By: Marc Andrews, Vice President, Financial Services and Insurance Industry Market Leader at Pegasystems

Business as usual is not going to work for vulnerable customers as we continue to deal with the impact of COVID-19. The pandemic not only affects the health of individuals, but also their financial wellbeing. As the pandemic and unemployment continues, more customers will be unable to pay their bills. There will be a significant increase in customers and companies declaring bankruptcy, or at a minimum, in need of restructuring their debt. But financial institutions and insurers can take steps now to help vulnerable individuals remain solvent. The key is to do so while also preventing their operations from becoming overwhelmed with customer service calls.

Ideally, banks and insurance companies need to proactively identify customers most at risk, but also with potential to recover, in order to make proactive offers of help. Not only has the crisis made it more important than ever to work with vulnerable customers, but suddenly a whole new group of customers has moved into the vulnerable category.

In the United States, an Interagency Statement, encourages banks to “work prudently” with borrowers and offer loan modifications, such as deferrals and extensions, to assist customers who have been affected by COVID-19. Multiple agencies have already suspended all collections activity. A new bill before the Senate, if accepted, would ban collections work during times of crisis.

In addition to proactively identifying the customers to focus on, banks need to dynamically adapt their collection strategies. Customer-facing staff must understand how to identify customer needs and determine the optimal approach forward both for the bank and the customer. As such, even existing well-trained collections staff will need guidance on how to best handle individual collection efforts, let alone the new personnel that will likely have to be added to support the anticipated increase in volumes.

Technology: A Key Tool

Technology is making it easier to identify and support vulnerable customers. AI and machine learning can provide continually evolving analysis of all customer activity, including transactions, interactions and historical behavior, to help the business identify customers at risk earlier. Using AI combined with rules about ethics and empathy, companies can determine the next best action to take for a vulnerable customer, including which methods will provide the best chance of recovery and the optimal channels to engage each customer. AI can either make the decision on its own, based on the data collected and the rules in place, or it can recommend a course of action to a human agent.

This really came to the fore during the first wave of the pandemic. Banks were struggling with call volumes from distressed customers and faced an unprecedented surge in demand. While most financial services organizations had invested in technology to manage processes, the crisis highlighted many of the gaps in their servicing capabilities.  In addition, the application of AI was primarily focused on identifying cross-sell offers, and most banks were unable to quickly adapt their models to identify vulnerable customers in need of service.  However, those that were able to rapidly identify and respond to customer needs were viewed much more positively by their clients and the market, while at the same time relieving pressure on their call centers.

For example, the most successful banks used data to identify the types of individuals who could struggle with their next mortgage payment, based on their occupation, transactions, location, and other history. That meant that they could reach out proactively, offering to reduce mortgage rates or to automatically defer payments without requiring customers to contact the call center. This makes the financial institution not only be viewed as client focused, but also reduces the incoming call volume and related customer support costs.

Data, Privacy and Difficult Conversations

Financial services organizations often know more about a customer’s private life than their family or friends – and this can create some challenging issues. So, companies need to be wary of crossing privacy boundaries. However, when it comes to customer service and providing assistance, clients actually expect their banks to know about them. In fact, they get frustrated when banks ask for information they know their bank already has, or send them offers the bank should know are not relevant based on their spending and account balances.

Channels Choice

Channel choice can influence how well customers receive interventions from their financial services provider. Financial institutions are learning that they need to determine which channel is best for each customer and each communication type, and tailor their response accordingly. Preferences and responses will vary from delivery of marketing offers to providing customer service to making collection attempts.

To do this, staff must have access to the tools and training to deal with a wide range of vulnerability-related issues. One of the challenges that banks had going into this crisis was that their policies were not necessarily codified into their system. For example, a set number of people knew how to handle bereavement issues, versus mortgage servicing requests, versus collections activities. The rapidly shifting volumes of customer requests and operational needs are driving a requirement for more cross-training to support these requests with existing staff.  This can be greatly streamlined if banks can systematize their policies to provide more guided processing. The leading banks are moving towards more flexible operations and shifting work across teams to improve overall operational efficiency.

Financial services organizations on a journey to offer excellence to vulnerable customers should consider three things. First, understand your customer needs to make sure you are focusing your outreach and engagement in the right places. Second, identify activities that can be automated and services that can be better delivered through digital channels. Third, look for ways to codify your policies and use technology to guide staff so that decisions can be streamlined and operations can become more flexible. Banks must figure out how to drive efficiencies while still providing effective customer service and retaining their client base. Because when we get through this, those once vulnerable customers are going to be the backbone for companies to move forward again.

One thing seems clear. As the pandemic moves into its second wave, the strategies and tools for serving vulnerable customers will be put to the test as never before.

To hear more from Marc, watch our webinar, Delivering Excellence for Vulnerable Customers in Banking and Insurance or download the full recap here.


Marc Andrews recently joined Pega to lead their Financial Services and Insurance industry markets. Prior to this, Marc led the creation of a new organization within IBM to build industry specific solutions for the financial services industry, where he was driving the design, development and delivery of offerings that apply analytic and cognitive technologies to streamline regulatory compliance, combat fraud and financial crime, and generate increased customer insights.