A digital response to chaos
In this period of crisis and great uncertainty, our number one priority should be our health and the health of those around us. But it’s impossible to escape the financial impact that COVID-19 is having on individuals and businesses across the UK.
Despite unprecedented government support in the way of grants and loans, income streams remain uncertain and many remain in a perilous financial situation. Indeed, only today research has suggested that 20% of all small business will run out of cash in the next four weeks.
It’s at this time that banks and financial service providers across the industry should be rallying together to proactively support their customers, and this can be greatly enabled by the rapid development of exceptional digital experiences and automated processes.
Proactive support is important in this instance because if the bank waits for the customer to come to them, it’s almost certainly too late, and it’s going to result in a massive strain on contact support teams.
And digital experiences are key because they dramatically reduce, if not entirely remove, customer traffic that otherwise would have contacted the bank.
So, what can firms do to support personal customers?
- Data-driven analysis: Banks have a vast array of customer data, which is only being improved by the introduction of Open Banking. This should be used alongside predictive analysis tools and alerting to provide customers with a forward-looking assessment of their finances
- Automated short-term credit: This in turn will give the bank a good understanding of which customers are likely to require short term credit arrangements. In this climate, the proactive offer of interest free, short-term financial support would be absolutely invaluable to many
- Digital, automated payment holidays: It will also highlight where individuals will be unable to meet existing obligations. Nationwide have already created an end-to-end online journey to request a Mortgage Payment Holiday, something that was previously initiated over the phone. This is something that all providers should be looking to facilitate
What can firms do to support businesses?
- Cashflow analysis: Similarly to with individuals, banks can use their mass of data to provide business owners – particularly SMEs – with better visibility of their financial runway
- Business impact on personal finances: For Sole Traders and the self-employed, the individual’s personal financial situation will often be tightly coupled with the business’, so banks could utilise Open Banking to better understand where a hit to business revenue will adversely affect someone’s personal finances
- Access to funding: Funding, either through government grants, the Coronavirus Business Interruption Loan Scheme or bank loans, is going to be essential for businesses at this time. Again, the process to request and secure funding needs to be digital, fully automated and rapid. Lenders will need to quickly organise their teams to create these experiences, and the processes in the background to proactively leverage data to assess risk
- Proactive short-term credit: Again, a data-driven assessment of financial runway will give the lenders better sight of funding requirements, allowing them to offer short-term credit, before the business requests it
Not all of these measures will immediately generate revenue for financial institutions – in fact, many will be loss making in the short term. Interest free credit, payment holidays and an overarching digitisation of processes won’t be cheap, but in the short term they will dramatically reduce the strain on already overloaded support and operational teams, they will provide much needed financial relief to businesses and individuals in time a crisis, and they might help to prevent widescale business closures and knock-on unemployment.
This is a time for collaboration, not competition, so if anyone would like to discuss how these measures can be implemented, Woodhurst are happy to freely provide our expertise and support.