PDL: patient is more alive than dead

Published: 27.05.2020
Updated: 05.07.2022

What is happening on the microcredit market? Long story short – it comes back to life.

 

We have collected the most «sensitive» and important questions here. We requested key representatives of Ukraine PDL to answer them in short blitz interviews. What is it all about?

  1. Can PDL market be restored to the level of January-February 2020? In what time frame can it happen? What key factors will impact the market’s revival and development in 2020?
  2. How does your strategy change in the new reality?
  3. What should affiliates expect when working with your offer in the nearest future (1-2 months).

mfo

Can PDL market be restored to the level of January-February 2020? In what time frame can it happen? What key factors will impact the market’s revival and development in 2020?

MYCREDIT: The PDL market suffered greatly during the quarantine period. The reasons are clear: job losses and shortage of borrowers’ regular income. Consequently we witness a 40% decrease of demand on microcredit services, as well as on arrears growth almost by 2.5 times. We will show one example for you to understand how arrears influence the work: before the quarantine we, theoretically speaking, had around 15 000 clients without active up to-one-month credits, now we have around 7 — 8 000. Part of these clients simply ceased to use services of PDL during the quarantine, and most of them simply failed to pay on time and don’t rush to call in their credits.

Full recovery of the market up to the level of January-February 2020 is expected in August-September.

The main factor that will help in PDL market recovery is start of enterprises work in Ukraine. It is difficult to specify how many people will be left without regular income after quarantine termination. But one should understand that regular income is an important criterion when taking decisions on issuance of credit.

ShvidkoGroshiThe market will recover when clients demand recovers and people get back to work!

KF.UA: The market will be restored approximately in March 2021.

Important factors are the quarantine, unemployment rate, further autumn pandemic outbreaks, the way NBU will regulate the PDL market, commonplace IMF tranches etc.

Mister Money: The indicators of a full recovery will be normal functioning of public transport and cancellation of the laws that «allow» borrower to not pay his credit.

Now PDL will try to detect a new profitable client. It’s impossible to tell how profitable a new client is because it’s too early.

Without understanding of profitability PDL are not able to pay 800 UAH per client. At the same time portfolio should be maintained, that’s why PDL will first provide loans for their clients again, and when they are no longer available – they will switch to the market.

Objectively speaking, It would be smart to attract new paying clients after the ban of  imposing fines / penalties but PDL won’t be waiting. Some of large PDL may show a «bad» example (fix a high interest rate for a lead) and all the others will follow it. The prices for client will start growing again which is premature and bad for the PDL market but good for the affiliates market.

MONETKA: We are looking forward to further recovery of the microcredit market. We expect rates to be the same during 2-3 months.

Top Credit: The market already shows the tendency of returning to the pre-crisis levels. One can notice that by looking at zeroes of the first loan and increasing payments. Although the trend of «credit online» pattern has plunged significantly. Certainly it has something to do with the fact that people are afraid of taking the credits as they won’t be able to pay them off.

We forecast that during next two months we will get back to about eighty percent of the rates followed by large amounts coming from the affiliates. However it is possible that someone will set prices higher than during pre-crisis period, as business models also have kids to feed and the traffic is needed although it is scarce.

Global Credit: Our forecast on the market recovery: from the beginning of the autumn it’s optimistic, till the end of the year it’s realistic.

CreditkIsa:  The market will recover. There’s no exact forecast if it comes to time – too many unknowns.

E-cash: We already observe that the main players returned to 0% crediting.

When can this happen? We think no sooner than August. The main factors that had and will be having impact on the market are quarantine and limits related to it, clients’ default, consumer sentiment, NBU.

KUMO: We think that up to the end of the year we shall have approximately the same figures.

Credit Plus: Let’s check the market drawdown statistics in general. In our perspective and according to different sources (CB, Payment – providers, Google Trends etc.) it’s clear that the market had around 50-60%  drawdown compared to January – February 2020.

This can be seen in the volume of the traffic received.

The main factors that will have impact on market recovery and development:

  • NBU as a regulator from 1st of July –  regulations of rates ( so far no prerequisites), clients authorization (can significantly impact SR), fulfillment of advertisement terms;
  • PDL control on behalf of new regulator
  • PDL presence in media channels (TV + Digital) – making demand in media observed in the  4th quarter of  2019;
  • Natural recovery of demand on PDL products – the end of the quarantine;
  • Risk reduction – jobs recovery, going to work and clients returning to normal life.

The only silver lining is that market recovery (the same legislative situation as now) – will start not from the scratch.

It’s hard to tell by the pace of recovery. It mostly depends on the factors mentioned above. In our opinion the market will return to its previous state in three months.

MyWallet: In the second half of 2019 the market was bloated, the prices of CPA for credit were not just. We assume that the prices will increase to 500 UAH which matches market and target price, although we don’t expect any significant growth till September. The market constricted by around 2-3 times, in summer there will be a drawdown as per usual. Perhaps small volume of traffic on the market will have impact on rates increase. But again, it will not be a market price for PDL and it’s unclear whether anyone agrees to that – those who act like this last year had investors’ money and were pursuing their own goals.

 

Moneyveo: Market demand on our services didn’t decrease. But all the participants have a conservative approach nowadays. Those who were crediting for loaned funds ceased such activities. Besides, during the quarantine period the penalties for overdue credits are not applied.

That’s why the forecast for the market are: till the end of the year the companies that do crediting at their own expense will restore the volumes. By the end of the next year the companies that do crediting for loaned funds will restore volumes. In other words the market will recover by the middle of the next year.

 

SOS CREDIT: The market may recover but under certain conditions. If you take into account the current dynamics, a full recovery is expected approximately in October. AmongstIhe factors we can outline two: final end of the quarantine and recovery of small and medium-sized businesses capacities.

 

Credit7: The market is likely to recover to the previous level as per CPS rates during next 2-6 months. As for the volumes, according to Google trends the demand on online credits as at the middle of May 2020 had more than 50% drawdown and conversion no less than 20%. It means that we shouldn’t expect the previous volumes in the nearest future.

 

The key factors that will impact the dynamics of the market are:

  • Cancellation of quarantine restrictions and, correspondingly, growth of economic activities. Those diligent clients returning to work will definitely stop being afraid of taking credits.
  • The quarantine crisis aftermath. A share of population will be in need of additional money between paychecks.
  • TV and other advertisement. During the quarantine microcredit organizations ceased most of their activities which resulted in slower flow of incoming clients to the market. The more wide-range advertisement is – the higher is demand.
  • Possible restrictions related to the change of regulator. One can only hope for the best here.

Money4you: There will be return to the previous rates but not in the nearest future. We think it’s about 3-4 months. In a very optimistic scenario – 2 months.

The corona crisis, legislative initiatives of PDL and also toughening of banks policy regarding crediting for consumer needs are the factors that impact growth of the market. If client cannot solve issue in a bank – he comes to PDL.

Total: everyone felt the market decline. The forecasts say from 2 months to year and a half for recovery to the previous volumes. Everybody needs media advertisement and population wants to get back to normal life.

How does your strategy change in the new reality?

MYCREDIT: During previous two months the borrower’s image has completely changed (both in a good and bad way). Consequently –   acceptable cost of attracting a new client has changed.

We are building marketing from scratch per se. The only thing that remained unchanged is the advertisement tools.

With all this going on it’s important to understand that the main goal of company and marketing, during the quarantine in particular, is not attracting new clients but refunds. Today we are working on the second quite important objective – attracting «high-quality» clients, in other words potential borrowers capable of taking financial obligations on credit in contractual terms.

 

Mister Money: It’s simple. We do the crediting and search for a new profitable segment of clients. We will be doing it more actively as soon as we find one.

 

Monetka: Coronavirus and quarantine have taken their toll; many clients lost their income and were late on their mortgage on two or more credits.

Naturally we cannot credit them and increase the financial burden now. 20 to 30% of our clients ceased to pay their credits.

The №3329-д  adopted by Verkhovna Rada also had its impact regarding ban of assessing fines and penalties. Initiators that want deeper legislative regulation of microcredit market in Ukraine also became more active.

Global Credit: The bullet points concerning the strategy:

  • Change of the risk model on the assumption of increasing number of default clients;
  • Research of the financial behavior of new and steady clients during quarantine;
  • Cutting costs for leads’ attraction;
  • The highest priority of the objectives that may lead to the conversion increase.

Creditkasa: In March-April we reacted on this uncertain situation and made a series of adjustments in decision making regarding credit issuance. To put it simply – we started reducing credit issuance. But now we get back to pre-crisis level.

 

E-cash: We are working on the improvement of business processes with the goal to optimize issuance and reduce clients’ defaults. We rapidly perfect scoring process.

 

KUMO: We limited the amount of credits issued. The clients proven reliable are in high priority.

 

Credit Plus: Business attention is focused on restoring the previous volumes with respect for all legal provisions, increase of attraction efficiency, providing conditions for restoration and development of work of the partners CPA) and internal channels for attraction. We also work on conversion development and risk reducing. As for CPA, during quarantine period Credit Plus proceeded with crediting clients and didn’t remove its offer even for a day.

MyWallet: Expenditure minimization and risks reducing, scoring, cutting off default clients, collection enforcement.

Moneyveo: We became very careful when issuing credits, more often we adapt scoring to new practicalities. We thoroughly count money and invest funds into the most efficient channels.

 

Money 4you: We are constantly working on updates to our scoring model, and we also simplify signing up procedure for clients and plan a new release. This will certainly increase CR and EPC offers. For us СРА-traffic will remain a high priority channel for getting leads, after quarantine termination we will also be considering work with CPA network as a priority.

KF.UA: we make an emphasis on working with risks, thorough growth with the lowest number of defaulters possible.

ShvidkoGroshi: The strategy transforms rapidly. We launched a national campaign on TV, YOUTube and radio in May – that’s the way of making demand.

MILOAN: About working with CPA networks after the quarantine. We cannot make hundreds of websites in SEO and arbitration teams don’t make themselves, the same thing about making money. In current situation the income of affiliates is more important than of networks. We assume that balance is inclined towards perks for affiliates, and networks should maximize the automatization of work with approves / payments / conveniences. And there’s still hope that even more affiliates will start accordingly count eCPC and CR (which also depends on the network used and amount of data updated). Résumé: CPA channel is quite a channel indeed 🙂

As for returning to the previous volume of credit issuance (we work for application), absolutely everyone is dependent on payment discipline / populism in legislation / transition to National Bank / financial source. The growth of amount of issuances will come along with economic revitalization with about month or two delay.

Crisis always stimulates brains and improvements, that is why everyone will have their AR higher than before after recovery (they will learn to work in a new way and finish off the old schemes).

Will validity criteria be toughened? It’s about additional sources of client validation – photo of passport, photo of a person with a certain text. It depends on National Bank. They recently had an intention to implement video identification. Imagine that, you show your passport to Meizu 3 via front camera. Now all the toughenings are related solely to the clients’ risks.

Total: general tendency – cutting costs on client attraction, searching for new reliable borrowers, working on refunding and traffic profitability.

What should affiliates expect when working with your offer in the nearest future (1-2 months)?

Top Credit: Our marketing strategy does not change, at least till recovery. Then we shall seriously consider image aspect of our brands.

I suppose that the fact that step by step we are promoting scoring and client conveniences goes whiteout saying 🙂

Creditkasa: As before we guarantee full timely payment to affiliates. Moreover we are going to launch an action which is very juicy with regard to payments in the nearest future. That’s in addition to the current rates of bonus network.

E-cash: Yesterday the level of conversion of loan application was close to pre-quarantine period one.

KUMO: The situation will be improving in time, we continue to work and increase the number of insurances. Perhaps we will increase the price of conversion as well.

Credit Plus: We can point out:

  • Previous stability – we are not a company where one day conversions work well and the other day don’t 🙂
  • Increase of CR – on an ongoing basis we are searching for the ways of improving conversions of funnels (the registration steps) and AR with decrease or saving the rates of default.
  • The support of the top EPC. As always we do everything possible to provide the most favorable terms when cooperating with affiliates.
  • We are also working out an action for affiliates – so keep posted)

My Wallet:  The objective was and remains as following: loan portfolio growth. For the further growth we set 0.1rate for the first 7 days – this works well with CR application. Drawing credit is very simple (both via website and application) – CR application on the traffic from the context reaches 50 %. Now CR isn’t bad for affiliates, 3-5% which makes offer quite interesting. The rate will be increasing.

 

Moneyveo: In the nearest future we are increasing offer conversion.

 SOS CREDIT: We increased issuance, which can be seen even now (both CR and consequently EPC are growing). Such image will remain stable provided that profile of the clients does not change in the nearest future.

 

Credit 7: If we speak about the strategy itself – nothing has changed. If we speak about tactics and plans, the only thing left is to put our ears to the ground and react to the market fluctuations as fast as possible. These fluctuations are quite volatile.

Our principles of working in CPA networks remain the same: providing of top eCPC, high conversion and stable performance.

Money4You:  In the end of this week the Money4You offer will show rates increase. Join and try it yourself!

 

Global Credit: The rejection of partners’ network is basically impossible. Reducing of client attraction cost on CPA market has cut a share of traffic due to low profitability of the previously developed bundles. Only those with minimal traffic cost price remain. We are continually working on the growth of eCPC and CR, we will start properly increasing rates when possible.

 

Top Credit: As always we will do our best to fulfill our obligations, we’re open to any criticism and get better on terms of conversion.

Monetka: We really value affiliates that manage to get us traffic and clients even in harsh for the market conditions. We want rates to be stable, we have a stable CR – yes, it’s lower than before the quarantine, but now client is not that good and scoring is more complicated. We have a plan to return the scoring settings to the previous rates as soon as the quarantine ends. We will increase rate as soon as possible. This will naturally increase eCPC.

MR money: We haven’t ceased crediting. Since the beginning of the quarantine we were crediting only our clients (recurring) though. The results indicate that the given segment is in a plus field. Now we try new leads but free of charge (our own SEO). I suppose till the end of the month we won’t be buying. If we see that new clients are not much worse than the previous ones during the quarantine – we shall return to buying leads in June. For us the weighty indicator of market recovery is urban transport recovery and cancellation of the ban to charge delayed payments.

KF.UA: Growth of CR, ЕРС, new products and offers, payments twice a month.

ShvidkoGroshiWe are ready for dynamic changes of the terms and raising stakes! Additionally we generate demand which increases offer attractiveness!

MYCREDIT: To date, on the MyCredit offer we paid back a 0% loan, got an approve and activated work of finishing off the clients on the stage of unfinished registration. All of it should positively affect affiliates.

As for raising stakes – we will do it bit by bit. Everything will depend on quality of traffic provided. We have always paid special attention to it, now it becomes a critical factor.

We would like to draw attention of our affiliates to the fact that work on the market during crisis is a constant test. That is why it is important to make decision whether you are ready to build up your traffic from scratch and adapt to new conditions. If yes – MyCredit offer is ready to cut a deal and provide on demand up-to-date information regarding reliable and non-reliable clients etc.

What do PDL advertisers agree on unanimously?

Résumé for affiliates: the market didn’t die – that’s for sure! It has already started to recover, and the pace of growth / recovery depends on:

  1. Quarantine and its timing,
  2. Conscientiousness of borrowers
  3. NBU as a regulator

And the main thing that joins together feedbacks of advertisers – is that they value affiliates and are inclined to do (already doing) everything possible for traffic partners to have more gain in working with their offer!