Introduction

The Standard Financial Statement (SFS) is a key tool in assessing customer affordability during debt collection. It brings greater consistency to financial assessments and lays the foundations for fair and appropriate outcomes for customers based on their income and expenditure.

The SFS can be a useful way for lenders to understand their customers’ circumstances. However, as collections teams know only too well, the SFS is just the start of the affordability assessment process.

During the assessment procedure, organisations aim to achieve

• Quick and clear outcomes for customers
• Proven consistency and fairness
• Efficient use of agents’ and customers’ time

These goals exist within an economic climate where the volume of customers who need help is increasing, financial vulnerability is rising, and where customer circumstances can change and change again.

This leads to a number of pressures

• Managing inbound engagement
• Assessing and re-assessing the customer’s ability to pay
• Maintaining the paying habit
• Making it easy for the customer
• Ensuring actions are based on accurate information

Automating the Standard Financial Statement (SFS): revolutionising affordability assessments

The SFS can be automated. But what does automation mean, and what impact can it have on operational capacity, customer service and baseline costs?

In many cases, automation of the SFS is a stand-alone information capture form filled in by customers. Lenders can also use a short form I&E assessment to determine if the full SFS is needed, or if there is sufficient comfort from the short form. This represents a valuable time saving but falls short of best practice. If an agent is required to manually complete the procedure, it’s less than half the job done.

Streamlining collections: the power of automated affordability decisioning

Affordability decisioning powered by comprehensive data, organised to each organisation’s parameters, strategies and policies, can generate consistently fair and appropriate outcomes without manual agent activity. All available data sources can be instantaneously evaluated, and all the known values can be used to produce the most appropriate outcome in line with forbearance policy.

Leveraging Open Banking for accurate and efficient affordability checks

Open Banking technology offers a significant leap forward in obtaining accurate financial information for affordability assessments. By securely accessing customers' bank account data with their permission, AISP provides a real-time, comprehensive view of an individual's financial situation. This eliminates the need for manual input of bank statements or reliance on potentially outdated information. 

Open Banking data can be integrated into the automated SFS process, allowing for instant verification of income, expenditure, and overall financial health. This not only enhances the accuracy of affordability assessments but also speeds up the process, reducing friction for customers and improving the efficiency of collections operations. Moreover, the rich, granular data provided by Open Banking can feed into collections systems, enabling more nuanced and fair outcomes tailored to each customer's unique financial circumstances.

Improving customer outcomes: automated income maximisation and social tariffs

The outcome is conveyed to the customer via their preferred communication channel. This may be the offer of a particular arrangement type or a period of forbearance. Customers may be identified as eligible for sector-specific help such as social tariffs (helping to increase take-up). Where the customer has no foreseeable affordability,  software like Flexys can automatically surface income maximisation tools to help ensure customers are receiving all of the benefits they are entitled to.

Real-time financial assessments – the future of debt collection

In the latter case, the customer’s income and expenditure can be automatically rechecked over an appropriate time frame, triggering the SFS to be unobtrusively sent out again. With Open Banking’s 90-day consent policy, this step may not be needed unless the consent has expired.

Enhancing consistency and fairness in collections with intelligent automation

Self-service and agent-led journeys use the same decision process, ensuring consistency. The same decision engine will factor the available outcomes into the best next steps and present them to the customer in real-time. This means that each digital journey is individualised and relevant, adapting to new information and taking no more time or effort than is necessary to achieve the most appropriate outcome, every time.

In every case, customer circumstances can be checked automatically over a designated period (or daily, with Open Banking) to capture any improvement in the customer’s ability to pay or any deterioration in the customer’s circumstances that needs to be addressed.

The real benefits: proven consistency and fairness

The time saving offered by advanced automation and Open Banking is vast but the true benefit is timely, relevant and appropriate engagement every time, for every customer.

With regulators focusing on demonstrable consistency, organisations can be certain that their own internal policies are being administered fairly and can refer to an immutable audit trail to prove that each customer has received unbiased and consistent treatment across every channel. To deliver exemplary service for customers at a time when circumstances are chaotic or unpredictable and at a time when new staff are extremely hard to come by, collections teams will be seeking to take full advantage of the operational advantages available through intelligent automation.

Discover how our automated affordability assessment solutions can streamline your collections process.

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