Pawnbrokers UK: Money on the High Street.
The number of pawnbrokers on the British high street has quadrupled in the last decade, with a record number of over 2000 stores now offering small loans against jewellery and other valuables.
For comparison there are now only an estimated 9000 bank branches still open in England and Wales with that expected to drop a further 10-20% in the next few years as consumer switch to online and phone banking and banks look to cut costs.
With banks also still reluctant to offer loans to individuals and small businesses, many people are starting to ask if pawnbrokers are a more favourable alternative to consumers who have no local bank or have limited access to short term credit like overdrafts or credit cards.
Related to this is a shift in attitudes towards pawnbroking, with the use of secured lending becoming more mainstream and acting as an alternative to overdrafts or credit cards. A 2010 study by Bristol University showed that pawn customers liked the convenience of the service and also felt great levels of trust in the store they used. In fact, 71% of customers had not used any other pawnbroker than the one particular store they were familiar with.
What’s next for Pawn Shops?
The 2013 collapse in the gold price put a dent in the business of some of the biggest pawnbroker chains in the UK, but they certainly knew the gold bubble would burst at some point. Considering the growth in the industry over the last ten years, the pawnbroking business still finds itself better off than at the turn of the millennium.
The closure of high street banks speaks to a larger change in the British high street in the 21st Century. As more retailers moved online and many big name chains closed, pawnbrokers, cash converters and other financial outlets were able to expand rapidly thanks to the abundance of empty retail units and more competitive rents.
Eventually though even businesses that base their service around physical goods and face to face transactions will have to face up to the fact that online services offer a more competitive and wider range of services.
Borro offers personal asset loans that start at £1000 against luxury goods like sports cars, antiques and diamond watches (90% of high street pawnbroker loans are for under £500) and are among many financially innovative companies offering a new breed of financial services. Peer-to-peer lending, crowdsourced funding and micro loans are alternatives to mainstream lending that wouldn’t have been possible even ten years ago.
Pawnbroking is an industry that has endured for centuries and will likely continue to do so, will it always involve popping to the high street to hand over a gold ring? Not forever. So by 2020 when you’re securing a loan against your Bitcoin using a pawn app on your iPhone 8 don’t be too surprised. The change might not be quite that drastic, but good businesses evolve and right now pawnbroking is still good business.