The latest guidelines from the FCA are soon due to come into full force which will have a massive impact on the financial sector; in particular, credit card providers, how they work and their processes, which if not dealt with efficiently, could cause huge problems.
There is a national problem with debt, part of which is known as persistent debt through credit cards. Persistent debt is where the cardholder is making low repayments on their credit card, which equates to over a period of 18 months the customer paying more in interest, fees and charges than they have repaid of the principal.
The new FCA rules state after 18 months, providers will have to contact and prompt all their customers in persistent debt to change their repayment behaviour.
This creates an enormous workload and challenges for these providers, who will have to contact all of these customers, who will be unaware that they are even in a problematic position, as they have never missed a payment and are sticking within their agreed credit limit, and will have not received any communication of this type before.
Naturally, this is going to spark a huge influx of questions by customers, through all inbound channels, meaning more staff will have to be in place to accommodate this.
These customers will have to discuss their financial situations, ask questions, as well as completing income and expenditure forms, which will be a very lengthy process taking between 45 minutes to an hour for each customer. The staff needed to handle this influx of inbound inquiries will be vast and in most cases, unmanageable. Could your contact centre handle an additional 100,000 hours of calls in a month right now?
If their situation still does not change and they remain in persistent debt, their card may be suspended, which may be reported to credit reference agencies (CRAs). In this scenario, the interest is cancelled or waived, and the customer will also get contact details for a debt advice service.
However, the problem is not unsolvable, and indeed is already being widely adopted: that is the self-serve alternative, which in the financial sector is increasing hugely by utilising the power and time-saving potential of Open Banking.
Self-serve solutions
Self-serve has become increasingly popular and the preferred option for many. Our addictions to the smartphone, internet and social media, has led us to become consumers that want everything instantly and conveniently. As consumers, we want to communicate on our preferred channel, wherever and whenever we want. We don’t want to be dictated to about when we can watch our favourite television shows, so we watch on demand, so we certainly don’t want to be caught on the phone for an hour answering questions about our finances.
Customers are now used to using self-serve options and when given the choice, it’s often their preferred option. Services like online web chat, SMS chat and other self-serve solutions are on the rise.
We have seen an increase in the roll-out of self-serve strategies by businesses with similar challenges to this one of the financial sector. Businesses are creating bespoke mobile journeys that allow customers to enter personal details and answer questions at their own leisure on a completely bespoke, business branded, secure mobile platform.
There also been an increase in the usage of mobile collections, mobile payments and RCS. All of which allow businesses to either send out bespoke information to customers or gather important information about a customer, quickly, easily and conveniently.
So self serve not only solves potentially a crisis for credit card providers, but also offers a more convenient and preferred method of communication for customers. If you would like to know more about our self serve solutions, then please get in touch today.
