What is vulnerability exactly, and why does it matter to lenders? The Financial Conduct Authority (FCA), conduct regulator for more than 58,000 financial institutions in the UK, tabled the issue of consumer vulnerability in 2015. Since that time it has used its independent status and considerable power to make identifying and aiding vulnerable customers a priority of UK financial institutions.
Who Is Vulnerable?
The FCA defines the condition quite broadly; characteristics of vulnerability may include low financial capability, low financial resilience, recent major life events (e.g., losing a spouse), and physical or mental health conditions.
According to a 2017 FCA survey, half of UK consumers currently show one or more characteristics of potential vulnerability. Vulnerable individuals tend to have more debt and struggle with monthly bills more than those not considered vulnerable. The FCA says that firms need to take vulnerability seriously and have policies in place to deal with consumers who are at a higher risk.
What Can Lenders Do?
This focus on vulnerability is not meant to be a separate scheme. The FCA advocates an integrated approach with all aspects of an organisation’s operations considering and addressing vulnerability. A recent Deloitte article highlighting the FCA’s approach to vulnerability suggests that financial firms ought to consider the following proactive steps:
- Undertake a vulnerability mapping exercise
- Identify vulnerable customers within their client population
- Introduce specific policies and procedures aimed at helping vulnerable customers
- Introduce systems that can track consumer vulnerabilities and track changes
- Review business models and product design through the lens of vulnerability
How Can Katabat Help?
As Adam Richardson wrote in his blog regarding hardship in Australia, identifying vulnerable customers is important, but is merely the tip of the iceberg. How firms track these customers, communicate with them, and develop solutions is what will determine their success. This success doesn’t just benefit the consumer. Targeted solutions that assist vulnerable customers to avoid default and successfully repay debt is in the lender’s interest as well. The Katabat solution can help organisations streamline the tasks necessary for helping their vulnerable clients.
Katabat’s solutions enhance customer experience by providing lenders with a better, more personalised way for organisations to connect to their clients. Automated workflows collect data and make it immediately available for real-time decision making. Information can be obtained via workflow input in several ways—through the customer self-service portal, an agent on the phone, or via email. The financial theme and condition of the customer is assessed in parallel with the automated calculations and analytics. This allows a personalised arrangement approach for the customer, swiftly.
Consistent and compliant customer communications are delivered on a unified platform. Customers can respond when and how they wish. This is critical when working with vulnerable consumers. Nobody in that situation wants to have to recount the details of an illness or loss of a loved one repeatedly to agent after agent.
Being a vulnerable customer can be uncomfortable, and some individuals may understandably be quite sensitive about their situation. Allowing individuals to communicate through their preferred channel can help make them feel more comfortable. It also makes it much more likely that they end up with a solution that will work for them. That’s a win-win for you and your customer.
To learn more about how Katabat can help you deliver personalized and integrated marketing and customer service, contact us at info@katabat.com.
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Katabat is the leading provider of debt collections software to banks, agencies, and alternative lenders. Founded in 2006 and led by a diverse team of lending executives and leading software engineers, Katabat pioneered digital collections and has led the industry ever since. It is our mission to provide the best credit collections software in the market and solve debt resolution from the perspectives of both lenders and borrowers.
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