Consumer Survey on the Image of Consumer Finance Companies
June 27, 2005
JProposals for Expansion of the Consumer Finance Industry Based on an Image Survey of Consumer Finance Companies
[Please note this title is OK for Section 5 of the original article, but does not make sense as a subtitle for an abstract. I suggest modifying it to read: "Proposals for Expansion of the Consumer Finance Industry Based on an Image Survey of Consumer Finance Companies" and using it in place of the main title, or else deleting it altogether]
The survey divided respondents into three segments: users of consumer loans, users of consumer credit services, and those who did not use consumer credit services. The analysis of the survey results revealed differences in awareness and perception between those who used consumer finance companies and those who did not.
Respondents who had used consumer finance companies saw them as accessible financial institutions that could be used to advantage if one made use of the prorata calculation of interest on a daily basis, whereas non-users saw them as somehow being a cause for concern and difficult to use.
A number of issues will have to be resolved if consumer finance companies are to be used as accessible financial institutions in the future. This article proposes a number of measures geared to resolving those issues.
TV commercials have enhanced awareness of consumer finance companies and have begun to contribute to market growth, but now that many companies have TV commercials and the volume of commercials broadcast has increased, it is possible that consumer perceptions of commercials have begun to change (too many commercials, too much emphasis on image, etc.). In future, as well as individual consumer finance companies publicizing their own services, it is important that the industry as a whole publicize its trustworthiness.
If consumer finance companies in general are to achieve further growth and development, the first task will be to find a means of inspiring peace of mind and trust in consumers and persuading them to visit their branches. For instance, one effective measure could be to award an "approval mark" to consumer finance companies that pursued sound business practices and have this mark displayed in such a way that it was immediately visible to consumers visiting branches. As such a scheme would be of no benefit if consumers were not aware of its existence, consideration should be given to publicizing the "approval mark" in the TV commercials currently being broadcast in large numbers.
Although 70% of consumer finance users felt that consumer finance companies played a useful role in society, only just over half of all respondents felt consumer finance companies played a useful role in society as financial institutions providing loans to a wide range of consumers, suggesting that there is insufficient popular understanding of the industry.
A positive effort is being made with regard to the "provision of information on loan sharks" and "provision of accurate information on products and services", which many respondents cited as specific services they would like to see the industry provide, partly as a contribution to society. These will play an important role in establishing the industry's role in society and the first task is to make a positive effort to educate consumers, both by the dissemination of information via websites and also via newspapers, pamphlets and other paper media.
Although consumers do not fully appreciate that they are set at a level that reflects the risk borne by the consumer finance companies, they are aware of the interest rates themselves.In future, a steady effort to educate consumers regarding the implications of interest will be important. For example, websites could be used to provide clear explanations of the reasoning behind interest rates, based on considerations of risk and return, and pamphlets could be used to explain how interest is calculated, with the aid of concrete examples of borrowing patterns.
For more information on the content of this report, please contact: The Japan Research Institute, Limited General Inquiries: Shigeru Takamura, Research & Consulting Division
Yuichi Kagawa, Research & Consulting Division
Press Inquiries: Yoshihito Sato, Public Relations Division