Banks go into trade – Newspaper Kommersant No. 28 (7473) of 02/15/2023

A new player, Loco-bank, is entering the small and isolated POS lending market. He is interested in expanding the product line and attracting customers through offers with lower checks. For most banks, the segment is of interest as an additional tool for finding customers and subsequently selling higher-margin products. However, competition is also intensifying due to the dynamic development of the adjacent installment market (BNPL).

Loko-Bank is entering the POS lending market (issuing funds for the purchase of goods directly at retail outlets), the credit institution said. “Earlier, Loko-Bank worked in the niche of large consumer lending checks, including secured lending, as well as car loans. For the bank, this is an opportunity to expand the client base, since it is this lending segment that recovers the fastest in times of crisis,” explained Elena Zhuromskaya, head of the bank’s sales department.

Previously, Ms. Zhuromskaya supervised POS lending at Renaissance Credit Bank, which is one of the leaders in the segment. Loko-Bank now expects to be among the five largest players.

Market participants consider the POS segment attractive despite its limitations. “Many lenders view this area as an additional sales funnel for their own higher-margin products,” explains Ivan Uklein, director of banking ratings at Expert RA. However, retail outlets themselves are also interested in the development of POS lending. Thus, Tinkoff Credit Broker increased the volume of issued installments and POS loans by 7.5% in 2022, largely due to the growth in the number of companies that connected the services, notes the head of the service Maxim Zaitsev.

In addition, the POS lending market is traditionally the first to recover among all types of unsecured loans, as due to the low average check, high turnover and targeted use, it has the lowest risk profile for banks and the highest clarity for their customers, notes HCFD Partner Business Development Director- Bank Irina Zhimerina.

Market participants expect it to recover further in 2023. As Andrey Pavlov, director of partner network development at Post-Bank, explains, “the savings model of behavior of some customers coexists well with the deferred consumer demand of others.” At the same time, pent-up demand does not disappear, but is transferred to future periods, he notes.

However, the POS segment has a number of specific risks and cannot be called high-margin. “POS loans as an independent direction, as a rule, can only be profitable with economies of scale with federal coverage,” Ivan Uklein points out. “How successful and noticeable a new participant will be will depend on his business appetite, risk level and business activity,” said Artem Mosin, Frank RG project leader.

“Compared to most other types of bank lending, the POS segment is characterized by an increased level of late loans,” adds Mikhail Polukhin, director of the financial institutions rating group at ACRA. According to NAPCA, the delay in this segment in 2021 amounted to 20 billion rubles, and in 2022 it increased by 20%.

However, the BNPL market (payment for purchases in installments, see Kommersant of January 19) brings additional competition to the POS lending market. “Given the expansion of the range of financial services by marketplaces and the growth of their share in the online sales market, this year the BNPL market in Russia will at least triple, up to 90-100 billion rubles,” believes Mikhail Burmistrov, CEO of Infoline-Analytics. The POS lending market, in his opinion, “will remain at the level of 2022 at best.”

Polina Trifonova