FICO has just completed its survey of European credit risk managers with Efma, and the results show a fairly dismal forecast for the rest of 2012. As reported in our news release, risk managers see further staffing cuts, consolidation and tight credit.
One area that was slightly less negative than in our last survey was delinquencies. While delinquencies are still forecast to rise, they are expected to rise slower than was forecast in the previous survey. The one exception to this trend is in mortgages, where once again there is an increase in those forecasting a rise in delinquencies, from 53% in the last survey to 55% in this one. In the UK, an addition trouble spot is auto lending — in the last survey, 75% felt they would stay the same, whereas now 60% see an increase coming.
As much of Europe is in a double-dip recession, most consumers are focused on staying afloat financially. Credit cards and overdrafts are now tools for survival, which consumers will strive to protect. This presents a good opportunity for risk managers to create customer-friendly environments in collections, using such tools as pre-collections communications, credit counseling and limit management. As risk managers now must focus on profitability as well as risk containment, retaining customers and preserving their healthy use of their “survival kit” credit tools may be regarded as nearly mandatory.