providers are turning to as they seek a nuanced and comprehensive picture of the individual’s financial status. Incorporating up to 72 months of account history, it uses extensive data attributes and proprietary algorithms to create a powerful picture that provides insights into the consumer’s spending trends and behaviour, as well as their ability to absorb financial shock.

Shail Deep continues: “It’s really positive to see that companies are now engaging much more with customers that are experiencing financial difficulty, with four in 10 having provided guidance on payment options in August, up from 22% in March. The various support measures, such as deferrals and payment holidays, have had a steadying effect on consumer finances, with a quarter of impacted households having benefitted from them over the past six months. However, 23% are hoping to extend these arrangements, and four in 10 (41%) want to create a repayment plan to catch up gradually. Finance providers need to be looking at the longer-term strategy and tailoring solutions that cater to individual needs.”

Brendan le Grange, director of research at TransUnion in the UK added: “Consumers continue to adjust to the current situation, cutting back on both spending and saving, as well as delaying holidays (56%) and home improvements (25%). That said, we’ve seen a decline this month in the number putting off house purchases, most likely as a result of the stamp duty holiday which has helped boost the UK property market after an extremely challenging second quarter. As we look ahead, with the Coronavirus Job Retention Scheme coming to a close next month, consumers that are facing difficulty need to reach out to the companies they have accounts with – something less than half (45%) have done to date – to set out their situation.”

View the latest research report here or visit TransUnion’s website for more about TrueVision.



*Based on a series of surveys of 1000 UK consumers, from 23 March to 31 August 2020, carried out on behalf of TransUnion