Managing Vulnerable Customers: How New Analytics Can Help

For many businesses, the pandemic has resulted in a lack of clarity into the true financial position of a significant number of their customers, including potentially vulnerable customers. 

Some are likely to be facing cashflow, crisis and vulnerability – despite moratoria, state aid and direct financial help. Others may rapidly bounce back despite the disruption caused by COVID. But there's still a lack of comprehensive insight for many.

As a result, it’s now more important than ever for businesses to develop strategies to ensure they spot customer vulnerability, understand it and act on the insights, while empowering staff to effectively manage ongoing relationships.

Interactions with vulnerable customers offer critical insights that can transform business outcomes, performance and drive long-term loyalty and retention.

By combining analytics, insight, and data to benchmark common vulnerability signals, firms can quickly, accurately and pre-emptively identify vulnerable customers. Alerts can be developed to notify staff when they’re interacting with a potentially vulnerable customer based on these signals, enabling more effective responses.

Analytics Are the Key

The pandemic has overturned typical customer and behaviour patterns. Despite rising complexity, back-office staff are looking at ways to reduce risks and costs - all in face of strict external oversight.

But top-performing analytics systems can help review and segment customers in real time, to help better inform the best actions, most appropriate offers, to help safeguard all parties from increased exposure to risk.

Take the FICO® Resilience Index, for instance. It can offer US lenders a refined tool and an extra layer of insight to help identify key and viable consumer segments during spells of economic disruption. Its innovative metrics are designed to provide deeper insight into a consumer's resilience to financial stress. The index particularly suits analysis of those susceptible to economic change and, thanks to enhanced analytics, enables creditors to understand the most appropriate action from there on.

Smart Systems Can Overturn the Rules

While internal datasets may offer insight into historic habits and be reasonably accurate at predicting behaviour the performance can be improved. Smart systems with access to enriched insight, analytics, AI, and machine learning techniques can help highlight hidden patterns, unusual customer behaviour and pre-emptively flag rising risk and exposure, again to help head-off any emerging challenges before they become a critical issue.

As with the FICO® Resilience Index,  there are tools that can also support and compliment customer decisioning platforms, portfolio management tools and business planning activities to enhance loan portfolio resilience and reduce the financial volatility caused by economic disruptions.  

Taking the Aggro out of Aggregated Data

With growing transaction volumes and back-office headcount challenges, organizations may at times be obliged to rely on sample data audits, instead of resourcing more frequent labour-intensive in-depth manual reviews. As a result, some customer segments may start to carry increased risk. But by incorporating advanced analytics, reduced manpower can continue efficiently working the data sets to deliver strong insights, accurately and pre-emptively identify vulnerable customers - and offer the best treatments before challenges arise.

At FICO, we’re already helping businesses analyze and optimize their customer interactions in real-time, to help ensure faster, smarter, better-informed decisions, speed. To find out more, simply click here.