Can data help assess customer vulnerability and affordability? Yes. Here’s why

Ahead of his session at the Online Collections Technology Think Tank 2.1 on the 16th of September, Frank Sherlock shares his thoughts on using data to identify vulnerable customers and assess affordability.

Organisations interact with vulnerable customers every day. How they respond has far-reaching implications on customer experience (CX), retention and reputation in the market.

While the pandemic changed everything in 2020, customers are constantly experiencing crisis and vulnerability. It’s important that every organisation has a strategy and process for understanding vulnerability, extracting and operationalising insights, identifying at-risk customers and equipping employees to manage customer relationships with sensitivity, flexibility and emotional intelligence.

Today, the UK Financial Conduct Authority (FCA) defines vulnerability as someone who, due to their personal circumstances, is especially susceptible to detriment. But we also know that vulnerability can take many forms. Perhaps it’s a working parent with young children enrolled in at-home learning. Maybe it’s someone who is digitally vulnerable – an individual who isn’t capable of or has chosen not to engage with the digital world – and is being left behind by digital-first organisations.

Or, as it relates to my upcoming panel discussion at Credit Connect’s upcoming Collections Technology Think Tank, perhaps it’s someone who has experienced a negative change in financial circumstances and is struggling to pay their bills.

In July 2020, the FCA reported that 24 million people in the UK displayed one or more characteristics of vulnerability. These adults are more than twice as likely to use high-cost credit than those who aren’t vulnerable – one in two (49%) had low financial resilience, two in five (41%) were over-indebted, and three in ten (29%) were in financial difficulty. Further, the also FCA found 31% of adults have experienced a decrease in household income, with Black, Asian and Minority Ethnic (BAME) and young people more likely to be affected.

These statistics are further proof that affordability is a key aspect of fully understanding and better serving vulnerable customers.

Affordability addresses a customer’s ability to pay for approved debt (like a credit card limit) or repay a loan once it reaches collections. Organisations need to do a lot of things correctly to properly assess affordability, such as understanding income and expenditure , priority bills (like utilities or internet), food costs, and other fixed costs (like monthly transportation). When each element of that assessment is documented, organisations can associate and analyse data to determine the best outcome for the customer. Understanding all of these elements together is critical in working with the customer to set up a fair and reasonable plan that they can actually pay back month over month.

Approaching affordability and vulnerability assessments from a data-driven view makes it easier to reach these fair outcomes – which is not only the right thing to do, it’s mandated by regulations.

But most organisations only analyse a small sample of customer interactions, which causes them to miss out on valuable insight hidden across customer interactions. This makes it difficult to guarantee they are asking all the right questions and capturing all the right data when it comes to assessing affordability, as well as recognising trends in vulnerability across the customer base and establishing strategies for how to best serve these customers.

Solutions, like conversation analytics, can help capture, analyse and monitor 100% of customer interactions across multiple channels in a single system. Companies can follow a customer’s journey and repeat contacts regardless of what communication channel is used – from call to email and chat – and extract insight that can be leveraged to improve processes, performance and decisions.

Further, these solutions can be set up to specifically address items related to affordability and vulnerability, such as: monitoring for and flagging specific words and phrases that insinuate vulnerability, with close attention to hardships such as job loss, illness, unemployment and abuse; look for signs of stress and agitation in consumer and employee voices to help confirm vulnerability using best judgement; and screen for non-compliant language related to affordability, such as specific questions that need to be asked around income and expenditure.

For customer-led organisations, it’s critical to identify those in vulnerable situations in the moment, as well as proactively adjust service levels, improve business processes and increase flexibility for future situations related to vulnerability and affordability.

Interested in learning more? Join me, alongside Alex Woodcraft, Director of Customer Engagement at GAIN Credit, and Denise Crossley, Chief Executive Officer at Lantern, at the Credit Connect’s upcoming Collections Technology Think Tank. We’ll be discussing how to assess affordability and use data to maintain best customer outcomes on Thursday the 16th of September at 10:45am BST.