A helping hand 2017...An Intelligent Environments White Paper A helping hand - How digital...

An Intelligent Environments White Paper

A helping hand

How digital collections channels are evolving to meet the new consensus on vulnerability


2017


A helping hand - How digital collections channels are evolving to meet the new consensus on vulnerability P 3

Over the last five years, creditor organisations of all kinds, from lending organisations to utilities providers, have been undergoing two simultaneous revolutions.

On the one hand, sweeping changes to the philosophy of UK regulators have prompted a fundamental reinvention of conduct strategy, focused on the principle of customer centricity. On the other, the relentless pace of technological change has led to the ascendance of online collection software as a mainstay of the debt collection platform.

Arguably the single greatest challenge of the conduct revolution has been the drive to define, and then better accommodate, the concept of customer vulnerability. Because the idea of treating customers fairly, as oft-repeated a mantra as that has become, certainly doesn’t mean treating all customers equally. The challenge of identifying individuals’ hugely varying needs - and of ensuring some consistency of response to them across entire industries - has been monumental.

And nowhere has that effort been more vital than in the field of collections and recoveries. While credit origination conduct has undergone great changes to allow for differing customer circumstances, it is at the end of the credit lifecycle that these considerations have become crucial. Few people experience distress when taking out a loan or setting up an account with a utilities provider, but when financial difficulty raises its head, the substance of a creditor’s reaction can be a matter of life and death.

Luckily, the second revolution undergone by creditors - the development and adoption of digital channels - offers a host of new tools and strategies for meeting the challenges of the vulnerability agenda. Nevertheless, digital remains something of an untamed frontier. While the capabilities of traditional telephony have been long understood, and built into the fabric of creditors’ response to vulnerability, there remains no consensus on how best to deploy digital to the same ends.

This paper, along with the debate to accompany it, will aim to assess the current consensus on defining, identifying and treating customer vulnerability, and identify key considerations for creditors when applying vulnerability strategy to the digital channel.

For more information please [email protected]



The Challenge

“ One of the biggest challenges in meeting principles-based regulation has been arriving at an understanding of vulnerability that can be consistently agreed across the full spectrum of credit providers. “



Reaching a definitionOne of the biggest challenges in meeting principles-based regulation has been arriving at an understanding of vulnerability that can be consistently agreed across the full spectrum of credit providers. This has been particularly problematic in the collections environment, not least because the very condition of being in financial difficulty is a potential vulnerability factor in itself.

Nevertheless, after a massive body of cross-industry dialogue and independent research, a consensus on how to consider vulnerability is beginning to emerge - and it is built around the idea of situational, rather than permanent, vulnerability. At Intelligent Environments, our internal process for defining vulnerability mirrors the findings of the University of Bristol’s Personal Finance Research Centre, which we would summarise as follows:

Following this thinking, a creditor can eliminate the unhelpful dichotomy of “normal” versus “vulnerable” customers, and indeed the need to permanently flag someone as intrinsically “vulnerable” based on circumstances which may change. In this structure, all customers can be placed on a spectrum of vulnerability, with a creditor’s actions governed by a drive to keep customers in the Potentially Vulnerable category, or move them from Currently Vulnerable or Particularly Vulnerable situations back to Potentially Vulnerable ones.

• First, the identification of what a customer is vulnerable to - specifically, what detriment are they at risk of experiencing in the event of the wrong treatment?

• Second, a move away from the idea of intrinsically and insolubly vulnerable people, and towards the identification of ‘vulnerability situations’ constructed along three axes:

▫ Individual factors including illnesses and mental capacity limitations.

▫ External factors - specifically surprise changes to life and work situations.

▫ Any action or inaction taken by the creditor organisation

• Third, a diagnosis of the degree of vulnerability experienced. This can be:

▫ Potentially vulnerable - which technically includes all customers, since any one of us faces the risk of being affected by unforeseen life changes.

▫ Currently vulnerable - that is, currently experiencing detriment.

▫ Particularly vulnerable - where there is an urgent need for active support.



The solution

“

“ ....collectors are finding that, given the option of interacting online, many customers are self-identifying as being in vulnerable situations.



The right fitIn the drive to find means of identifying, categorising, and remedying situational vulnerability, collections organisations are finding the digital channel to be surprisingly effective. The primary reason for this is straightforward - engaging with a creditor via an online ‘self serve’ environment removes much of the potential embarrassment or stress of discussing major life changes on the telephone.

In many cases, collectors are finding that, given the option of interacting online, many customers are self-identifying as being in vulnerable situations. This allows for segmentation from a much earlier stage in the collections journey, and in many cases may form a customer relationship where previously there was little or no engagement.

Early self-identification also allows for the immediate presentation of appropriate outcome elements through a debt collection platform - for example the presentation of clear links to third party money management charities such as Money and Mental Health.

Filling in the gapsThe other great advantage offered by digital in providing the right outcomes for vulnerability situations is its inherent strength in data harvesting. And after all, the more information can be collected about a customer, the more accurate a creditor can be when developing the right solution for them.

The digital channel is particularly suited to collecting affordability data - not only can assessments be completed in the customer’s own time and space, and without the stress or potential inconvenience of a phone call, but online collection software can offer a dynamic, tailored response that would be much harder to achieve through telephony.

For example, if a customer indicates early in an assessment that they live with their parents, a smartly written platform will then circumvent later questions about mortgage or utility payments, saving the customer (and the creditor) time and hassle.



Targeting expertiseOnce data is collected, a digital collections platform can also help with flagging situations of potential vulnerability, even where a customer has not self-identified. Frontline telephone staff can do this too, but require a lot of training to do it reliably, making a level of digital screening attractive from both an efficiency and a compliance standpoint. Online platforms can also pick up on potential clues - such as the use of accessibility tools - that would go unseen even to the most skilled telephone agents.

While we wouldn’t suggest that it’s possible to replace human intuition in assessing personal circumstances, a certain level of automation can be very useful in identifying those cases which might benefit from particular review, allowing for more targeted use of expertise within the contact centre.

Once accounts have been identified as potentially vulnerable, the facility to view account action in real time becomes immensely useful - if operatives can see what the customer is doing online and when, they can make a better call over if, when and how to intervene in the digital journey.

Just as digital collection methods are adept at harvesting data, they are also adept at curating and recording it. The provision of a digital journey leaves a clear record of how vulnerability has been identified, categorised and treated. This provides an interrogable and transparent record of case handling for the purposes of compliance and auditability, as well as a pool of data which can be studied in order to develop the creditor’s future debt collection solutions.



ConclusionOne weakness of digital financial services culture is that it tends to assume that the “coolest new idea” will be most successful, and that all consumers will be keen to try out the most advanced technology on offer. Common sense and experience, however, tells us this is not the case.

Indeed, as was stated clearly during our previous collections live debate, we do not believe digital contact is a panacea for all collections issues: while it should be a central channel for any collections organisation, its proper place is to complement, rather than replace, traditional call-and-collect methodology.

Indeed, if not used correctly, digital channels can alienate the very people creditors are trying to engage through their vulnerability strategies. After all, one important factor in assessing vulnerability situations is to take into account creditors’ own actions - and forcing people down a channel they are not comfortable with can therefore not only be inefficient in terms of data capture, it can be downright counterproductive.

While quite often it is the case that people don’t want to talk about subjects like addiction or bereavement on the telephone, it would be wrong to make that assumption of everyone - this would be a regression to the fallacy of lumping all “vulnerable customers” together as a single cohort with uniform behaviour and preferences. As such, it is important to build “breakout points” into the digital journey, such as live chat, explainer videos or callback requests, so that human assistance is available whenever it is required.

Collections organisations have long moved away from talking about the reasons they can’t address vulnerability in a digital space, to a discussion of the channel’s inherent benefits to debt collection solutions. Nevertheless, there is still a long way to go – the industry has only recently arrived at a consensus view of vulnerability itself, and an agreement on how best to tackle it digitally is yet to coalesce. We look forward to working with creditors and collectors of all kinds on the way to this destination.



About the Author

Randolph McFarlane,

Head of Sales Partnerships, Intelligent Environments

Randy McFarlane is Head of Sales and Partnerships at Intelligent Environments. Established 1985; Intelligent Environments has been dedicated to financial services for over 17 years, giving their clients innovative and secure digital solutions. Recognised thought leaders in customer experience and engagement, their single software platform Interact® is the class leading system of engagement to any debt system of record. (e.g. Experian Tallyman, FICO Debt Manager).

Randy joined Intelligent Environments from Visa Europe where he had pan-European responsibility for the establishment and delivery of their ‘direct to market’ business model for Commercial Cards. Prior to this he was Global Business Development Director for KDS and was successful in the securing of strategic partnerships including AirPlus, Societe Generale, BNPP and Mastercard. He has also held a number of senior roles across the American Express Global Corporate Payment business. With a first class Honours degree in Business Studies, Randy also counts Spendvision, Rank Xerox, Compaq and Computacenter amongst his former employers.

About Intelligent EnvironmentsIntelligent Environments is an international provider of innovative financial services technology. Our mission is to enable our clients to deliver a simple, secure and effortless digital customer experience.

We do this through Interact®, our digital financial services platform, which enables secure customer acquisition, onboarding, engagement, transactions and servicing across any digital channel and device. Today these are predominantly focused on smartphones, PCs and tablets. However Interact® will support other devices, if and when they become mainstream.

We provide a more viable option to internally developed technology, enabling our clients with a fast route to market whilst providing the expertise to manage the complexity of multiple channels, devices and operating systems. Interact® is a continuously evolving digital customer engagement platform that ensures our clients keep pace with the fast moving digital landscape.

We are immensely proud of our achievements, in relation to our innovation, our thought leadership, our industrywide recognition, our demonstrable product differentiation, the diversity of our client base, and the calibre of our partners.

For many years we have been the digital heart of a diverse range of financial services providers including Generali Wealth Management, HRG, Ikano Retail Finance, Lloyds Banking Group, MotoNovo Finance, Think Money Group and Toyota Financial Services.

If you’d like to hear more please contact

Randolph McFarlane

+44 (0)20 8614 6040

[email protected]

Kingston Upon ThamesRiverview House20 Old Bridge StreetKingston upon ThamesSurrey

KT1 4BU

+44 (0) 20 8614 9800

Belfast, Northern IrelandSuite 1B Ground FloorConcourse Building 1Northern Ireland Science ParkQueens RoadBelfastNorthern Ireland

BT3 9DT

+44 (0) 2890 785 795

Digital Financial Solutions

[email protected]

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