Digital Collections, Vulnerability and Open Banking: My thoughts on the Credit Summit | Flexys

Digital Collections, Vulnerability and Open Banking: My thoughts on the Credit Summit

12th April 2018 by Jon Hickman

Earlier this month, I attended the Credit Summit in London: an excellent, well organised event with all the best minds in the industry in attendance, from the FCA, Experian and FICO to HSBC, Monzo and American Express.

There was a great plenary session hosted by broadcaster Evan Davis with insights from MPs Sir Vince Cable and Jonathan Reynolds, and a speech from the FCA to round off the day.

The most common themes I noticed cropping up again and again throughout the day were Digital Collections, Vulnerability and Open Banking. With machine learning technology taking off in the collections world and increased industry interest in catering to vulnerability, it was only natural these topics should come up as banks look to innovate and collection agencies begin to embrace a softer, more tech-driven approach. Transparency and honesty were also big themes, with many highlighting the importance of being clear and open about process.

Digital Collections

AI and machine learning were mentioned extensively by many speakers, including credit leaders from Grant Thornton and Ipsos Mori. But their application to digitalising the collections industry was best summed up by the Financial Conduct Authority’s Jonathan Davidson, who advocated the use of technology to treat debtors more fairly: “A credit check is not an affordability check, [affordability checks should be] forward not backward looking.”

Vulnerability

Vulnerability was also widely discussed with agreement that customers need to be treated within their own context & forbearance and advice provided where appropriate. One speaker mentioned creating an “inclusive process” – i.e. a way of engaging with customers which caters for their vulnerability and doesn’t exclude or disadvantage anyone.

The Debt Respite Scheme (breathing space) also got quite a bit of air time and seems to be gaining some ground. There’s a bill going through parliament which should be signing this into law. Giving the politician’s perspective, Sir Vince Cable notably tweeted from the summit about the importance of integrating vulnerability into collections: “[The] biggest issue for policymakers now is that many who are borrowing heavily are the poorest, who are having to do so just to get by, pushing further into financial distress.”

Open Banking

“Thin file” was one of top buzzwords around open banking at the summit: open banking platform providers Open Wrks revealed how open banking technology is supporting individuals who couldn’t get financial support otherwise – over 80% of SMEs are rejected when seeking finance due to insufficient information, labelled as “thin file” consumers.

In terms of how open banking can help collection agencies pick up on vulnerability and emotional distress, Grant Thornton’s Charles Roe made a very insightful observation during his presentation: “no affordability model can predict everything that can happen to a customer. Open Banking allows us to continuously monitor and deal with issues before we would have been aware of them before.”

However, the general feeling around Open Banking was that it’s an immature technology which needs refinement and has some hard issues yet to be resolved – like accurate categorisation.

All in all, a superb event and a must for anyone who is serious about technology in the collections industry: I certainly met some great people who are helping to lead the movement towards more responsible lending and ethical digital collections.