UK’s Provident shows risks of tech enthusiasm
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UK’s Provident shows risks of tech enthusiasm

Europe’s banking industry should pay attention to the woes of Provident Financial – its problems go to the heart of how to modernize a lending model without destroying the franchise, losing workers and racking up credit losses.


These days the use of cutting-edge technology tends to be equated with relevance to the modern economy and society. But beware of blind faith indigitalization.

Disrupting a tried-and-tested business model from the inside will not work well if customers prefer the older method. British sub-prime lender Provident Financial, founded in 1880, is a good example of these dangers. After regaining and then doubling its pre2008 share price between 2014 and 2016, Provident stock lost more than 80% of its value after a profits warning this summer.


John van Kuffeler,
Non-Standard Finance

The warning came as the firm missed loan collections and haemorrhaged clients and staff at its home credit division. In October, Provident said it was backpedalling on its strategy, effectively admitting to a botched and misled digitalization push under Peter Crook, who resigned as chief executive in August. Provident had long used community-based self-employed agents – many of them former customers – to sell and collect credit at people’s homes. 

Crook saw a chance to use technology to boost profits and shareholder value. Earlier this year he completed a shift to new routing and scheduling software, so that a smaller number of full-time employees could cram in as many client visits as possible. 

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