Nobody was ready for the Coronavirus outbreak, or the pandemic that so quickly unfolded. Its impacts – personal, social and economic – have been, and will continue to be, huge and unprecedented. Beginning to repair them means a deep understanding of the challenges people face, and a set of tools powerful enough to tackle them head on.
In the lending world, the pandemic hit at a particularly uncomfortable time. Growth was already slowing and competition was a growing concern. Consumers’ personal finances were stretched, and vast swathes of the UK population lacked the savings to fall back on if times got tough.
Social distancing, crumbling consumer confidence and a long period of lockdown led to business closures, job losses and massive income uncertainty. The government’s furlough scheme helped many keep their heads above water, but by May around 40% of the UK population had experienced income shock, with many more remaining at risk.
Undoubtedly, this new income uncertainty is straining customers’ resilience – yet in terms of lending, their need for credit, of different varieties, is greater than ever. Against this new backdrop, providing responsible lending without unreasonable risk means taking a new view of consumer affordability, right across the lifecycle.
Explored in this paper:
- An economy in shock
- Economic scenario mapping
- Recognising consumers’ new reality
- Addressing the shortfall in trusted tools
- Combining creditworthiness with affordability
- Monitoring a new set of metrics
- Open Banking: helping firms find certainty in the face of crisis
- Unlocking opportunities for everyone