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Podcast Link: Credit Shift
In this credit industry update, the focus is on various developments, including the challenges faced by households in paying rent or mortgages, Apple’s integration of the UK open banking API into its Apple Wallet, and the updated EU Consumer Credit Directive. The report also touches on the importance of Buy Now Pay Later options for retailers and the potential benefits and risks of AI in creditworthiness assessments.
Key Points
- An estimated 7 million households in the UK are struggling to meet rent or mortgage payments.
- Approximately 2.1 million households will face challenges as fixed-rate mortgage deals expire by the end of 2024.
- High energy costs and accumulated energy debts are contributing to excess winter deaths, prompting calls for targeted supports for vulnerable groups and improved customer service from energy companies.
- The UK Labour Party plans to regulate Buy Now Pay Later credit with credit checks and consumer protections.
- Apple’s updated Apple Wallet now integrates with the UK open banking API, providing users with real-time account balance information.
- The EU Consumer Credit Directive (CCD) is being expanded to include various types of loans, including Buy Now Pay Later schemes, short-term overdraft facilities, and more.
- Lenders within the scope of the CCD proposal must perform creditworthiness assessments, with bans on lending in cases of negative assessments.
- AI is seen as a tool to facilitate faster and more accurate creditworthiness assessments but must be used responsibly to prevent overindebtedness.
- OpenAI has added voice input and image interaction capabilities to its large language model, GPT-3.
- OpenAI seeks funding at a $90 billion valuation, indicating the continued growth and interest in AI and language models.
Key Statistics
- Excess winter deaths increased by nearly 50% to more than 4,700 people in the UK last year.
- 60% of Americans live from paycheck to paycheck, emphasizing the importance of managing spending and savings.
- Two-thirds of Buy Now Pay Later users are unaware that it can improve their credit scores.
- The CCD proposal includes loans below 200 Euro but excludes loans above 100,000 Euro.
- The valuation of OpenAI has tripled to $90 billion.
Key Takeaways
- Household financial challenges related to housing costs and energy bills continue to be significant concerns.
- Regulatory scrutiny of Buy Now Pay Later services is increasing, potentially leading to credit checks and consumer protections.
- Apple’s integration of open banking data into Apple Wallet enhances financial awareness for users.
- The expanded EU Consumer Credit Directive seeks to cover various credit products, including Buy Now Pay Later, with a focus on responsible lending.
- AI has the potential to streamline creditworthiness assessments but requires careful oversight to prevent excessive indebtedness.
- OpenAI’s ongoing development highlights the rapid progress and investment in AI and language models.
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