In Focus Commercial Credit
vary for that customer month on month. So it does come back to the question of how often you have that conversation on affordability with the customer.
IR:We utilise conversational techniques based on behaviours to get a bit more sophisticated and to get away from just the tick-box exercise of going through and I&E. So a call can take 20 to 25 minutes now,
but if we get all the information that we need, which gives us the confidence that we have set up a good arrangement for both sides, then that is absolutely fine. I would much rather spend 25 minutes
now making that arrangement secure so we can leave the customer be and it clears the debt gradually, rather than it failing and we need to disturb the customer again.
How accurate do you find I&E assessments? SW: Particularly in car finance where the speed of decision is so important, but also in the wider consumer lending space, the automated approach can help from a consistency perspective. By using the correct data to quickly get
yes’s and no’s faster can take away any uncertainty from if an underwriter is having a good or bad day, provided you are confident that it provides sufficient assessment of the customer’s situation. However ensuring that the maybe’s are
appropriately assessed is key for any applicants with thin credit files or specific circumstances.
SB:My preference is not to get the information from the customer! For two reasons: either a small number will deliberately misinform you, or more likely most will just not know. Either way, it will
By using the correct data to quickly to get yes’s and no’s faster can take away any uncertainty from if an underwriter is having a good or bad day, provided you are confident that it provides sufficient assessment of the customer’s situation
not be accurate. So, for me, Open Banking is the best opportunity, although it is very hard still to get that properly right.
DJ: Surely Open Banking will prove to be more accurate than the customer, because it is just simply reading from the statements, where a customer will have to rely on memory. If there was a system that could accurately categorise the outgoings – highlighting how much is spent on ‘entertainment’ or on priority bills and so on, because it can see exactly what the customer is spending on, I think it would be a huge improvement to what we currently have.
SS: It is very up to date as well, as you are doing it. As you are going through the data in real time you might know that a customer has, say, £100 available. We know that the CRA data is late, it always has been, but you know that the Open Banking data is right up to date.
SS: This is always a problem in lending, both at the front and back end – it is an
individual CCA agreement for that money, but can you take household income into consideration? Well, we decide that we had better not. But at the back end you will do so. You really have to be consistent; you have to stick to a policy at the front end and at the back. The friction can even exist if you have one bank account. I think that is the great value, that you do the I&E at the front end and then every quarter you automatically pull the information from the back end and run an algorithm so you can see your changes in expenses and that itself can be a warning and a point of discussion.
JML: Going back to the adoption rate, I am going to take a rather more bullish view on this and say that it will be rather more like two years before Open Banking will be widely adopted. Technology is accelerating almost exponentially, but I also think that the barrier that most people see – that is the customers themselves not giving access to bank accounts – may not be such a hurdle. I worked in a collections environment when direct debits were brand new. At the time, half the business said that nobody would ever give us their bank account details because we would control what comes out and nobody would trust debt collectors to do that. It is now probably the biggest paying mechanism that most DCAs have got, and Open Banking will do just the same – 24 months, that is all it will be.
SS: I think you are under an obligation, that is the grown-up thing to do. If you see that the priority bills are not being paid, then you have to have that conversation to say ‘look, we have put you through an I&E, you normally pay £100, but we are going to put you down to £50 because you have not paid your power bill’. CCR
Left-right: Neil Taylor; Phil Bellemy; Sarah Watts; Stuart Sykes; Tushar Das June 2019
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