[EVENT]: Credit Connect: Credit and Collections Technology Think Tank 2023

Another interesting event this year, based around the following topics

  • Credit and Collections Risks
  • Assessing Affordability and Customer Vulnerability
  • Communication the Value of Customer Engagement
  • The Role of Technology

Session 1: Credit and Collections Risks

There are multiple challenges currently facing the sector. Amidst a backdrop of economic uncertainties like rising living costs, energy prices, and interest rates, the discussion pivoted around the evolving landscape of consumer behaviour, the integration of technology in collections, regulatory changes, and their collective impact on business strategies and operations.

Key Points

  1. Economic challenges including increased cost of living and rising energy prices are impacting consumer behavior and business operations.
  2. The credit and collections industry is grappling with issues like fraud and the complexity of collections.
  3. Regulatory changes, particularly around consumer duty, are posing additional challenges.
  4. There is an increased focus on understanding and implementing AI and data analytics in risk management.
  5. Changing consumer behaviors, especially among younger demographics, are influencing engagement strategies.
  6. Digital communication and processes are becoming more prevalent, but the need for human interaction remains strong.
  7. Operational costs and margins are being affected by compliance requirements and regulatory changes.
  8. The balance between technological innovation and traditional methods is key in collections and customer service.
  9. There’s a noticeable shift in the industry towards more nuanced customer interaction strategies.
  10. The impact of economic factors on repayment rates and settlement rates is a concern.
  11. The industry is adapting to a more data-driven approach for customer engagement and risk assessment.
  12. There’s a potential mismatch between media portrayal of the industry challenges and the actual on-ground realities.

Key Statistics

  • The proportion of voice interactions in collections has decreased from 70% to around 60-68% in recent years.
  • 1.9 billion GBP was borrowed in February (excluding mortgages), as per the Bank of England credit and money Overview Report.
  • The shift in mortgage rates and its effect on the credit sector was a key discussion point.

Key Takeaways

  • The credit and collections industry must adapt to rapidly changing economic conditions and consumer behaviors.
  • Integrating technology, especially AI, can enhance risk management and customer engagement but requires careful implementation.
  • Regulatory changes demand a flexible and responsive approach from businesses in the sector.
  • Understanding and catering to the communication preferences of different consumer demographics is essential.
  • Maintaining a balance between digital processes and human interaction is crucial for effective customer service.
  • Businesses need to be aware of the potential impact of economic changes on customer repayment capabilities.
  • The industry is moving towards a more data-centric approach in operations.
  • It’s important to differentiate between media narratives and actual industry experiences.
  • Preparing for future challenges involves anticipating changes in consumer behavior and regulatory environments.
  • The role of human psychology in debt repayment and customer interaction is an important consideration.
  • Keeping abreast of technological advancements and regulatory changes is vital for maintaining competitiveness.
  • There’s an ongoing need to refine customer interaction strategies to suit the evolving market landscape.
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Session 2: Assessing Affordability and Customer Vulnerability

The nature of vulnerability is evolving with the impact of external economic factors, the necessity of early customer engagement, and the challenges in identifying and addressing vulnerabilities proactively. The panel also highlighted the crucial role of staff training, the potential of digital tools and AI, and the changing dynamics of those seeking debt advice.

Key Points

  1. Growing Complexity in Understanding Vulnerability: Acknowledgement of the increasing complexity in defining and addressing customer vulnerability.
  2. Economic Impacts on Customers: Rising energy and food costs significantly impact customers’ financial situations.
  3. Importance of Early Engagement: Early engagement with customers is crucial in mitigating financial difficulties.
  4. Challenges in Vulnerability Identification: Identifying customers at risk of financial difficulty is complex and often lacks clear data.
  5. Role of Open Banking: Discussion on using open banking data to proactively identify potential financial issues.
  6. Staff Training and Empathy: Emphasis on training frontline staff in empathy and effective response strategies.
  7. Digital Tools and AI: Exploration of digital tools and AI in enhancing customer support and engagement.
  8. Changing Debt Advice Demographics: Noting a shift in the demographic profile of individuals seeking debt advice.
  9. Regulatory Perspectives and Consumer Duty: Consideration of regulatory aspects and the importance of aligning industry practices with evolving customer needs.
  10. Transience of Vulnerability: Recognition of the transient nature of certain vulnerabilities.
  11. Integration of Digital Methods: The need for more thorough integration of digital methods in customer engagement.
  12. Stigma Around Vulnerability: Discussion on the stigma associated with being labeled as ‘vulnerable’.

Key Statistics

  • 4% year-on-year increase in demand at StepChange.
  • 46% of people coming to StepChange still have dual fuel arrears.
  • Increase in older borrowing, with 4 million people borrowing into retirement.
  • Two-thirds of savings built up during the pandemic have been used up.
  • On average, individuals wait 12 months before seeking debt advice.

Key Takeaways

  • The landscape of financial vulnerability is becoming more complex and requires a nuanced understanding.
  • External economic factors like rising costs significantly affect customer financial stability.
  • Proactive and early engagement with customers can prevent the escalation of financial difficulties.
  • Identifying financial vulnerability early remains a challenge due to lack of clear data indicators.
  • Open banking data can be a valuable tool in identifying potential financial issues.
  • Frontline staff training in empathy and customer support is critical for effective engagement.
  • Digital tools and AI have significant potential in enhancing customer support services.
  • The demographics of those seeking debt advice are shifting, including higher income individuals.
  • Regulatory frameworks and consumer duty need to be aligned with current customer vulnerabilities.
  • Understanding the transient nature of vulnerability is important for appropriate support.
  • Digital methods in customer engagement should be more thoroughly integrated.
  • Addressing the stigma associated with vulnerability is essential for encouraging early support seeking.
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Session 3: Communication the Value of Customer Engagement

It is now vital to blend digital and telephone communication methods and address the changing dynamics of customer engagement amid economic shifts. This discussion highlighted the proactive nature of customers in managing credit profiles, the nuanced use of digital tools and AI in enhancing engagement, and the industry’s image challenges, suggesting a more integrated and empathetic approach to collections.

Key Points

  1. The panel focused on customer engagement, particularly in collections and communication.
  2. Emphasis was placed on the importance of both telephone and digital communication.
  3. Discussion on how economic factors like inflation impact customer engagement.
  4. Observation of customers becoming more proactive in managing their credit.
  5. The need for a balance between digital and human interactions was stressed.
  6. The potential of AI and digital tools in supporting agents and improving customer experiences.
  7. The significance of empathetic communication in collections.
  8. Challenges related to the image of the collections industry.
  9. Importance of integrating collections into the broader customer journey.
  10. The panelists discussed the necessity of consistent communication across the industry.
  11. The role of data in personalizing customer interactions and outcomes.
  12. Strategies for improving industry perception and engagement techniques.

Key Takeaways

  • The integration of digital and telephonic communication is crucial in collections.
  • Economic trends significantly influence customer behavior and engagement.
  • Customers are increasingly taking initiative in managing their financial profiles.
  • A balanced approach to digital and human interaction enhances customer experiences.
  • Artificial Intelligence can play a pivotal role in improving engagement and efficiency.
  • The collections industry faces challenges in its public perception.
  • Empathetic and personalized communication is key in collections strategies.
  • Consistency across the industry is vital for positive customer experiences.
  • Early engagement and proactive communication can lead to better outcomes.
  • Understanding customer emotions and situations is critical for effective engagement.
  • Data-driven personalization can improve the relevance and effectiveness of communications.
  • Addressing the industry’s image issues could lead to increased customer engagement.

Session 4: The Role of Technology

The panel delved into the evolving role of technology in business, focusing on Artificial Intelligence (AI) and its implications in customer service and operational efficiency. The conversation touched upon various aspects of technological advancements, including AI integration, data utilization, customer experience, and future trends in digital transformation.

Key Points

  1. AI’s Central Role: AI is not just an emerging trend but a now integral part of business operations.
  2. Different Views on AI: There’s a spectrum of opinions on AI’s role, ranging from it being a problem solver to a dynamic, evolving field.
  3. Data Modelling and Customer Adoption: New techniques in data modelling and growing customer interest in AI are notable trends.
  4. Impact on Customer Service: AI and large language models like ChatGPT are changing the landscape of customer interactions.
  5. AI and Business Integration: Businesses are focusing on integrating AI to enhance intelligence and decision-making processes.
  6. Degrees of Intelligence in AI: AI should be viewed in terms of varying degrees of intelligence, similar to human intelligence.
  7. Real-time Analytics and Agent Support: AI is increasingly used for real-time conversation analysis to assist customer service agents.
  8. Customer Preferences and Digital Transformation: Understanding customer preferences is key to digital transformation and adopting new technologies.
  9. Balancing Technology and Human Interaction: The need for a balance between automated services and human interaction is highlighted.
  10. Quality Monitoring Using AI: AI’s role in 100% quality monitoring in contact centres is discussed.
  11. Predictive Analytics and Data Utilization: The importance of predictive analytics and efficient data utilization is emphasized.
  12. Future Trends: Potential future trends in AI and technology in customer service and business operations are explored.
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Key Statistics

  1. “16% of customers set up payment plans between midnight and 6 am on self-service platforms.”
  2. “800,000 contact center seats in the UK today, expected to remain consistent over the next few years.”
  3. “70% of conversations are on the audio channel, 30% on digital channels.”
  4. “Significant investment in data analytics in recent years, especially by data science teams.”
  5. “Rapid advancements in AI and large language models in the past year.”

Key Takeaways

  • AI’s integration in business is not a future possibility but a current reality.
  • The perception and application of AI vary significantly across different business sectors.
  • There’s a growing trend towards using AI for real-time analytics in customer service.
  • Balancing digital transformation with customer preferences is crucial for successful AI integration.
  • AI in quality monitoring is evolving, with a focus on enhancing agent performance and customer experience.
  • Data is a cornerstone in leveraging AI effectively, requiring clean, structured, and accessible datasets.
  • Predictive analytics using AI is becoming increasingly important in decision-making.
  • Future trends in AI and technology are likely to focus more on refining existing tools rather than introducing entirely new concepts.
  • Understanding and adapting to customer behavior through data is key to improving service and efficiency.
  • Continuous testing and learning are essential in the effective implementation of AI technologies.
  • The importance of human touch in customer interactions remains, despite technological advancements.
  • The evolution of AI and technology in business is rapid and demands ongoing adaptation and investment.

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