This weekend a summer storm was forecast, dire warnings across the news, wind, rain… and of course I was booked to go camping.

So, driving down Friday the mood, like the sky, was pretty dark just thinking about the weekend ahead.

I was certainly not looking forward to putting up the tent in the driving rain.

Yet, snuggled down in the sleeping bag, warm and toasty, listening to the wind howl and rain dance on the canvas, I did have plenty of time to reflect on the week.

Creating good outcomes

Consumer duty is of course just around the corner. The changes are now pressing, although, in reality, nothing will change on the 31st, except our ‘new’ way of life will start. The new lens to look at all our business processes through will now be mandatory.

The bad weather this weekend got me thinking about the nature of good customer experiences and outcomes. Can you have good outcomes even in the face of adversity?

Now of course being stuck in a tent is in reality only a minor and temporary adversity and discomfort, especially when compared to some of the difficult life situations many people can face sometimes.

However, was there anything to learn about adversity and outcomes from these situations that could aid me in thinking about design principles to help?

What worked?

Certainly, despite the weather, there were laughs with friends, games, and good food… also the delight of an on-site coffee shop with warm, dry, comfy chairs, serving good coffee and a parade of cheesecake every morning… all of which took the edge off the 5 am dawn chorus and sodden conditions.

So although at first, it seemed grim, having a familiar process, one that was supportive, made easy and topped off with some excellent well thought-through customer service… really helped.

It may not have stopped the rain or weather but did help generate a good (or at least better) outcome.

Lost in Translation?

So, will these same principles work at the office too… something to guide us as we move into this new consumer duty environment… they certainly seem sensible.

Lived experiences are a powerful thing, helping you understand and empathise (it is one of the reasons we all need to talk and try to understand the full diversity of people from all over – it’s important).

However sometimes lived experiences, situations, and conditions don’t exactly match and can be hard to find.

Yet, if you look carefully, even in some of the simplest personal experiences, there can be principles and learnings that can help… you just have to look and listen in the right spots.

Who ate my cheese?

The only slight downside this weekend… caramel cheesecake, chocolate cheesecake, and lemon cheesecake… 2 days was just not enough time to finish the trinity…

I suppose that is the definition of leaving the customers wanting more… so maybe another article for another time… although maybe another good outcome that I did not have all three!

Have a good week everyone.

Last week, I had the pleasure of chairing the Online Collections Technology Think Tank, sponsored by Credit Connect, something I always find enlightening.

Reflecting on the conversation there were a couple of trends that really stood out this time around.

A low growl

Firstly, the trend around arrears levels which, surprisingly, has not really seen a noticeable upsurge, on average at least. Certainly, certain demographic sectors—those with lower incomes or exhibiting other characteristics indicative of financial vulnerability—are feeling the strain. However, a substantial portion of the population still appears to remain remarkably resilient and successfully managing the financial pressure, at least for the moment.

Over the past couple of years, many of those who remained employed did manage to put away some savings. There’s a theory suggesting these savings are now serving as a buffer against these escalating prices… individuals with good credit scores can also adopt the same strategy, by taking on more debt, albeit at increased interest rates.

Using the standard business processes, that we have used and have worked for the last 30 years, it is easy to assume everything is fine… arrears levels look in line, right?

However, looking deeper, once these buffers are exhausted, or as rates continue to increase, the risk of over-indebtedness will increase, over time leading to increasing arrears levels… so are we living on borrowed time? Maybe…

The panel’s consensus was that barring any unexpected external shocks, any increase in arrears levels is still likely to be gradual. The good news is that there will be time to react… however, the bad news is there is still danger… the danger of averages that is.

Focusing solely on averages to measure performance, is convenient, easy, however also contains inherent risk. The risk is that averages can often mask underlying performance issues in a process.

For this reason, it is also important to monitor outliers and what is going on in the distribution tails. These arrears can often tell a different story and act as a critical early warning indicator for longer-term or hidden trends.

This might be exactly what we are looking at here with arrears levels, in that it may be the tail that tells the story (pardon the pun)… so something we need to monitor closely going forward.

The end of vulnerability?

A second notable trend pertained to the rapidly evolving definition of financial vulnerability. This term, employed for almost a decade now, has been instrumental in identifying customers who might be susceptible to financial detriment due to personal circumstances.

The label has galvanised an entire industry to take action, changing it beyond recognition, including driving widespread adoption digital, making employees feel better about their jobs and of course helping many customers… all without really a huge amount of negative financial impact.

Nevertheless, the term’s definition appears to be broadening. We have already had vulnerable, potentially vulnerable and now, with consumer duty are looking for characteristics of vulnerability. So, is the term becoming too broad and is the label becoming redundant?

Probably not, labels are still important and are still needed to trigger crucial discussions and investment. However the broadening to a wider spectrum of types of vulnerability is good news, it better reflects the diverse realities of our society.

We are undoubtedly witnessing a more fundamental underlying shift towards individualized customer treatment, a theme reinforced under the new consumer duty.

This shift underscores the necessity of ensuring all customers receive treatment that yields good outcomes. Our challenge now lies in customizing treatment to meet individual needs. Be it training agents, gathering data to present a 360 view of the customer, we are going to need new skills and data to enable tailored interactions going forward… We need to ask the right questions, provide the right treatment, at the right time. It is going to be a new front line of activity in the new world – post Consumer Duty at the end of July.

Hyperinflation… really?

Lastly, over the weekend, all this discussion of inflation, spending, and debt sent me in a spiral of concern around the perils of hyperinflation.

Hyperinflation is typically defined as inflation above 50%, a rate which is eye-wateringly high even vs the 7-9% headline rate we have today.

Now I am not an economist, and I need to highlight that those that are, and in the know, are playing down any risk of this happening. They do not appear to be worried.

However, this being said, much like the quiet before a gathering storm, by joining the dots, my fear is that conditions appear to be building.

The internet is a wonderful thing and a quick search online yields several causes of hyperinflation.

1. Excessive Money Supply – Governments printing or creating money unsupported by economic growth
2. Demand-Pull Inflation – Where the supply is insufficient to meet consumer demand for goods and services, consumers still buy, so prices go up

And, looking back over the last few years, we seem to be aligning with a couple of these criteria already.

• Cheap money supply and quantitive easing
• Limited economic growth
• Supply chain issues, more recently due to COVID and more recently workforce shortages. 

Wrap all this up with many folks, those with savings also appearing to be spending money, because…

• They can – look at the demand and pricing for holidays this year
• Wait and prices will only go up further

At a surface level, this appears a heady mix, emulating some of the forces and risks above. 

… demand is also increasing putting more pressure on prices.

It may explain, in part, why despite raising interest rates to control inflation, it does not also seem to be working… is this the starting of a hyperinflationary cycle?

I certainly hope now and I will now take off my tin foil hat, trying not to return to the bunker for at least the rest of the week… I promise… however if there is even a remote risk of this we need to be pragmatic, have plans in place, and make sure we are aware enough to spot the signs early.

So all eyes are on the inflation rate for the next couple of cycles. Hopefully, it will flatten out, but something to watch closely.

Browsing Twitter this morning, all to make the most of my 600 tweets, I was greeted by the sight of early morning Wimbledon, the time-honoured sporting event that for me at least evokes being near the start of the school summer holidays.

Of course being the first week, it will of course rain, and by Friday all the talk will be about just how we will be able to recover the timetable. There will be pictures of centre court being deluged with torrential downpours, with people in ponchos stoically eating strawberries and cream.

Next week it will be of course be a heat wave… phew what a scorcher… and all will be forgotten… hosepipe bans around the corner.

Each year, all of this transports me back to my school days.

Bjorn again fans

For two weeks each year, we would all suddenly become massive tennis enthusiasts… exams over, lounging around on tennis courts and just waiting for the summer school holidays to arrive.

The media of course had a profound impact on this collective interest in the game.

With only 3 TV channels at the time, 2 of them seemed to be completely dedicated to tennis.

We were all either Bjorn Borg or John McEnroe fans… and that is about as divided as society seemed to be those days.

Have I been assimilated?

Today of course it is all different. We have hundreds of channels on TV, streaming content on tap and social channels such as YouTube, Instagram or TikTok now ubiquitous.

Even I have noticed how my content is increasingly coming from social channels… rather than traditional mainstream media…. so what does this all mean.

As a result this weekend I so found myself exploring TikTok.

It is a platform teeming with energy. Beyond inane videos of people falling over, dog and eating contests, there is a whole stream of content around credit, loans, what to do in collections and debt advice.

For all us middle-agers, this never hits LinkedIn, yet it is something we clearly need to be more aware of…. I have added a sample here… take a look.

Bite-sized content pieces are capturing the attention, and much like the case with tennis now hugely influential.

Hyper personalisation around the corner?

In financial services we tend to veer towards, information-rich, often written forms of communication with customers.

These after all can be reviewed, quality checked, compliance checked and audited…

However, we are also competing for attention and engagement from time poor, busy customers on the go…. short, sweet and visually grabbing really helps to start the conversation…

Video teasers and messages are already starting to appear, and as you will see here… it really feels that video personalisation is about to go mainstream….

Imagine this with your name and some account specifics… will this beat automated voicemail in generating engagement?

Something to think about as a new week starts…