The consumer desire for a brighter Christmas amidst continuing Covid-19 restrictions has seen a sharp rise in ‘buy now pay later’ schemes, and with furlough ending and depression rates rising, a perfect storm lies ahead for all collections teams as consumers juggle multiple payment demands.
As Ian Elam shared in his recent blog on the state of the nation, we’re in the midst of a spiralling debt crisis as millions fall behind with repayments. This trend is expected to continue with the vulnerable in particular hit hard. The Woolard review warned that buy now pay later (BNPL) comes with a “significant potential for consumer harm” and the Citizens Advice Bureau reports one in every 10 BNPL customers is being chased by bailiffs and debt collectors as they face “under-the-radar debt”.
Factors contributing to this dire situation include the ending of the government furlough scheme; under-employment, where employees are forced to reduce their hours; and the rising costs of basic goods and services. The Financial Conduct Authority is concerned about how easy it has become for consumers to buy more than they could afford and rack up high debts, whilst regulatory consultation is in progress with responses due by 6 January 2022.
This collision of emotion all points towards a further worrying increase of abuse for our collection teams. Chris Pitt, the CEO of First Direct, told the BBC that some of his customers had taken to stalking employees online and have become “abusive and quite personal" .
The Institute of Customer Service (ICS) has found that over 60% of workers it surveyed have faced “unacceptable levels of hostility and abuse” in the past 12 months from “an increasingly frustrated and disenfranchised public”.
It’s a tightrope to walk for all operational teams: identifying vulnerability, driving loyalty, managing self and consumer emotions and for leaders, protecting our employees. What can you action today to deliver value tomorrow?
We suggest three tactics specifically for collection teams in the financial services sector.
Tackling the bigger picture
Collection teams need to be ready, skilled and knowledgeable enough to understand not only a case in isolation, but also how to assess the vulnerable individual’s whole situation. If a person is unable to pay back a BNPL plan, credit card or loan, then they are likely to also be struggling with their bills, mortgage, rent, utility bills and any number of other obligations.
Your staff must take a holistic approach and provide support for debt managing that is wide as well as practical. And this broad-focused approach should extend to institutions themselves: banks and financial organisations need to join forces with debt management charities and support groups, for instance Citizens Advice Bureau and StepChange.
Encouraging empathy and prevention across all channels
More than ever, empathy is the key tool for better serving your customers. Being able to recognise their emotional state and knowing how to react, proactively reaching out to those you recognise as vulnerable.
Financial services should consider learning from other sectors. The gaming industry may not seem an obvious place to look for inspiration, but it has implemented some innovative measures, such as encouraging a set spend limit and alerting the customer when they are close to it. Measures like these are driving that industry towards increased responsibility, while still facilitating both loyalty and engagement, and could just as easily help support customers in the prevention of debt, reducing the likelihood of lengthy collections processes and their resultant emotional and monetary cost.
Utilising multi-channel smart technology
Accessibility through a range of communication channels is essential for giving your customers the right support quickly and easily. You should be just one click, phone call or text away.
When considering voice channels, AI can work wonders by detecting distress ‘in the moment’ in a customer or colleague’s voice and support with live coaching. Our assisted customer conversations technology analyses two-way speech in real-time – providing additional information, evaluating emotion live, ensuring compliance and delivering efficiency by automating post-call tasks. All this, plus support from in-built real insight learning that drives customer experience, reduces churn and identifies fraud or vulnerability.
Being there to help
Millions are facing tough times ahead and collection teams have a crucial role to play in helping. With the right guidance and support they can make a huge difference to the lives of people who need them right now more than ever.
The financial services industry has a collective duty to ensure they are set up and capable to understand debt in a social responsibility context. As lending becomes more accessible, inclusive, and diverse, so too does debt. A strategy to manage this part of the ecosystem that recognises empathy, mental health, vulnerability, support and prevention will ensure responsible lending that drives the economy, growth, aspirations and prosperity for both the individual and the industry.
Customer journey and experiences can then be designed and mapped with these eventualities front of mind. This is where we can help and support your organisation to stay ahead with innovative solutions and expertise.