|How home credit works||Key activities in 2009|
|The market and economic environment||Looking ahead|
|Home credit strategy|
Home credit is Provident Financial's longest running business stretching back to the company's foundation in 1880. It is the largest home credit business in the UK and Ireland. Every week, 11,600 local agents visit 1.8 million customers (around one in 20 UK households) to issue loans and collect repayments. Even after 130 years, the business continues to flourish and fill an important space in the UK non-standard credit market.
- Broaden the product mix
- Grow customer numbers
- Continually improve credit management
- Continue to modernise the business
- Provident Personal Credit
- Greenwood Personal Credit
Home credit succeeds by offering simple, transparent financial products to customers on average or below-average incomes, some of whom may find it difficult to obtain or manage other forms of credit. The service is popular for very clear reasons: it's personal, friendly and flexible, and is well suited to the needs of our customers.
Provident is the UK and Ireland’s leading home credit lender operating through the Provident Personal Credit and Greenwood Personal Credit brands which share a national network of over 400 branches. Provident and Greenwood provide small, unsecured cash loans, typically for sums of between £300 and £500. These are delivered to the customer’s home by self-employed agents who then call every week to collect repayments. Unlike other forms of lending, home credit includes all the costs upfront. There are no extra charges whatsoever, even if a customer misses a payment. For those managing on a tight budget, it’s important to know that the amount to be repaid is fixed at the start and will never go up. 86% of our customers consider our products to offer them good value for money.
Another advantage of home credit is the part played by the agent. Agents are paid commission on what they collect, not what they lend, so they have every reason not to lend more than their customers can afford to repay. That’s good for the customer and a valuable check on impairment for the business. The agent’s weekly visit is not only convenient for the customer but also acts as a useful reminder to put the money aside for the repayment. If customers get into difficulty, they know they’ll get a sympathetic response from their agent. The home credit product is one that customers trust and positively want to use – which helps to explain why our customer satisfaction rates are consistently high. 94% of customers say they are satisfied with the Provident home credit service, and the vast majority say they would recommend Provident to family or friends.
Customer acquisition channels
There are over 10 million non-standard credit consumers in the UK, of which the home credit industry serves around three million. Provident Financial has 1.8 million home credit customers.
The picture is changing, however. The tightening of lending criteria in response to the global scarcity of credit and increasing impairment has meant that mainstream lenders are not advancing credit to those at the margins of their lending models – many of whom would have been more suited to high service level, small-sum, home credit lending in any case. This presents an opportunity for us to win back some of the customers we have lost to more mainstream lenders over recent years. As a result, combined with the changes we have made to the business, after several years of gradual decline, home credit customer numbers have started to grow: up 2.1% in 2006, 5.3% in 2007, 6.2% in 2008, and 5.1% in 2009.
This continuing tightening of lending criteria by mainstream credit providers is leading to a growing non-standard market in the UK and presents a growing opportunity for home credit.
The strategy of the home credit business is to be the leading community-based lender in the UK and Ireland and to deliver profitable growth by lending responsibly and meeting customer needs.
Managing Director, Consumer Credit Division
“The business demonstrated a good collections performance throughout 2009.”