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European Retail and SME credit

In 2015 Intrum Justitia published the "European Retail and SME Credit – Recovery Time?” report which examined the current state of European retail and SME credit markets. A year later and its findings have never been more relevant.

The European Retail and SME Credit – Recovery Time? report updates the European Retail Credit – Payback time? report which Oliver Wyman and Intrum Justitia published in 2008.

“It was time for an updated report,” explains Johan Brodin, Chief Risk Officer at Intrum Justita. “Especially given the major changes the market had undergone since the financial crisis.”

For the 2015 report, the scope was extended to also cover SME lending. “As well as examining the current state of the credit markets the report forecasts their evolution over the coming years,” says Brodin. “It also outlines the strategies that banks should adopt in response to these likely changes and the capabilities that they will need to develop.”

Major trends

The report identified four key trends that will affect European retail credit markets over the next three years:

1. New regulations.

2. Digital channels.

3. Increased use of third party servicers.

4. New entrants.

  “All of the trends identified are still relevant,” Brodin says. “Even more now than when the report was published since the media is increasingly focusing on the topics that we highlighted.

“And digitalization for example concerns not only us but the economy as a whole. Gray banking is also here to stay simply because it has become so much easier to get in contact with your clients and you can also make use of customer intelligence in a way that banks are not able to.  Also the regulatory trend is even more accentuated for our own industry.”

Helping customers

Brodin says that the report has helped Intrum Justitia´s customers in many ways. “It has provided insights on the drivers behind the coming changes,” he says. “And also how lending in Europe has changed since the crisis – what has grown, what has not grown and why we have had this development.”

And, Brodin concludes, the report clearly shows how Intrum Justitia can play an essential role in helping SMEs: “By showing both the level of outstanding debt that exists in Europe today and how fast it has changed in some economies, the report points toward our basic business idea, to help people get paid and to be a catalyst for a sound economy. That has never been more relevant than now.”