Data from The Money Charity shows that the average total debt per household in the UK, including mortgages, was £60,363 at the beginning of 20201.
With one in seven homeowners now applying for payment holidays2, do they understand the implications for their future financial stability? Tracey Roberts, Capita’s debt management expert, explores six ways that you can help customers who have fallen into arrears due to Covid-19.
Covid-19 has suddenly and unexpectedly affected all aspects of our lives – and the impact has been as severe on our financial wellbeing as it has on our physical and mental health. The lockdown has meant that many more people than predicted have been furloughed by their employers and have had their incomes reduced; with some losing jobs altogether.
People are turning to their financial services providers, utility companies and landlords to get help with paying their mortgages or rent, bills and loans. Many are asking for payments to be reduced or suspended until they’re back on their feet once the pandemic is over; this is a great short-term solution but what are the longer term consequences now the furlough scheme has been extended and the UK prepares to enter a severe recession?
The Institute for Social and Economic is warning that more than 6.5m jobs could be lost due to the pandemic3 and this will have a serious impact on people’s ability to pay off arrears that build up during the current crisis.
So, what can businesses do to help customers who get into debt as a result of the pandemic? Here are six steps that you can take to support their financial wellbeing.
1. A human-centred strategy
Traditionally, organisations have managed customers in debt by guiding them through a defined process that’s often linear and inflexible, in most cases due to a lack of technology. So, what can be achieved by tailoring their response to reflect individual circumstances?
Identifying customers before they fall into arrears, for example when they ask for a payment holiday or for a bill to be deferred, is a perfect opportunity for you to let them know about the financial support options that are available. This type of early intervention often establishes the tone of an organisation’s relationship with its customers, and it can be critical to achieving the right outcomes. It is also provides a great platform to ensure that payment holidays are being taken for the right reasons as it isn’t necessarily the right outcome for everyone.
Customers who are already in arrears often don’t have the option of using digital channels to discuss their situation – many organisations engage only through customer service agents. Customers often don’t want to do that, because they’re embarrassed about their situation or worse find it a stressful conversation to have, so more channel choice is key to being able to engage with them on their terms, reduce the effort, stress and – ultimately – financial impact for them.
2. Understanding vulnerability
Organisations already find it challenging to identify and respond to vulnerable customers and the pandemic is increasing the numbers of people who find themselves in vulnerable situations, as they struggle with their emotional, physical and financial wellbeing. There are several different ways that you can support those customers who need more help, such as:
- training frontline staff to recognise and support vulnerable customers
- smart support for agents, such as real-time speech analytics to help them to recognise sentiment and patterns of speech that demonstrate vulnerability
- providing simplified digital journeys that offer a choice of ways for customers to communicate with you.
3. Accessible technology
In today’s ’always on‘ world, many customers with more complex needs would like to have the option of a fully digital experience or one that can access support from an agent, should the customer need additional help.
Use of secure messaging is a good way to reach out to customers to promote online support channels where they can interact to find out information, supply income and expenditure details and agree any repayment plans. Being able to provide seamless interactions across any channel is a key way for you to support customers who are in financial difficulty, supporting ’their needs, their way’.
4. Meeting regulatory standards
Complying with regulation is critical to the health of any debt management operation and ensuring appropriate and fair outcomes for customers is paramount. Often, this can be a time-consuming, retrospective check, listening to calls and rating them for compliance. Sampling levels vary but, once they’ve become competent, agents often only have a small sample of their calls, perhaps up to 5%, checked each month.
Technology can help you to stay compliant. Real-time speech analytics, for example, can offer significant benefits by providing 100% quality checking of all calls, automatically scoring them for compliance and flagging up any issues to your quality assurance team. This can help you to demonstrate fair outcomes, as you can review many more customer conversations and focus on improving the areas where you’re non-compliant.
5. Data and analytics
There are several key areas within the debt lifecycle where businesses can benefit from taking an approach led by data and analytics.
Firstly, if we take the area of forecasting and modelling books of debt, COVID-19 has forced us to change our underlying assumptions about how we need to model debt after the pandemic is over. What you may have assumed previously is highly likely to be no longer valid so using data science experts to review these models is a good starting point.
Secondly, being able to use data and analytics to segment customers who are already in arrears and use the most appropriate strategies for each one (through dialler technology or digitally), such as propensity to pay or best time and channel to contact, can offer better ways to engage constructively with them.
Thirdly, data and analytics can now help you to understand the triggers of debt better. This allows you to develop proactive strategies and intervene as soon as you see the warning signs.
6. 'Smart agent' enablement
To get the best outcomes for customers, you must create the best agent experience. Many organisations rely on their agents’ ability to navigate a multitude of systems, often requiring them to log into three or four different systems to review all the information they need to have worthwhile conversations with customers. Businesses can now support their frontline teams with a unified desktop, which provides agents with all the relevant information they need on a single screen and gives them time to focus on the human aspects of the customer experience.
Agents can then agree the best outcomes with customers, supported by technology in assessing affordability and setting flexible payments plans to nurture customers back to financial health.