Consumer loyalty is built during challenging times with the right tech stack

When loyalty is up for grabs during tough economic times, flexible loan repayments and customer-centric collections not only reduce delinquencies. They improve loyalty and experience too.

When the economy ground to a halt during the pandemic, IT and operations teams in consumer lending faced the massive task to shift customer-facing operations to digital customer journeys and remote telephony. Business continuity across new borrowing, service, repayments and collections became the business-critical priority for lenders.

With Government support and debt relief announced, teams were further tasked to administrate payment holiday requests, re-calculate interest and balances, and forecast the business impact of mass-scale payments disruption. Implementing contact and communications strategies to support these debt relief protocols, and harnessing the data to measure revenue impact was mission-critical.

As UK consumers and financial organisations face new challenges in form of the cost-of-living crisis, the customer purse is stretched once again. Financial organisations should prepare to support customers and ensure flexible payment options are available that ensure ease of transaction, optimise repayments and reduce defaults.  And ultimately, provide the sort of service that yields loyalty.

Digital-first collections strategies driving the uptick in customer experience?

While a reduction in net-new consumer borrowing and repayment disruption hit lenders hard during the pandemic, a surprising consequence of the pandemic was an uptick in customer loyalty, Net Promoter Scores (NPS) and Customer Satisfaction (CSAT) across consumer finance.

What’s even more shocking – is that this improved customer experience in collections became a major driving force of this improved sentiment between lender and consumer.

Yet, when you consider that customers have long been telling lenders that aggressive calling won’t improve response and recovery rates, it’s perhaps not so surprising after all. With that desire for digital-first contact and flexible omnichannel payments portals enabled by the sheer force of the pandemic and various lockdowns; it seems that borrowers are finally receiving the kind of people-focused service they’ve been crying out for.

Arguably, choice, flexibility and autonomy are more powerful than force.

The widening gap between top performers and lagging competitors

For many lenders, it was no easy task to accelerate the digital transformation that drove this improved relationship. Some lenders fared better than others. As business continuity plans and customer contact processes kicked into action across the globe, we saw lenders with varying levels of preparedness for the crisis. Those with disconnected legacy systems and data silos across CRM, ERP and customer outreach platforms struggled to execute effective contact as rapidly as the crisis required.

Technology-first incumbents and fintech challengers however proved well-prepared for disruption, with software stacks and agile business process design already in place to handle stress tests and business interruption. These lenders were better able to manage increased call centre traffic spikes via rapidly implemented, automated workflows.

From pandemic to process automation

So, what can consumer lenders learn from the pandemic to continue this increased positive sentiment from borrowers, optimise customer relations and improve recovery rates as we face new financial challenges? The key to success lies in a customer-centric, digitally-enabled collections strategy.

The four pillars of an effective strategy include:

1. Self-serve functionality

Whilst there’s still a place for agent outreach and inbound calls for segments of borrowers, research highlights that an omnichannel strategy across a range of digital self-serve options is the key to successful collections. From accessible on-the-go mobile apps and desktop portals, to chat functionality and easy-access SMS payment links, it appears that empowering customers yields better results than a narrow and intense call-focused strategy. Automated robotic call flows are also favoured over queues to transact with an agent.

Empower customers with a range of accessible channels, on-the-go, around the clock, and see your rate of delinquency drop.

And of course, with self-serve taking care of the light-touch payments and queries, agent time is better spent on high-value interactions and customer support, retention and care.

The general outcome here is that you gain borrower trust, and remove behavioural obstacles to repayment that present themselves during aggressive agent-to-borrower call strategies.

2. Pay their own way

In the bright new world of online payments, consumers transact in a range of different ways. The choices are wide and varied, from PayPal and Apple Pay to Klarna and AllPay. And there’s still a place for traditional payment options like Direct Debit, Bank Transfer, Debit Card and Counter payments. By enabling self-serve functionality alongside flexible repayment options, customers are further empowered and encouraged to meet their repayments – and that positive customer sentiment is a nice by-product.

3. Let’s get personal

Many lenders fall into the trap of personalised marketing and communications messaging and highly targeted customer acquisition programs, yet treat delinquent accounts as one homogenous group. It’s important to remember that even borrowers who’ve fallen into late payments and defaults are digital-native consumers who are used to the instant gratification and personalisation of Amazon, Uber and Airbnb convenience and transactability.

Tailored communications should be an integral part of your contact strategy, complementing flexible payments and self-serve functionality.

4. Leverage your internal data

As well as eliminating department silos and providing a single source of truth, CRM for lending and collections provides data enrichment that enables informed decision-making and rich MI and BI. From CFO-level reporting to agent analytics, understanding what collections programs work, allows repeatable processes to be executed on a larger scale. Visual dashboards make it easy to understand customer behaviour, agent success, and preferred communications choices.

Data-driven collections create a powerful impact. As lenders face a new phase of challenges in the months and years ahead, we encourage you to leverage technology and work to the four pillars outlined to manage collections and communications effectively.

That is, flexible payments on a range of self-service channels, supported by personalised communications across a single source of truth platform. This customer-centricity will build customer delight, reduce delinquencies, improve CSAT and create immeasurable efficiencies across every area of your business.

Financial Cloud the leading Financial CRM for financial services comnpanies.

At Financial Cloud, we work with all types of consumer credit companies, from High Street lenders, and Banks to Legal and Collections agencies. Our full suite of products includes:

• Financial Cloud CRM: a fully customisable Financial CRM that provides a 360-degree view of your customer.
• Customer Portal: empower your customers through cross-channel self-service functionality
• Payment IVR: a fully customisable payment IVR allowing customers to self-service payments 24/7.

Financial Cloud runs entirely in a secure cloud environment, with no installations required. That means no software, no hardware, and free upgrades every year, making it ideal for small businesses and large enterprises

Improve your business performance with dynamic software that helps you create a better and more engaging customer experience. Book a demo today,