The Covid-19 pandemic hit at a time when many consumers were already exposed. Almost a year on, many are continuing to struggle, and will do so for some time to come.
Of course, the risks to the economy aren’t purely generated by Covid. Overlay the early effects of the post-Brexit economy and we can see that many more people are now exposed, creating new scenarios around affordability, vulnerability and creditworthiness.
Understanding exactly who is at risk – particularly as the furlough scheme and emergency payment holidays often mask the full extent of hardship – is now more urgent and more complex than ever.
For lenders there are several things to consider. The first is the immediate effect of the pandemic – determining who’s been affected, and who will continue to be affected if various scenarios play out.
The second is addressing the trends that have been accelerated in 2020 by the Covid crisis. These include an increased focus on digitalisation and cost reduction, the need to monitor customers in real time, and the desire to identify trends at a granular level across sectors, geographies and socioeconomic segments, in order to provide more personalised services, products and experiences.
The third issue is how to meet the demands of regulators in the light of the Woolard Review, which recommends a more holistic approach to regulation.