A focus on collections

 Each month, we analyse how things are continuously changing, or have changed; through our data, and through ongoing industry research. Clearly, trends are changing fast, but each month we see a surge towards a specific theme. This month, the emphasis has been very much on the challenges and risks in collections.

At present, collections is a clear priority for lenders – particularly preparing for a surge in cases, but also with a view to better understanding pre-delinquency – and therefore protecting customers before the impact is fully realised. The volume of customers entering collections is expected to be tempered in the short-term by the government’s financial support packages, and alongside these, firms are also striving to establish ways to support their customers, without the need for forbearance.

Our research across the UK lending market reveals that early intervention remedies are being formulated in different ways. The research indicates that firms are:

A list of how firms are reacting in the lending market, including monitoring bureau activity and looking at ways to assess economic exposure.

Despite lenders working hard to proactively help consumers, there are still many challenges facing them. These challenges fall into three key themes:

Need for real-time customer data – a lack of real-time access to bureau data during these rapid changes means it’s difficult to make an accurate assessment of customer circumstances and affordability.

Identifying financially vulnerable customers – specifically being able to understand the difference between customers who miss payment(s) due to the crisis, and those who are genuinely financially distressed and need special attention. Making this distinction is becoming a growing burden.

Limited operational and IT resource – operational demands are growing while resources are reducing, causing significant internal challenges e.g. handling inbound calls, capturing income and expenditure (I&E) details and identifying vulnerability. In addition, APIs in the past have taken time to integrate due to restrictive IT resources – today, firms simply don’t have the ability to delay.

The good news is each of these challenges can be overcome through access to the right data, and analytically rich tools that can not only enhance process efficiency, but also foresight and real-time understanding of change. Experian can provide access to all of this. In the following sections we explore what actions are required, and what tools are available to help.

What are the immediate actions?

  1. The time is now to get models right.
  2. It’s also crucial to be able to have a view of the whole of market
  3. And a detailed view of your portfolio, as it changes.

What can help?

At Experian, we are committed to helping you understand the impact across your customer base, through scenario analysis and access to enhanced data insights.

We can help you understand the granular details behind a profile, and how they will inevitably play out over short and long term.

A quote saying: To help you respond to today's unprecedented challenges, we've enhanced our suite of capabilities. Our unique suite of capabilities can give you deeper, more relevant insights than ever.

Understand any change in affordability

Experian’s new bureau data triggers, provided on a fortnightly basis, give you access to timely and relevant data insights that are uniquely able to spot trends and identify customers in, or moving toward, financial distress. Through knowing this you can respond appropriately. The triggers allow you to identify any changes in income and highlight customers who have opted to take an emergency payment freeze therefore giving you access to key and relevant information, more timely insights and a roadmap of insights to react to changing conditions.

Understand what is affordable

Experian’s Affordability IQ capability enhances insight by giving access to a range of bureau data that you can use throughout your customer relationships, personalising your understanding of their financial wellbeing so you can reduce risk, respond to their changing needs and protect them better.

Our Affordability Passport gives you a clear, comprehensive picture of their affordability and the best possible indication of those likely to struggle in the current crisis. You can use it as an additional tool to create automatic triggers and alerts around income, liquidity and balances, check the customer owns any connected accounts, and proactively build a fuller view of their financial world. As an additional aid, Experian are giving free access to the passport to lenders in need.

Manage those unexpected spikes in demand for financial assistance

PowerCurve Customer Assist is a brand-new capability designed to help you manage predelinquency and collections. It uses the latest in Artificial Intelligence and automated decisioning to help you manage unexpected spikes in customer demand for hardship assistance. PowerCurve Customer Assist can help you automate through multi-channel self-serve options, communicate through digital integration and comply including full decision explanation. Thus it can improve decision workflow through customer segmentation and application monitoring and the ability to monitor, report on process, CX and performance.

We are here to help

There are many ways in which we can help, and our approach is not focused on selling products either. We pride ourselves on being your partner and using our extensive consulting expertise, and innovation, to work with you in order to solve the most complex problems.

This month collections strategies have been front of mind, last month understanding how affordability has changed was the topic of the day. Both themes are interconnected – and while some of the detail difference is minor, they’re causing huge implications on the surface.

Next month, its likely we will see a further divergence in themes and topics. This is the nature of the environment. We are experiencing change, at speed, like never experienced before. Change which we can help you understand, track and be ready for.

Let us help you navigate the problems:

  • Join our monthly insight webinars – registration and attendance is critical, as the sessions are live and not recorded
  • Browse our Covid-19 resource hub – containing assets relevant ot the market, and challenges
  • Book a consulting visit at Business.Enquiries@uk.experian.com– where we can work with you to share insights, and thoughts around the necessary strategies needed to help you understand your exposure to economic shock