In this guest blog, Harrison Jardine from BSA Associate, Protiviti, outlines how the member journey through the Credit Lifecycle could be improved.
A potentially stress-inducing, worrisome process for members. The Credit Lifecycle spans from the origination, screening, underwriting, and closing of credit (aka. Lead-to-Loan) to the servicing, collections, and recovery of credit (aka. Service-to-Recover). As mentioned by the BSA’s Mortgage Team, “Some people find that applying for and getting a mortgage can be stressful” , particularly those that exhibit one or more characteristics of vulnerability or are considered to be ‘risky’ from a traditional industry credit perspective.
Example: Impacting members lives and the wider community. An example of this heightened stress can be during the underwriting process, whilst the member is waiting for a decision back from the Building Society. This process can seem like a “black box” to members and the outcomes from these decisions (e.g., Mortgage Applications) tend to have significant impacts on people’s lives. Whilst the Lead-to-Loan process can heighten stress for members, this process can also be filled with positive feelings for members, such as optimism and excitement.
Inconsistent experiences during an emotive time. However, the Service-to-Recover process traditionally has fewer positive interactions and can overall be an extremely emotive process for members, particularly those that are dealing with any financial challenges, such as missed payments. These interactions tend to be more positive when members can access and understand the information they need, in order to enable them to make effective decisions. Whilst there are processes in place to handle such events, these are often reactive and ad-hoc in nature, occurring after-the-fact. This means that the experience that members have during this period can vary, and it is difficult to maintain control, visibility and ultimately evidence efforts to ensure good member outcomes.
Win-win, improving member experiences and compliance to The Consumer Duty. This point is particularly relevant in the context of Consumer Duty, which enhances the regulatory expectations for firms monitoring and evidencing of good customer outcomes. Therefore, having a strategy, proactive and consistent approach to monitoring outcomes, such as across the Service-to-Recover process, can help to ensure that requirements set by the FCA are met, whilst also delivering the best service for members.
A proactive approach to monitoring and managing customer interactions. The core systems that you and your members interact with every day produce a digital footprint of touchpoints. These touchpoints can then be stitched together to derive your member’s journeys e.g., through the Credit Lifecycle. By monitoring these logs in real-time and overlaying key criteria such as a member’s vulnerability in that particular moment, you can assess on an individual level whether the appropriate process is being followed for that member, at any given time. This can then be utilised as a toolset to monitor and evidence your journey towards achieving good member outcomes in the context of the credit lifecycle.
Improving the efficiency, effectiveness, and timeliness of member interactions. The purpose of this approach is not to reduce the amount of member interactions, nor is it intended to change the type of interactions that are being had. The purpose is to improve the impact of every interaction between a member and their building society. The point in which an event occurs (e.g., a missed payment) tends to be the most emotive and worrisome time for members. By alerting one of your member-facing team to reach out to an individual, and equipping them with the right information, either as or before an event occurs, you can have the largest impact with your interaction as you can mitigate the concern at source and support your member through the process.
Example: A consistent, timely and impactful experience during a stressful time. One example of this can be for a change in interest rates on a tracker mortgage following an increase in the BoE Base rate. There may be different processes that are followed on communicating this change based on whether a member exhibits one or more characteristics of vulnerability, and given the fluid nature of vulnerability, your process approach needs to be flexible enough to pivot based on the perceived level of vulnerability at that given time. For example, you may have a process in place to ensure that for someone considered vulnerable, you follow-up any email about rate changes with the offer of a face-to-face appointment or phone call. This proactive approach to monitoring the process in real-time will therefore automatically trigger alerts to member-facing teams or automatically schedule phone/face-to-face appointments for your vulnerable members to ensure that they all have a consistent, timely and impactful experience during a potentially stressful time.
Wider applicability. Whilst this blog post focused on the Credit Lifecycle, this approach can easily be replicated to other member-facing processes, particularly those that tend to be highly emotive for individuals.
Improving impact and enabling good customer outcomes. Through this approach, you can enhance the impact of member touchpoints through improved efficiency, effectiveness, and timeliness of interactions. Also, you can then begin to evidence the steps that you have taken in the pursuit of good customer outcomes.