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5 mins read


Ian Elam

Millions of people across the UK are struggling financially because of the impact of Covid-19. Recent figures suggest that one in seven people have fallen behind on essential bills1, and one in three households have seen their income shrink, by a third on average2.

This is certainly one of the most serious challenges that retail banks have faced in the last century. How can they manage revenue and customer expectations, despite low interest rates and growing pressure from consumers and regulators to support their customers more? The steps that they take now are important to help them to weather the storm but could also determine their performance long after the international health crisis is over.

With the country in lockdown and millions of people furloughed or without work completely, banks can’t afford to take a one-size-fits-all approach to collecting money from customers who have fallen behind on mortgage, credit card or overdraft payments. Financial Conduct Authority (FCA) guidance says that they should go beyond providing a standard payment holiday or deferral and offer empathetic support that’s tailored to customers’ personal circumstances.

Despite the fact that a lot of people have opted to take payment holidays, many are still worried about their ability to cope financially. These customers are looking to their bank for trustworthy information, empathetic support and fast, responsive communication3.

The collections journey is an opportunity for banks to respond empathetically at a time when ‘treating the customer fairly’ has become a priority for customer experience and brand perception.

We’ve commissioned independent market research to understand the issues and how people facing debt want to be treated at this time. This is important if banks wish to retain those customers pushed into debt for the first time by Covid-19 after the pandemic ends, when they may no longer be in financial distress.

So, what can you do to make sure that you’re treating your customers fairly, empathetically and proactively during the collections process? Here are four practical steps that you can take:

1. Educate customers that are in arrears

If a customer has never been in debt before, it’s important that your contact centre agents give them clear information about all the support that’s available. This means taking the time to explain the options, and to understand which path is right for each customer.

This information should be easily available through your website and chat pages for customers who prefer to self-serve.

2. Train your employees to identify vulnerable customers and engage with them early

There’s no doubt that financial distress, heightened by Covid-19, has affected many people’s mental health. Older customers in particular told us that they felt embarrassed by their debt and abandoned by the companies that they owe money to. In some cases, customers avoided talking to their bank, waiting to be contacted first. This has made their financial situation worse.

You can offer vital support here by using data to identify customers who may be at risk and offering help as early as possible. This means proactively contacting them to explain what options are available to help them to avoid getting into unmanageable debt.

It’s also important that you train your customer service agents to treat customers with respect and empathy, and to understand that they’re very likely to be worried or in distress, so that they can work together to find a solution that’s realistic and affordable.

3. Offer flexible communications channels for customers

We know that customers value banks that are fair and flexible in their collections process. What might this look like in practice?

The Co-operative Bank, for example, told us that customers who are struggling to pay should contact them at the first sign of hardship as there are now different support options available4.

We spoke with several heads of collections during our research, and they told us that the traditional fixed payment date, requiring customers to pay a bill at the same time every month, is changing. An increasing number of providers now allow customers to pay their bills on different dates, to accommodate flexible incomes. If you haven’t already, you can adopt this approach to allow for the ever-changing nature of employment contracts.

Flexibility can also apply to how and when you contact your customers. Sixty seven percent of respondents told us that they prefer to speak to a live customer service agent about debt rather than self-serve on a website. However, that still leaves a significant number of people who prefer not to speak to an agent directly. In this case, you could offer a responsive and seamless experience across multiple channels, such as mobile apps, social networks and websites.

4. Personalise the user experience through data and automation

The data that banks hold can help them to make smarter decisions about how and when to contact customers who owe money. Analysing customer, industry and historical account data can help you to understand why someone is struggling and how long they’ve been struggling for. It can also help you to predict who’s likely to pay on their own and who may need a little extra help.

Combining empathetic conversations, tailored support and data-driven outreach means that you can approach collections in a way that’s specific to each customer. In some cases, it helps you to spot people who are at risk, prevent them from falling into unmanageable debt and increase their long-term loyalty.

Our research makes it clear that the banking industry can do more to help vulnerable customers. We know that people believe that contact with their bank should be easy, compassionate and, above all, tailored to their situation. But many of our respondents feel they’re being treated like a number, rather than a human being. Banks must address this by being fair, flexible and empathetic.

Banks that treat customers fairly at a time when they are most in need will reap the rewards5 of increased loyalty and revenues in the future.

Read our research in full

Written by

Ian Elam

Ian Elam

Business Development Director, Capita Customer Management

Ian has spent the last 25 years working with regulated businesses, helping them improve customer outcomes, reducing costs whilst remaining compliant. He is part of the team responsible for Capita’s collections, complaints and rectification proposition development. Prior to joining Capita he has held senior leadership and board roles in consultancy and outsourcing businesses.

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[3] UKCSI June 2020
[4] Savanta research Oct 2020

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