About 17% of Australians face some sort of financial hardship, and we in the lending industry could do much better at serving them. Hardship customers are unable to repay loans or debts when they are due. These aren’t all people simply living beyond their means. Some have lost their jobs. Others are caring for an ailing family member.
Special protections have been established within the legal frameworks governing the consumer credit, telecommunications, energy, and water sectors, but the collections industry still has a long way to go in helping customers who are in hardship. In their 2015 Australian Debt Collection Industry Report, The Australian Competition and Consumer Commission (ACCC) reported as a key finding that “technology and scale have improved compliance [with these laws], but there are still challenges for both large and small businesses—particularly the timing, frequency, and appropriateness of contacts.”
Poor communication around hardship is a problem for both lenders and customers. Lenders are losing profits. Customers are falling deeper into the debt spiral. Hardship clients are just as important as any other client. Most of them are good customers who have just run into some trouble, often through no fault of their own. If they can be kept engaged, lenders will be able to see them through to the other side. This makes for a very loyal customer and brand advocate.
What typically happens to these customers, however, is that after they are approved for a hardship adjustment, they just get thrown into a corner of the system. No one talks to them, and they sort of fall off the map. These folks want to be functioning members of society and deserve to be treated fairly and with respect. Katabat’s solutions substantially improve customer experiences. We provide better, personalised ways for lenders to connect with clients. This is especially critical for the hardship population.
Many institutions are able to gather a lot of data on their customers, but then it gets stored in a spreadsheet, which isn’t helpful to anybody. Katabat’s solutions gather data and make it immediately available for real-time decision making. Information is captured via workflow input. This could be through the customer using the self-service portal, or by an agent over phone or email. It then informs automated calculations and analytics.
Strategists can even configure real-time workflows for advanced processes, such as automation of financial statement assessments or automatic approval of hardship plans. A mobile-friendly, self-service portal is available to customers 24×7. Finally, consistent and compliant customer communications are delivered on a unified platform. Customers can correspond when and how they wish, which goes a long way, particularly with those in hardship. There won’t be instances of a customer agreeing to a hardship plan that they know isn’t suitable just because they want to get a lender off the phone.
Consumer protection legislation continues to change, and it is up to financial institutions and utilities to ensure they are in compliance with these evolving laws. The Katabat platform allows you to manage compliance risk through tight automation and digital audit trails while storing all of this information in accordance with the most stringent security protocols.
Seeking hardship adjustments can be embarrassing, and some people may be quite sensitive. Changing which channel is used to communicate with them based on their preferences can go a long way toward making them feel more comfortable. It also makes it much more likely they end up with a payment plan that will truly work for them. After all, lenders should want to see them through to the other side just as much as they want to get there.
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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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