1. Slow, manual processes

It's common for smaller organisations to manage loans using spreadsheets. Data has to be added by hand, sometimes across different computer programmes. This leads to slower processing times and a higher risk of human error. It's also difficult to track communications and manage payment arrangements, or even to stay fully compliant.

How technology can help:‍

Speed things up: Technology automatically spots late payments and sends out reminders or notifications. This drastically speeds up the process and frees up your team's time.
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Stay on top of things: Get a real-time view of your loan book, payments received, and all communications. Software will automatically flag accounts that are falling into arrears, streamlining management and slashing the risk of errors.
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Spot trends: Data analysis can identify trends across your loan book and highlight specific accounts that need your attention, so you can target your approach more effectively.

2. The rising risk of defaults

High living costs mean many families are really struggling with money. This means more members are not able to pay back their loans on time. Lenders are finding it harder to assess loan applications accurately because members' living costs and behaviours are changing quickly.

People may be saving less or withdrawing deposits to pay for daily life. This makes lending riskier. You could see more unpaid loans, more bad debt, higher costs and more write-offs. It's also much harder to identify and assess affordability for members who are struggling, since things keep changing so fast.

How technology can help:

‍With member consent, Open Banking provides access to real-time income and expenditure data. This offers a clearer picture of a member's financial situation, helping you to offer more realistic repayment plans and to identify potential problems early.
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Specialist tools and analytics can help you group members based on indicators of vulnerability or risk. This is super helpful for staying compliant with FCA regulations.
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AI (Artificial Intelligence) can use smart predictive models to analyse member data and spot patterns that suggest future missed payments are likely. This means you can reach out proactively and offer sensitive support before arrears really pile up.

3. Connecting your systems and data

Often, problems in how you work come from manual steps and scattered information. Your teams might enter member data into many different, unconnected systems. This means they often can't see a full picture of a member. They might not know all past payments, savings balances, or previous financial conversations.

Old computer systems are inflexible. They don’t have the tools needed for today’s financial services or to manage data effectively. Accessing and integrating data from these systems is a tough challenge.

How technology can help:‍

Modern cloud debt management systems are designed to be a central hub for all your member data across products and services. This gives your team a unified view when managing arrears and payments.

Technology, including AI assistants, can pull data together from different systems and databases. Your team can then access all the relevant information – loan details, savings, communication history, Open Banking data – from one single screen.

Collaboration through Credit Union Service Organisations (CUSOs) or shared infrastructure agreements offers access to professional-grade systems that individual mutuals might struggle to afford, improving data access and management for collections.

4. Making time for proactive outreach and support

Manual processes and complex systems consume a lot of staff time. This means they have little time to reach out to members before they fall behind on payments. Instead, staff time is often spent reactively managing existing arrears. Using automation to free up capacity from routine tasks allows staff to focus on more complex cases and proactive support.

How technology can help:‍

Automating routine tasks like reminders or managing payment arrangements, lets your team focus on complex cases and proactively reach out to members you've identified as at risk.

Secure online portals make it easy for members to contact you earlier about potential arrears. Built-in GenAI (such as ChatGPT) can help staff to quickly draft messages tailored to different member situations.

Cloud software reduces the time spent on manual checks and audits, freeing staff up for member-focused activities.

5. Balancing digital transformation with trusted service

While digital efficiency is increasingly important, some members still prefer in-branch, face-to-face, and relational services, particularly when dealing with sensitive matters like debt. Moving too quickly or relying solely on digital channels can erode the trust and personal service that makes your mutual special. Some members also don't fully trust new tech, which makes them less likely to use it.

The goal is to use technology to make things smoother.  The challenge is to do this without pushing away members who prefer in-person contact, or aren’t comfortable with accessing services online.

How technology can help:‍

Use online and mobile platforms designed to the highest accessibility standards. Make sure they allow members to access human support if needed – through secure messaging, options for scheduling calls, or clear signposting to support services.

Branches remain vital for local community engagement, and for some members, branches are crucial for face-to-face debt support. Technology can transform the way your team works in these multi-purpose hubs, creating a better experience for members.

Data analytics helps you understand your members better, including contact preferences and communication styles, allowing outreach to be tailored to feel more personal and relevant.

The future for mutuals: Finding a balance between tradition and innovation

UK mutuals are at a crossroads. They need to strike a balance between tradition and innovation. By addressing these five problems, mutuals can play to their strengths - offering compassionate, community-focused financial services  - while ensuring their own operational resilience.
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Modernising debt management processes while maintaining the personal, ethical approach that defines mutual societies can be done. The future means using digital tools to enhance personal service, not lose it.