No matter which industry you operate in; consumer incomes, buying behavior and lending characteristics are changing in ways we couldn’t have predicted or prepared for. People have been unable to work for weeks, and millions more in the UK’s gig economy are struggling without support. Despite the government’s furlough scheme, these significant changes mean 38% of the population have seen a decrease in incomes since March*. Many more remain at risk. This summer, unemployment looks set to reach levels not seen in two decades, and while we believe these numbers will fall as 2020 goes on, they’re another powerful way in which the pandemic has the potential to upturn lives, change priorities and destablise portfolios.
With all this change and uncertainty, it’s imperative you have a clear view of how your customers are being impacted specifically so the right strategies and processes can be implemented to support those customers most affected and protect your business. So, what’s the quickest way to start?
A closer look at KPIs
When it comes to understanding what the pandemic means for your portfolio, one of the fastest ways to get started is with the data you already have at your disposal. The KPIs you routinely gather can provide insight into what’s happening – and help you shape a strategy that takes you forward. These readily available KPIs can reveal more than you might realise, if you analyse them with specific new questions and contexts in mind.
For example, if your most vulnerable customers begin to experience even more financial hardship then it could now be a sign that other customers, who may have never indicated stress in the past, could begin to be challenged financially. So, identify them based on immediate economic impact, then monitor their data for signs of stress. These include falls in income, a shift in spending to high-priority items, new or unauthorised overdraft use, greater reliance on savings or an appetite for high-cost loans. It could also include requests for payment holidays, or a slip into arrears. This data layer will also enable you to iteratively build a fuller view of the economic landscape both during, and in the aftermath of, the coronavirus pandemic.
How can Experian’s Market & Portfolio Insights team help?
Even under normal, non-pandemic circumstances, protecting and growing your portfolio means getting a clear, objective view of its performance. Our Market & Portfolio Insights team combine CAIS and credit bureau data, benchmarking analysis, granular economic forecasts and data on local economies and households, analysing it against your lending policy and customer profile to forecast the financial performance of your portfolio.
They’re also able to confidentially benchmark your portfolio against the rest of the market or a specific peer group, as well as advising on adjustments that can help you mitigate risk or take advantage of opportunities for growth.
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To make sure that growth is sustainable, they can even give you quantitative insights into customer risk concentrations across different geographies, life stages and socio-demographic backgrounds, highlighting higher risk concentrations that may require mitigation, as well as opportunities within lower risk areas which could nurture growth within your risk appetite.
If you would like to find out more, please contact our Market & Portfolio Insights team by completing the form via the contact us page or speak to your account manager. You can also read more about our services on the economics consultancy page.
*On a sample size of 19 million UK consumers