According to Experian, with growth and unemployment levels in Norway, Sweden, Switzerland and Finland currently better than the Eurozone average and deficits within the Maastricht limit of 3% of GDP, austerity measures in these countries will be minimal or non-existent.

Experian’s analysis suggests that lenders are best placed to focus on enhancing the sophistication of underwriting techniques, allowing them to better understand and attract new low risk customers, and to maximize the value of existing relationships.

In contrast, lenders operating in Portugal, Ireland, Greece and Spain will be faced with the challenge of dealing with significantly more accounts rolling into a delinquency position.

The environment will be fueled by extensive austerity measures seeking to tackle deficits in excess of twice the Maastricht limit, unemployment running at higher than 7% and growth less than the Eurozone average.

According to Experian experts, growth opportunities still exist for lenders that can precisely identify risks and react to changing customer circumstances, but it will be vital for companies to ensure their collections operations can cope with the influx of new cases, and that they have the information they need to fully understand the individual circumstances of each customer.

Effective collections strategies will be particularly important in Ireland, where household debt exceeds 80% of GDP.

Meanwhile, Experian also advised that credit risk management in Germany, Netherlands, Italy, France, Austria, Belgium and the UK should be focused across the entire credit lifecycle.

In addition, in Germany, Netherlands and the UK, where household debt is greater than 50% of GDP, lenders should ensure their collections capabilities are operating as effectively as possible, to ensure they minimize bad debt losses, and rehabilitate customers suffering short term cash flow problems.

Experian managing director of Decision Analytics for EMEA David Groom said that the austerity measures across much of Europe create new challenges as well as opportunities for lenders. While priorities will differ from country-to-country, those that use data, software and analytics will be able to add even greater sophistication to their underwriting, customer management and collections capabilities and will be well placed to adapt to the pressures facing consumers.