The European Banking Authority (EBA) has published its most recent Consumer Trends Report. Prominent among the conclusions of the report is the fact that mortgages are the retail product that most impact consumers’ finances, whereas more than half of the European population already uses online banking.
In this report the European banking supervisory body analyzes consumer trends related to financial retail products in the European banking sector – products such as mortgages, consumer credit, deposits, payment accounts, payment services, and electronic money. It also provides a holistic view of questions related to the financial products and services that most impact consumers, as well as the measures taken to address them.
The EBA notes that mortgages continue to have the biggest impact on consumers. They represent more than 77 percent of all loans to households, and in the last five years there has been a relatively steady increase in the volume and value of home purchasing loans. The report warns of mortgage-related issues, such as levels of household indebtedness, the level of fees and charges, and mortgage loan refinancing.
The report points out that the volume of consumer credit remained somewhat stable over the past year, rising just slightly. The main problems arising out of this product include the short-term cost of credit, the misuse of consumer credit, and insufficient contractual and pre-contractual information.
Internet banking grows in dominance
The report points out that 2017 represented an important milestone because already at that time more than half of EU inhabitants were already using online banking. A figure that has increased considerably, having doubled in ten years. In 2007 the figure stood at 25 percent. Online payment is particularly popular among 25- to 34-year-olds: 68 percent of this demographic frequently use this facility.
In parallel, the EBA notes that paper-based transactions continue to decrease, whereas payments with electronic money is growing consistently each year. According to the European institution, the main relevant issues related to this trend are security requirements associated with new payment services and solutions and transparency of fees and charges.
The EBA also observed an increase in the number of people with a payment account in the European Union. The European Banking Authority report points out that payment accounts are “the first step for accessing a larger variety of financial products and services and a flexible tool for managing personal finances.” Whereas, deposit volumes dropped slightly, in line with a decline in the savings rate.
Financial education, one of the most topical issues
The report also identified the most relevant topics for consumers, including commissions and fees; indebtedness; poor creditworthiness assessment; financial education; transparency and the disclosure of pre-contractual information and changes to contractual terms and conditions; cybersecurity; and the cross-border selling of products and services.
With regard to financial education, the report notes that new solutions based on innovative technologies have met with consumers who are unprepared to face them. Therefore, a specific need has been identified for financial education with a digital focus.