"Those that focus on eliminating frictions will alleviate strains on their systems, processes, service teams and ultimately, their customers."
For many businesses facing disruptions during the national lockdown, the Bounce Back Loan Scheme (BBLS) and the Coronavirus Business Interruption Loan Scheme (CBILS) are a crucial lifeline. With the loan deadline extended to March 31st, many lenders are still focusing on keeping up with applications while the bigger challenge looms: servicing these customers.
The National Audit Office predicts that £15 billion to £26 billion of the BBLS loans could be defaulted on due to fraud and businesses unable to pay. This puts increasing pressure on lenders to do more to minimise the risk of losses. Identifying fraud and risk while appropriately supporting customers requires systems and processes that depend on back-office capabilities.
The imperative for transformation
Back-office transformation has been on most lenders’ to-do lists for a while, yet urgent priorities have tended to push it to the backseat. Usually, to handle peak demand, lenders could call on more human power – yet with CBILS and BBLS applications, this has not been enough. The delays caused by inefficient backend processing resulted in lengthy approvals and dissatisfied customers. Lenders see that they can’t rely on the old ways to handle CBILS and BBLS accounts going forward as these will require more proactive servicing.
Why focus on the back-office?
Many lenders have grown through mergers and acquisitions along with organic developments, which has translated into a proliferation of legacy systems. With data sitting across disparate applications, more systems need to talk to each other, resulting in more hops and slower processing. This is not a problem if you have time, but BBLS and CBILS account servicing is time-sensitive. To increase straight-through processing KPIs and make fast, data-driven decisions lenders need to reduce frictions by:
- Automating processes
- Updating the backend systems
- Streamlining communications management
Let’s look into these in more detail.
Last year, CBILS and BBLS approvals faced delays due to the reliance on manual processing of data sat across lenders’ systems. Artificial Intelligence (AI) and Intelligent Automation (IA) can help lenders automate hundreds of manual processes, enabling them to spot risks faster and free up human resources to focus on impactful customer interactions. For example, one commercial finance division of a leading UK bank is saving £3.5 million per year in risk exposure by using intelligent automation provided by Firstsource to streamline invoice processing.
Updating backend systems
Legacy systems perform critical functions and are costly to replace – so running on these, though imperfect, can appear easier than dealing with the migration challenges. The good news is that there are now better solutions to complicated migrations. Robotic process automation (RPA) can help migrate customer accounts and data safely. For example, if you have 5,000 data fields to migrate per customer record, instead of developing complex and risky programmes to extract, transform, and load data, you can use RPA. Here, a migration bot can leverage the existing user interfaces and ensure the data being migrated is consistent and accurate. The bot can also do this on-demand, giving the operator more control over which records are migrated and when.
Streamlining communications management
Effective use of customer data and digital channels can help lenders optimise customer communications. Running analytics on profile data such as age, payment history and credit rating can identify their contact preferences, leading to a more strategic contact channel deployment. And contact patterns can be used to predict customer call and chat volumes, helping with resourcing.
Moreover, digital communications offer the potential for a less intrusive contact approach to traditional voice calls. By using web-portals, emails and text, lenders can provide customers with all the information they need at their fingertips, saving human interaction for when it is really needed.
Combining empathy, insights, and agility
Customers who have taken out coronavirus loans are in a position they don’t want to be in. To service them well, lenders need to focus on reducing additional stressors through timely and efficient servicing. This requires an approach rooted in empathy, insight and agility and for many lenders, this means back-office upgrades. Those that focus on eliminating frictions will alleviate strains on their systems, processes, service teams and ultimately, their customers.