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Underbanked Loan Behaviours Defined

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© Business Wire 2014
2014-03-24 10:02:01 -

Recent studies show that 12 percent of the United Kingdom’s population falls into the category of underbanked. This translates into nearly 8 million UK consumers that may have current accounts, but for various reasons, lack access to traditional credit options. Lenders face the challenge of managing lending risks among these consumers because of their lack of credit history. To better understand the needs of these consumers’, LendProtect : .. , the leading provider of underbanked consumer data, analytics and risk-scoring solutions, publishes The LendProtect Underbanked Index.

The quarterly analysis offers data points regarding cyclical trends and effects tied to these consumers. The first index was released in 2013 and provides a snapshot of the key attributes that define underbanked

consumers. Insight from the Demographics Edition of the index includes average consumer age, employment history and median loan amounts in relation to consumer income. The current edition delves into specific behaviours of this large but misunderstood group of consumers.

“The Underbanked Index provides lenders with a better understanding of who these consumers are, and offers an opportunity for advancement in a space that has previously been hard to reach,” says Greg Rable, CEO of LendProtect’s parent company FactorTrust. “Additionally, consumers who fall into the underbanked category have long lacked the traditional tools needed to be financially savvy; the availability of this data provides the opportunity to gain entry into the traditional banking and credit world.”

Key findings outlined in the Loan Behaviours edition of The LendProtect Underbanked Index offer revealing data points on.

- Credit Scores
- Average Loan Amount Requested
- Approval Rates
- Default Rates by Consumer Location
- Banking Relationships
- Amount Borrowed by Age

Key learnings from the Loan Behaviour edition of The LendProtect Underbanked Index include:

1. Credit Scores. The average LendProtect credit score in its extensive database is 736.

2. Average Loan Amount Requested. In 2013, the average loan amount requested was £227.

3. Approval Rates. 21 percent of scored applications pass lenders’ initial criteria.

4. Default Rates by Consumer Location. The top 10 cities where applicants reside, as ranked by lowest to highest First Payment Default rates are as follows: Glasgow, Nottingham, Sheffield, Bristol, London, Leeds, Liverpool, Birmingham, Manchester, Leicester.

5. Default Rates by Age. Nearly 40 percent of borrowers are Millennials (18-30 years old) and this group had the highest average default rate in 2013. The 31-40 year age range came in at a close second, having a five percent lower default rate than the Millennials.

6. Banking Relationships. More than 100 banks and approximately 10,000 branches are included in the database.

7. Amount Borrowed by Age. In the past year, the 18-30 year bracket borrowed the highest amount (34 percent of the total borrowed), closely followed by 41-50 year-olds (31 percent). 61 years and older borrowed the least (one percent). Comparing the past year to the lifetime of the LendProtect database, the 18-30 year-olds gained the greatest share, moving from 29 percent of the total borrowed to 34 percent.

A copy of the Loan Behaviour Edition, as well as past issues of The LendProtect Underbanked Index, can be viewed at: : .. .
To receive the quarterly Index automatically via email, sign up at : .. , or simply contact : .

About The LendProtect Underbanked Index

Published quarterly, The LendProtect Underbanked Index provides a range of data points including demographic, loan behaviour, seasonal effects and others, to help shed light on underbanked consumers. The Index assists financial institutions, associations, analysts and media interested in tracking, benchmarking or understanding the needs of underbanked consumers. Data is based on expert analysis from LendProtect’s database of millions of records related to underbanked consumers collected by the company each quarter. For more information, please visit : .. .

About LendProtect UK Ltd.

LendProtect UK Ltd. has compiled the most comprehensive data on the underbanked market in the industry on portfolios that report data daily, in real time. This daily loan performance data on millions of underbanked consumers is analysed in order to provide instant lending decisions using the company's comprehensive scoring platform. Lenders are continually faced with the challenge of how to effectively and intelligently manage risk and assess affordability on this segment. This analysis uses data not typically reported to the credit bureaus, and is invaluable in helping consumers have access to better borrowing options, while also providing a more accurate assessment of the consumer for lenders. For more information please contact LendProtect UK at +44 (0) 114 209 6052 or : .

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Trevelino/Keller Communications GroupCarrie Crabill,

+1-404-214-0722 Ext. 102 :

Hossam Abdel-Kader
Phone: +43 1 9582319

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