The novel coronavirus pandemic started very much as a healthcare crisis but has evolved over the past six months into an economic crisis too. In the UK alone, we are seeing millions of jobs at risk, businesses teetering on the edge, and whole industries such as travel on the verge of collapse. Interventions by the government, the FCA and lenders, in response to the Covid-19 crisis, will come to an end much sooner than the wider economic crisis, so this means a raft of new financial services challenges in 2020 and beyond.
How can we expect the financial landscape to change, and how might Target be able to help? Keep reading to find out more about the current challenges faced by financial institutions, and possible future challenges in the financial market.
Increased numbers of accounts with debt balances
Millions of homeowners are taking a “payment holiday” from their mortgages, at an average of £755 a month. These high volumes of customers taking payment holidays will lead to increased debt to collect in the coming months and years and represent a significant percentage of the overall mortgage book, far more than under usual circumstances.
How can increased public debt be managed? Outsourcing operational processes could be one way for lenders to maintain good customer relationships. Business process outsourcing from a trusted partner, like Target, enables providers to focus on core activities, reduce risk and enter new markets quicker. BPO providers have the skills and experience to support customers in debt, and adequate support is the key to retaining brand satisfaction, loyalty and customer retention.
Will the short-term Covid-19 measures have a long-term impact?
Payment holidays are expected to be in place for the next few months, but the consequences and impacts of these payment holidays will be felt by customers and firms long after, as lenders grapple with increased debt. Solutions are required to help firms in the long-term as well as the immediate term.
Demand for outsourcing services is already increasing and may rise further as lenders seek additional support. Financial institutions may also begin to prioritise their online portals and seek more technologically-advanced loan and mortgage software solutions.
Increased operational demand
Banks and Building Societies have expressed concerns relating to the need to up-weight existing operational teams to handle increased demand. Recruiting, training, retaining and managing resources across the arrears life-cycle will undoubtedly place increased strain on firms. From simple processing to complex arrears, vulnerable customer and litigation matters, there are a number of operational processes that will be put under additional stress.
Increased demand for rapid delivery models
There is a great urgency for increased operational resource, especially since delivery models need to be faster during Covid-19.
These solutions require support from partners with rapid delivery models including, where appropriate, low- and no-integration requirements.
It is imperative that, along with a speedy response, solutions deliver good customer outcomes and reduce the risk of future remediation.
Choose a Trusted, Reliable Arrears and Collections Partner
One of the current issues in finance for 2020 is that lenders are under pressure to run expedited procurement and supplier selection processes. Looking forward, near-term challenges will drive firms to look for tactical solutions from trusted partners. Firms need reassurance from suppliers that their needs will be met, for the near term and long term.
Meet additional demand and transform your collections and arrears processes throughout the Covid-19 crisis and beyond.