While card lending remains the leading category in terms of gross lending, it was inevitable that it would experience a decline in 2020 as consumers were becoming increasingly careful with their spending in the uncertain economic situation against the backdrop of the COVID-19 pandemic and the impact of the measures taken to slow its spread. According to Japan Financial Services Association, both outstanding balance and gross lending recorded declines in the April-May 2020 period.
With dealerships closed and people responding to the government’s stay-at-home recommendations, it is no surprise that car sales were declining during the COVID-19 outbreak. Monthly new car sales in May 2020 were down 55% year on year, by 23% in June and a further 14% in July.
AI score has been one of the fintech areas in the spotlight in Japan. While it may not have been seeing particularly strong penetration in the past few years, AI score and lending services are starting to gain a stronger presence in the marketplace, with competitor products beginning to struggle.
With the COVID-19 pandemic, and the measures taken to contain its spread, both at a national and international level, continuing to cast a major shadow over the economic outlook in the country, it is inevitable that Japanese consumers will continue to spend less on non-essential goods and expensive products. This will therefore continue effecting the performance of lending for purchases such as automobiles and durables, which could take some time to recover to pre-COVID-19 levels.
Gross lending for education lending is expected to be relatively unaffected by the COVID-19 pandemic. The education fees for private and public universities continue to be high and the percentage of students who progress to higher education continues to rise, regardless of the declining population, meaning that demand for education lending also continues to grow.
Although the recovery in consumer credit will heavily rely on how the economy performs in the immediate future, players can try and offers consumers and businesses products that can match the new post-COVID-19 lifestyles. While auto lending will see a marked downturn in gross lending in 2020, car manufactures are trying to promote automobiles as the ideal means of transportation in a post-COVID-19 world, enabling people to avoid the country’s busy public transportation.
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Understand the latest market trends and future growth opportunities for the Consumer Credit industry in Japan with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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