In Finland, approximately 90% of all consumer loans are made by banks, with the balance provided by specialized financing companies and online lenders. Although the market for this product has historically been narrow, recent surveys reveal that approximately 30% of Finnish citizens have taken out consumer loans in the past five years and that market activity is picking up. Finland is thus one of the few European markets where consumer credit volumes have been growing steadily.
The country’s total consumer credit volume was €9.9 billion in 2012; by November 2015, outstanding consumer credit totaled €14.1 billion, an increase of 42%. Growth has been driven to a great extent by increasing lending by alternative credit providers. This segment’s growing market share should allow Bondora to further expand its business, especially given that per capita consumer credit volumes are, as noted earlier, relatively low in comparison to those of its peers; for example, Finland’s ratio of consumer credit to GDP was 6.8% in 2015, lower than that of the UK.
That said, the Finnish consumer loan market is becoming more competitive; a growing and comparatively wealthy market naturally attracts newcomers and alternative structures related to the provision of credit. The primary competitors that Bondora faces in this market are specialized consumer financing companies and challenger banks operating cross border. The most significant are Ferratum Finland, 4Finance and Santander Consumer Finance; alternative credit platforms have also emerged, including those of Fellow Finance and Fixura.
Legislative changes regarding the provision of consumer loans were introduced three years ago; among them was a law that came into force on June 1, 2013, which mandated an interest-rate cap on loans below €2,000 and which had the effect of shrinking the bottom-end of the Finnish consumer loan market. The cap, which limits the annual interest rate on such loans to no more than 50 percentage points above the reference rate applied by the European Central Bank and notified by the Bank of Finland, also had an adverse impact on short-term loan companies: some have closed, while others have altered their product offerings to focus more on so-called flexible credit.
 Short-Term and Consumer Loans in Finland, Taloustutkimus Oy, April 2014