Less consumer credit in the crisis

Germans consumed less during the lockdown. And if they did, then they went shopping on the Internet. This is shown by the rise in online lending.

Dhe Corona crisis has dampened consumption by Germans and thus also the demand for consumer credit. As the banking association, in which the banks that focus on consumer and investment loans are united, announced on Wednesday that new lending business fell in the first half of the year by 17 percent to 53.7 billion euros.

Consumer loans to private individuals fell by 7.3 percent to 26 billion euros. In this total value, the credit banks financed consumer goods, especially cars, furniture and computers. Even more clearly – by almost 29 percent to 21.5 billion euros – the new credit business with dealers, i.e. purchase financing, collapsed. The financing of mobile capital goods by companies fell by 3.2 percent to 5.3 billion euros.

“The coronavirus pandemic has severely slowed private consumption and corporate investment,” said Jens Loa, managing director of the banking association. Since many consumers made online purchases from home during the quarantine, the number of online consumer credit transactions increased by almost 14 percent to 6.2 billion euros. That corresponded to almost every fourth loan agreement. In 2019, the proportion of online degrees was still a fifth.

Legal Barriers To Online Loans

“Corona also acts as a digitization accelerator when it comes to financing,” said Loa. According to him, the lockdown has shown the importance of digital options for business deals. The banking association has long been campaigning for simplification of the legal requirements for online loan agreements. Because only a small part of the loans is taken out completely online. In the first half of the year it was 1 billion euros, which corresponds to an increase of 7.7 percent compared to the same period in the previous year.

On the occasion of the publication of the annual report, the chairman of the banking association, Frederik Linthout, complained in mid-May that the legal hurdles for digital credit were too high. The managing director of Gefa Bank, a subsidiary of the French Société Générale, calls for a simple digital loan agreement. Linthout sees this as a means to stimulate the economy.

Fully digital processes are essential in lending for both companies and consumers. In its communication on the half-year figures, the association once again pointed out that financing sustainably supports private consumption and commercial investments and is therefore important for economic development.

Within a year, the credit banks increased their accounts receivable from private and commercial credit customers by 3.5 percent to 172.4 billion euros. The positive development of the lending business in the second half of last year and in early 2020 made a particular contribution to this. The consumer loan portfolio grew by 4.7 percent to 134.2 billion euros.