• What are the main tools/indicators to measure the collections risks? 

Anthony Sumner, The Connected Data Company: The tools can vary depending on the stage the customer is in – predelinquency, delinquency, recovery. But one principle that should be maintained throughout is the degree of to which data is used to understand the customer, their circumstances and the next best action. It is crucial that there isn’t a dip at any stage, because a deep understanding of both the customer and their circumstances is central to ensuring the right outcomes at all times.

Key to this is the combination of internal data with various types of external data. The different kinds of external data that now exist and can be accessed in the eco system are vast. They include not only credit bureau data, but contact and lifestyle data, speciality data such as property insight or declared vulnerability, Open Banking data, open payroll data, mobile data and much more.

On their own, the value of these data sets will only go so far, but when they are connected intelligently, the results are significant. In fact, we are seeing a growing demand for very specific ‘data connections’. This means connecting the many different external data points with each other and with internal data, so that the insight gained is always appropriate for the specific challenge or stage the customer is in.

It is those organisations that manage to leverage the different types of data at every stage of the collections process will see the most positive progress.

• How many times you can offer a vulnerability program to a customer?

Anthony Sumner, The Connected Data Company: Vulnerability isn’t a choice and so programmes to help those who are vulnerable shouldn’t be limited. They should instead be based on a deep and ongoing understanding of a customer’s changing circumstances.

The pandemic, for example, pushed many more people into vulnerable circumstances. Once the pandemic was over, they were thrown straight into a cost-of-living crisis followed closely by the energy crisis. It has been relentless and so itis understandable that many people will continue to fall in and out of the arrears.

• How will you avoid giving a vulnerability program to the wrong delinquent customers? What are the criteria? What is the maximum number of vulnerability programs that you can offer to the customer? In which phase (Pre-delinquent – delinquent or recovery), you will offer the vulnerability program? Do we need to exhaust all collection measures before we will offer a vulnerability program?

Anthony Sumner, The Connected Data Company: In order to make sure that a vulnerability does exists and that it is identified and acted on, a deep understanding of the customer and their changing circumstances is needed. This understanding has to be at all stages, especially at predelinquency stage, so that early warning signs – such as erratic spending behaviour, sudden decline in income, a surge in credit searches or loans being used to pay household bills – can be caught and appropriate strategies can be applied before circumstances worsen. Ongoing use of data, and those key data connections mentioned earlier, will be crucial here.

• How can we promote uptake of Open banking, given some customers are hesitant to use it due to privacy and other aspects?

Anthony Sumner, The Connected Data Company: Customers need to understand the specific, tangible benefits of Open Banking data for them. In the context of collections, for example, the prospect of filling out forms, finding old statements or remembering specific details relating to their spending, will be daunting to customers who are already stressed and overwhelmed. However, Open Banking will take much of this pressure away and enable the sharing of financial information electronically, securely, and only under conditions that customers agree to.

As organisations, we have to help customers understand those benefits.  If customers can see that they would be able to demonstrate responsibility and prudence in real time through streamlined and automated income and expenditure processes, and gain better access to attractive financial services…etc, they are more likely to engage.

• Could more be done by government and lenders in the next 5 years to educate young people (e.g. as part of the school curriculum) on financial education to improve financial literacy and resilience?

Anthony Sumner, The Connected Data Company: The routes to credit are widening, so it is important that younger generations are educated, and there is a lot of good work already taking place. However, even people with the best money and life management skills can become vulnerable. They can be affected by life events, such as bereavement, or experience mental health issues. Many people who start to fall into vulnerable circumstances often don’t realise it is happening until it is too late. In these circumstances, there is only so much early education can do. We, as an industry, still have a duty to catch those early signs. It is the use of data that will be a differentiator here, to help identify those whose circumstances are changing, and enable early intervention.

Selected Event Poll Results

Which channel do you think is the best for customer engagement?

• Letter 0%
• Email 0%
• Phone call 24%
• SMS texts 9%
• Whatsapp messaging 14%
• Other social media platforms 53%

From your experience, when will companies be able to evidence that vulnerability data and insight is truly influencing their day to day operational strategies?

• Already started 57%
• Next 3 months 17%
• Next 6-12 months 13%
• 12+ months 13%
• Never / Not applicable 0%

Event Summary

Session 1: Collections

Summary:

In this session, the focus is on the consumer duty and its implications for debt collections. Experts discuss the importance of aligning with the consumer duty regulations, monitoring customer communications using voice analytics, and demonstrating a commitment to fair outcomes for consumers. It highlights the potential impact of mortgage rate increases on borrowers and the need for a review of the insolvency regime. While technological advancements like AI are seen as valuable tools, the human element and meaningful interactions remain crucial. Overall, the session emphasized the significance of understanding customer situations, addressing arrears levels, and advocating for improvements in the collections space.

Key Points:

• The consumer duty regulations by the FCA emphasize fair outcomes for consumers.
• Voice analytics and interaction analytics enable monitoring of customer communications.
• Flexibility and consideration of unintended consequences are essential in process changes.
• Benefits calculators can assist customers and demonstrate commitment to fair outcomes.
• A review of the insolvency regime is recommended to reduce access costs and barriers.
• Mortgage rate increases can impact borrowers and lead to arrears.
• A gradual increase of new individuals entering the collections space is expected.
• AI technology should be utilized responsibly, with ethical considerations in mind.
• Customer engagement, feedback collection, and prioritization of their needs are key.
• The cultural alignment with the consumer duty is crucial for organizations.
• Monitoring and addressing arrears levels are essential in the collections industry.

Key Statistics:

• £19 billion of Social Security benefits go unclaimed each year.
• Mortgage rate increases can significantly impact borrowers’ monthly payments.

Key Takeaways:

• Prioritize fair outcomes and cultural alignment with the consumer duty regulations.
• Utilize voice analytics and interaction analytics to monitor customer communications.
• Consider unintended consequences and be flexible in process changes.
• Leverage benefits calculators to assist customers and demonstrate commitment.
• Advocate for a review of the insolvency regime to improve access and support.
• Monitor and address arrears levels to manage potential risks.
• Emphasize the human element and meaningful interactions in customer service.
• Stay updated on future trends and developments in the collections space.
• Engage with customers, collect feedback, and prioritize their needs.
• Responsibly utilize AI technology while considering ethical implications.
• Promote financial literacy and education to empower individuals.
• Collaborate with relevant stakeholders to enhance industry standards and practices.

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Session 2: Business Transformation

Summary:

In this session, the discussion revolved around the challenges and potential solutions in the debt collection industry. The focus is on leveraging artificial intelligence (AI) and machine learning (ML) to improve customer engagement and outcomes. Various topics were explored, including the need for personalized approaches, concerns about bias and data validation in AI, and the role of regulatory interventions. The session highlights the importance of understanding the consumer spectrum and generating positive outcomes for customers. It also emphasizes the potential benefits of AI while acknowledging the need for ongoing improvements and a balanced approach.

Key Points:

• Many individuals are facing financial challenges, necessitating effective debt collection strategies.
• Debt collection industry struggles with the complexities of forbearance and customer engagement.
• Blending approaches, such as reengagement and education, can improve debt collection outcomes.
• Digital tools, including smartphones and messaging apps, offer opportunities for communication with clients.
• AI and ML can enhance debt collection by predicting customer behavior and identifying signs of financial difficulty.
• Machine bias and data validation are concerns that need to be addressed in AI implementation.
• Democratizing understanding of AI decisions and models is crucial for effective incorporation.
• Operational resilience and decision-making using AI should be prioritized.
• API sharing of information between organizations can enhance debt collection strategies.
• Customer outcomes and personalized approaches should be the focus in debt collection.
• Investments in R&D and technology should not be hindered by regulatory interventions.
• Chatbots can be an area for improvement in customer engagement.

Key Takeaways:

1. Utilize AI and ML to improve debt collection strategies and predict customer behavior.
2. Address concerns of machine bias and data validation in AI implementation.
3. Democratize understanding of AI decisions throughout the organization.
4. Focus on personalized approaches and positive customer outcomes.
5. Enhance communication through digital tools and platforms.
6. Continuously improve strategies through test and learn approaches.
7. Collaborate with other organizations through API sharing for better debt collection outcomes.
8. Invest in R&D and technology advancements while considering regulatory interventions.
9. Balance the benefits and potential risks of AI in debt collection.
10. Provide training and support to agents for effective use of AI tools.
11. Improve chatbot experiences for better customer engagement.
12. Monitor and adapt to the evolving consumer spectrum for targeted debt collection strategies.

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Session 3: Customer Engagement

Summary: In this session, the topic of customer engagement and communication strategies based on a discussion among industry experts is explored. The conversation highlights the importance of personalization, omnichannel approaches, and the use of technology to enhance customer interactions. It also emphasizes the need for clear and understood communication, shorter attention spans, and the integration of AI to support agents. The panel provides insights on engaging with customers in financial difficulties, utilizing videos for support, and designing content to grab attention. They also discuss the alignment of technology and people, the expectations of younger borrowers, and the significance of data governance.

Key Points:

• Connecting with customers through an omnichannel approach using new technology is crucial.
• Offering webchat options during online advice journeys enhances customer engagement.
• Recorded communication ensures adherence to the right processes for agents and customers.
• Customers have an expectation for every call to be recorded.
• Clearer understanding of communications is essential for effective engagement.
• Measuring engagement requires considering different metrics and understanding customer comprehension.
• Content should be designed to grab attention due to shorter attention spans.
• Personalized communication and apps are valuable for engaging with customers.
• AI can assist agents in real-time during customer conversations.
• Integration of technology and legacy systems is necessary to improve engagement.
• Data governance plays a vital role in collecting and utilizing data effectively.

Key Takeaways:

1. Personalize communication based on customer segmentation and situation.
2. Be proactive in contacting and engaging with customers.
3. Utilize videos to provide support and explain available help.
4. Design engaging content that captures customer attention.
5. Provide tools to support agents during conversations and enhance their interactions.
6. Adapt to the preferences and expectations of younger borrowers.
7. Ensure a seamless and personalized engagement journey for customers.
8. Align technology and people to deliver effective and personalized communication.
9. Gather and utilize data effectively, considering data governance principles.
10. Focus on clear and understood communication for better customer engagement.
11. Stay attentive to shorter attention spans and create content that resonates quickly.
12. Explore the integration of AI to enhance customer interactions.

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Session 4: Vulnerability

Summary:

In this session, the panel discuss the topic of vulnerability and its implications for customer support in the financial sector. They explore the evolution of lenders’ understanding of vulnerability, the challenges faced by frontline colleagues, the role of data in debt management, and the importance of proactive strategies. The panel emphasize the need for a blended approach that combines data-driven insights with tailored support to ensure positive customer outcomes. They also highlight the significance of consistency in terminology and the importance of partnerships with debt advice and specialist support organizations. The session concludes with recommendations to invest in data and insights, provide training for agents, and foster collaboration across the industry.

Key Points:

• Early engagement and guidance are crucial in promoting customer engagement and positive outcomes.
• A multi-channel contact approach that adapts to customers’ preferences is necessary for effective support.
• Digital exclusion remains a challenge for vulnerable customers who lack internet access.
• Lenders are evolving in their understanding and operationalization of vulnerability, using data sources like credit bureau data, open banking data, and more.
• The cost of living crisis has led to increased financial difficulties for customers.
• Frontline colleagues need support to bridge gaps in understanding customer experiences.
• Proactive strategies are essential to anticipate challenges and address unpredictability in interest rates.
• Data-driven approaches should be balanced with a human touch for personalized customer support.
• Consistency in terminology is important for a consistent approach to customer treatment.
• Partnerships with debt advice and specialist support organizations provide valuable guidance for customer support strategies.
• Investment in data, insights, and technology is crucial to reduce blind spots and improve understanding.
• Collaboration across the industry is necessary to effectively address vulnerability and support customers.

Key Statistics:

1. The Bank of England predicts that the cost of living crisis and rising inflation will continue to impact the economy.
2. Customers have been maxing out credit cards and falling into financial distress due to the cost of living crisis.
3. The digital self-serve approach needs to be balanced with the human touch to support customers effectively.

Key Takeaways:

1. Invest in data and insights to reduce blind spots and enhance understanding of customer vulnerability.
2. Provide bespoke training for frontline agents to improve empathy and comprehension of customer challenges.
3. Adopt a proactive approach to anticipate future challenges and address them effectively.
4. Join data points and indicators to develop a comprehensive view of vulnerability and tailor support strategies accordingly.
5. Foster partnerships with debt advice and specialist support organizations to learn from their expertise.
6. Maintain consistency in terminology to ensure a consistent approach to customer treatment.
7. Stay informed about economic factors and interest rate changes to proactively support customers.
8. Embrace technology and a multi-channel approach while maintaining a human touch for personalized support.
9. Simplify data and provide clear guidance to agents for effective decision-making.
10. Prioritize good customer outcomes by blending data insights with tailored support strategies.
11. Develop clear and user-friendly websites and materials that reflect the support available to vulnerable customers.
12. Encourage collaboration and knowledge sharing across the industry to address vulnerability comprehensively.

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Recordings will also be added soon to Credit Connect’s Youtube channel. An archive of all past digital events can be viewed on Credit Connect’s Youtube channel which can be found here.