Sandor Ungvari, Chief Technology Officer The European Union’s new Consumer Credit Directive (DCC2) is the current biggest ongoing shift in lending regulation. Its main goal is simple: make credit fairer, clearer, and safer for European consumers. But its impact goes far beyond compliance: it’s changing how banks, leasing companies, and fintechs design, market, and manage their credit products.
Forward-looking institutions are already seeing DCC2 as more than a regulatory burden. They view it as a chance to modernize, to strengthen customer trust, and to bring smarter, faster digital lending services to market.
That’s exactly where Circeo and TheLoanFactory come in: a SaaS platform built to help financial institutions turn complex regulatory change into a genuine competitive advantage.
What DCC2 is really about
The first version of the Consumer Credit Directive (from 2008) was written for a very different world, before digital lending, before “Buy Now, Pay Later”, and before instant online credit applications.
DCC2, formally adopted by the European Parliament in 2024 and rolling out from 2025, updates the rules to match today’s digital reality.
In practical terms, DCC2 aims to:
● Increase the scope: it now covers smaller loans (under €200), leasing, and new digital models like BNPL.
● Increase transparency: lenders must make sure customers truly understand the costs, risks, and repayment terms, even in a fully online process.
Because in the DCC2 era, compliance and innovation aren’t opposites anymore.
● Promote responsible lending: banks must perform deeper creditworthiness checks, possibly using alternative data (e.g. open banking), as long as it’s fair, explainable, and GDPR-compliant.
● Enable digital-first compliance: key information, contracts, and withdrawal rights must be available digitally and in standardized formats.
● Ensure EU-wide consistency: rules for advertising, disclosures, and penalties are harmonized, paving the way for more cross-border credit offerings.
At its heart, DCC2 is about trust, fairness, and digital responsibility. But achieving that level of transparency and control requires technology that can handle new levels of complexity, reliably and at scale.
Why DCC2 is a challenge for lenders
For most banks, DCC2 is not a single policy change: it’s a complete rethinking of the lending journey.
From the moment a product is marketed to the day a loan is repaid, everything must be traceable, explainable, and compliant with the new standards.
That means:
● Credit decisioning must be configurable and fully auditable
● Customer consent and documents must be tracked and stored
● Pricing and product logic must be transparent and standardized
● And systems must stay continuously updated in line with guidance from the EBA, ECB, and national regulators.
Many existing systems simply weren’t built for that level of flexibility. Manual workarounds might work for a while, but they slow down operations and increase risk. The solution is to use platforms that embed compliance by design, automate documentation, and let banks adapt quickly as regulations evolve.
Circeo’s TheLoanFactory: compliance, simplified
Circeo, works with major European financial institutions such as Société Générale, UniCredit, La Banque Postale, and Mobilize (formerly Renault Credit International).
Its flagship solution, TheLoanFactory, is a SaaS e-lending and e-leasing platform built to handle the full credit lifecycle — origination, decision, account management and servicing, and collections, across multiple countries and regulatory frameworks.
Here’s what makes it stand out:
● No-code / low-code configuration: business users can adapt many domains such as workflows, scoring models, or product rules without IT development.
● Advanced decision engine: integrates data from credit bureaus, open banking, or other sources, always with full auditability.
● Servicing & collections: end-to-end traceability of every customer interaction and repayment event.
● Cloud-native security: certified for IBM Financial Services Cloud, aligning with DORA and GDPR standards for resilience and data protection, certified ISO 27001.
In short, TheLoanFactory doesn’t just help banks comply with DCC2: it makes compliance a built-in capability, not a constant project.
Turning DCC2 into an Advantage
Adopting DCC2 isn’t just about avoiding penalties. It’s about using the moment to deliver a better experience, for customers but also for internal teams.
With TheLoanFactory, lenders gain:
1. Total transparency: every decision, change, and customer communication is traceable and timestamped, making audits and supervision much easier.
2. Smarter credit assessment: by blending traditional credit data with new data sources, banks can make faster and fairer decisions, while staying within DCC2 rules.
3. Automated documentation: standardized templates for SECCI, contracts, amendments, changes, save time and reduce risk.
4. Multi-country capability: large groups can manage multiple markets, currencies, and regulators from a single platform ensuring compliance across all geographies.
5. Future-proof design: Circeo updates the platform continuously to align with other EU regulations like DORA, NIS2, and the AI Act — ensuring long-term compliance without rework.
Why Banks Choose Circeo
Banks using TheLoanFactory consistently report faster deployment, easier audits, and much greater agility when launching new products.
Because it’s modular, they can start small, with origination, decision, or the orchestration capacity of the platform, and extend later to servicing, collections, or specialized lending (SME, leasing, etc.).
Most importantly, TheLoanFactory helps them turn compliance into a strength. It enables transparency and accountability, as recommended by DCC2 puts, while keeping operations efficient and scalable.
As the 2025 deadline for DCC2 implementation draws near, the leaders in lending will be those who see regulation not as an obstacle, but as a chance to evolve.
With Circeo’s TheLoanFactory, financial institutions can navigate this new landscape with confidence, efficiency, and speed, and emerge stronger, more transparent, and ready for the future.
Because in the DCC2 era, compliance and innovation aren’t opposites anymore. They’re two sides of the same opportunity.
