Omnichannel Communications Will Help Lenders Align to Latest FCA Support for Motor Finance Customers

Global analytics software provider FICO has responded to the extended support announced by the FCA for motor finance customers facing continued financial difficulties, which came into force on 17th July.

“With the latest ONS data showing that the UK payroll dropped by 650,000 in June, and many millions still on furlough, more people than ever need help managing their finances,” said Bruce Curry, vice president for collections and recovery consulting and sales at FICO. “The FCA’s extended support for those on motor finance and other high-cost credit is a welcome measure but will be challenging for many lenders to implement.

“The FCA has made it clear that care must be taken over the handling of vulnerable customers. But it’s not just about those who are typically profiled as vulnerable; there will be many borrowers who are facing financial hardship for the first time, due to COVID-19. Lenders need to find not only the right solution for these people, but the right way to communicate with them, at a massive scale, to reach the best outcome for both parties.”

FICO is advocating omnichannel communications strategies, directed by good data and analytics. Automated two-way dialogues across email, SMS, mobile apps, IVR and online sites become more powerful when driven by analytic strategies. And the firm believes that in terms of time-to-value, omnichannel communications are one of the quickest, most powerful solutions that lenders can implement, with a high return on investment.

“The key issue is to make sure the right data is being collected right now,” added Bruce Curry. “Lenders need to collect more data than what they have captured in the past, in order to understand the differences between COVID-19 related debt and non-COVID related debt, and to identify the customers that classic collections risk analytics apply to and those for whom it won’t work.

“It is also important to determine the likely return to financial good profile by customer segment, including whether they work in a protected industry; what circumstances drove their reduction of income; what has been the true level of impact on disposable income; and what is their likely return to good curve given their household dynamics and industry sector. By truly understanding the customer circumstances, lenders can communicate with the right frequency, through the most effective channel, for the optimal end result.”