Credit, Collections & Insolvency News
Credit Connect’s hosted its inaugural Credit & Collections Technology Think Tank at the beginning of November in Manchester which saw credit and collections strategies and the impact of the pandemic discussed by sixteen professionals from a variety of industry sectors at the Midland Hotel in Manchester.
The themes of credit and collections risk, affordability, vulnerability as well as the future of credit and collections were discussed by panellists and Chair Chris Warburton from ROStrategy.
Commenting on the event host Colin White Founding Director at Credit Connect said “It was great to see such a great mix of credit and collections professionals take part in the industry panel but more importantly it was great to host a face to face event.”
“We have had some great feedback from the attendees and fully intend to run annually with our online versions of the event Technology Think Tank taking place across 2022. We have already approached speakers the next instalment of the Think Tank series for the 2.1 edition of the series which will be screened in early 2022.”
Commenting on the event panellist Guy Statter Head of Software Sales at Qualco said “It was a fabulous event, with a great crowd of fun, interesting people. Loved the sense of camaraderie and collaboration, and I learnt quite a bit too.”
Kevin Still, Director at DEMSA said “The day and evening event were great opportunities to network with a cross-section of the industry and it is clear that there are different views on how the sector has matured in terms of the digital transformation agenda and how identifying and embedding effective treatments for customers showing characteristics of vulnerability in the context of the FCA guidance. Encouragingly, we seem to have learnt a lot of lessons from the pandemic and this is reflected in the evolution of working practices and the speed of deployment.”
“This is especially true in terms of data sharing beyond what is currently shared with the CRAs. The public sector is now sharing more data. There is an urgent and strategic need for all firms in the supply chain to look at how we better bring customers along with us in terms of use of tools like Open Banking and using both transactional and behavioural data in future decision making and tailored customer journeys. Where a customer is volunteering data then we can’t ignore this and we need to be able to make engagement more straightforward where someone has multiple debts and multiple touch points with creditors and their appointed collectors.”
“There is a lot to be done as we move into the Consumer Duty regime from July 2022, with the regulator reviewing consumer sourcebooks and the draft legislation for Statutory Debt Repayment Plans (SDRPs) is laid down. This should include a critical review of the impact of the Debt Respite Scheme from May 2021, where registrations are significantly below FCA and government expectations.”
The event was sponsored by: Aryza, CallMiner, Qualco and Webio.
The insights from the event were recorded and will be available on Credit Connect’s youtube channel early in the New Year.
The next Online Collections Technology Think Tank will take place at the end of January 2022.
If you are interested in speaking or becoming a sponsor for the next event then call 01622 437014 or email colin.white@credit-connect.co.uk for more information. More online events will be confirmed soon.
The event was followed by the announcement of the winners at this year’s Credit & Collections Technology Awards. The winner’s list can be found h
● Hearing a lot about rehab insights back to the client from AI however given 90% of debts are charged off at DCA stage, how is that possible?
GS: We look to collect data from all customer interactions where we can, including post charge off as and where it is available. There are a lot of challenges in getting ‘outcome’ data from across different third parties, but we start by asking for it (rather than assuming we can’t access it), and of course ensuring that we have the correct permissions to use/share the data to get insights using AI and other analytical tools.
PG: Not sure that’s the case many portfolio’s of work get upwards of 15% liquidation levals at DCA. The idea of AI is to help answer the easier questions and allow learning .
●Vulnerability’ & ‘Digital’ are spoken about too generally, without real thought for the full customer journey. Is profitability being put ahead of customers?
GS: I can’t speak for everybody, but all of our clients are looking to deliver the correct solutions for their customers, applying guidelines of TCF, using solid Conduct Risk principles, however once they have done that they do price to make profit, if they are a commercial organization. As a solution provider we actively do think about the entire customer journey, as Sonya suggested on the panel better customer underwriting and onboarding helps mitigate issues later in the lifecycle, as does a more active relationship with ‘good’ paying customers, rather than just waiting until there is a problem (usually in collections). Our solution needs to enable excellent customer care across the lifecycle.
PG: Digital is there to support the customer and give them options . Many people do not want to talk to a call centre or do not have time to do so in their working lives . The digital solution tends to their needs . This doesn’t mean we don’t speak with people or give them the option to call in. We have every option open. Additionally vulnerable people don’t always know they are vulnerable , machine learning is able to spot a problem through key words and pick up on potential vulnerability . in the same way an agent would be able to pick up things from open questioning.
KS: My ‘outside in’ view from a debt advice sector view is that the recurring messages are around bottom-line improvements for creditors, debt buyers and collectors. Better customer outcomes are often referenced, but quickly skipped over when trying to tangibly set out how any such benefits will be achieved is never made clear. The best examples of digital transformation are those driven by customers. We need to balance the lessons learned from emerging technologies where this evident like BNPL, gambling, social media and online banking. Open Banking will really take off when ‘agents’ (physical or virtual) are able to sell the mutual benefits of using the tools. This also requires customers to have absolute confidence with regard to what is going to happen to their data and that there are no unexpected consequences of sharing data. Many consumers still seem to be taken in by ‘influencers’ beyond ‘a bloke in the pub said’.
Jessica Rusu (Chief Data, Information and Intelligence Officer at the FCA) made a speech on 2 November 2021 at the CDO Exchange for Financial Services. She has reinforced the investment FinTech and PayTech firms need to make to build trust and protect consumers. She has also highlighted the challenge of dealing with ‘insistent customers’ that may not act in their own best interests, which can be a real dilemma when faced with downstream consequences if claims management firms focus on high complaint levels in any regulated sector that brings in the Ombudsman.
Identifying vulnerability really needs to mature in terms of how it is built into the product lifecycle, in line with the FCA vulnerability guidance. This means using data sources like the Vulnerability Registration Service at the point of onboarding and through the customer lifecycle. It means that speech analytics and Open Banking data is used effectively to trigger the right behaviours and customer journeys. As a consumer, there is nothing more infuriating than having to repeat yourself many times, especially if accessing the service provider is still fraught by an IVR or menu system designed for someone to abandon the process. I think firms need to see their processes through the eyes of their customers. It is still evident that people are still having to correct themselves when discussing ‘debtors’ (“err, sorry I meant customer”). This is where the FCA Consumer Duty proposes changes where Principles 6 and 7 may take a back seat going forward. Use of words like ‘reasonable steps’ suggest that the FCA is moving from reasonable endeavours to a higher level of assurance, which can be quite impactful with higher risk permissions. This places a greater burden on due diligence and ongoing monitoring for customers where there is an ongoing relationship.
I expect to see growth in consumer portals where the customer can experiment with Open Banking, accessing CRA data and other forms of data sharing before actually sharing with their creditors or other parties (e.g. insurers). My feeling is that the Gambling Commission initiatives may mean that some initiatives come to the fore ahead of others. Sharing best practice is key, including the emerging picture on data protection reform and the role of disruptive technologies like AI/Ml and sentiment analytics.
● The panel have mentioned “Alternative data sources” several times. Do they think existing sources (such as CRAs) are fit for purpose?
GS: Having worked at a CRA I think they have great data, but not all of it is available in all situations. I was also referring to Open Banking data and other insight data such as Aire or even aggregated data sets such as Data on Demand or Connected Data. The key is to have a mechanism for ingesting and making sense of useful data from a variety of internal and external sources.
KS: As follow-on to my earlier response, CRA data has a role to play, especially when it comes to looking at some transactional data on revolving accounts like a credit card and cash withdrawals. Credit hunger remains a key assessment. Payday lending highlighted the need for more frequent updates to the traditional data sharing schemes and BNPL will bring this to the fore again and bring in challenger CRAs where transactional and behavioural data will begin to accumulate both as an alternate payment mechanism and whether repeat transactions are likely to cause consumer detriment. This may become more capability aligned. The Gambling Commission has highlighted that there are over 20m gamblers and around a quarter of a million ‘problem gamblers’ with the ability to stop gambling transactions provided the right merchant information is picked up and other the firms in the ecosystem are checking for suppressions.
From my Equifax days and being involved in CIFAS at the outset, the key is getting critical mass so that data suppliers and data users get enough traction so that better outcomes are more frequently observed with reduced consumer detriment and avoidable complaints. Consumers generally don’t have good knowledge of the take-up of consumer protection schemes.
The key again is that parties sharing data understand how their data is going to be used and whether they have the right to get this deleted. This is especially true of transitional data, where individual circumstances can change. This may require participation by both the consumer and the parties hosting the data. It is not uncommon for someone who was genuinely vulnerable to continue claiming a benefit when they are no longer entitled to it. A vulnerable customer position can rapidly turn into a potential fraud position. These require collaboration on both parts and the means to routinely stay engaged, however, ‘arms-length’ this may be.
Data sharing works best when the terms of reference of sharing are very transparent and visibly embody the UK GDPR principles. Consumer benefits should stand out.
● Some businesses are already moving away from hybrid working, due to compliance controls, fears around data protection. How might this affect attrition/service?
GS: Personally, I believe employees want clarity around what they can and can’t do. What they dislike is not knowing where they stand. Insecurity and uncertainty effect attrition, not necessarily a 100% home or office working.
KS: DEMSA has been fairly vocal on this topic and the government’s ‘levelling up’ plans. I feel that the compliance issues are far less than the potential disruption caused by staff determining what is a fair deal going forward and what they believe is the right balance in terms of workplace wellbeing. The FCA’s own troubles are there for all to see. Sheldon Mills reflected on his brother working remotely from the west country, but having a London job. Margins in debt advice and contingency collections are very thin. Losing competent, highly trained staff is a real risk. Having access to a wider resource pool that helps with diversity challenges seem important. This is likely to dictate that hybrid working is with us to stay and that the executive teams need to think about how their firm can be regulated effectively in this type of operating model, which is also likely to include a growing proportion of services ‘in the cloud’.
● How do you identify vulnerability digitally?
GS: There are many ways to do this. Frank touched on some of the analysis CallMiner use in language analysis. At Qualco we have intelligent questioning through self-service portals or two way messaging. We also have intelligence built into I&E and affordability forms, as well as free texts for customers to disclose whatever they want to. It’s not necessarily going to catch everything, but it is a key priority of our digital engagement platforms to identify as many customer characteristics as we can, so that we can ensure that they are offered the most appropriate solution.
● The industry shares fraud data as non-competitive for lenders, what about sharing affordability data to benefit and help consumers in debt across lenders?
GS: I know IE Hub are already doing this, I’m sure there are others.
● Can your human interactions not be done via digital channels?
GS: We believe that digital and telephone journeys should be as similar as possible, but empathy is more difficult via a two way message or self-service portal. Therefore we design systems to deliver all types of customer journey including telephony, digital and face to face journeys.
● Is there a fear from customers that the information could be stored and used against them in future lending decisions post financial rehabilitation?
GS: It is something that comes up sometimes, but as long as there is clear information available to all customers about how there data will be used and shared, then it is then for the customer to decide what data they wish to share.
● It was mentioned by one of the panelists that it’s really important to improve financial education, do you have any ideas how to do this, who it would be targeted to, and when?
GS: I think you start in primary school, and continue through high school as part of overall ‘life skills’.
PG: I think it should be led by schools and colleges as part of General Studies / Form Sessions but with people invited in from our industry , talking about lending , managing money , what happens if you default .
● How do you conduct QA processes for a completely digital or omni channel journey ensuring that customer outcomes are measured the same way across all channels?
GS: We use a data warehouse and modelling solution which flags the different channels, as well as the strategy and sub strategy, this data can be then used for a variety of purposes including QA.
● Once we have identified a vulnerable customer…. What new technologies are you seeing that support the journey from that point on?
GS: Policy in Practice and ‘Step’ from Triangle Technology offer great ‘next steps’ to practically helping vulnerable customers, triaging their issues and signposting them to local help for a whole manor of different vulnerability types.
KEY (ANSWERS PROVIDED BY):
GS: Guy Statter, Qualco
PG: Peter Gent, CRS
KS: Kevin Still, DEMSA
* ALL EVENT DATA AND POLL RESULTS ARE COPYRIGHTED TO CREDIT CONNECT MEDIA AND SHOULD NOT BE USED OR SHARED WITHOUT OUR PERMISSION