1 in 2 Australians think lenders should monitor borrowers’ financial health
Half of Australians believe credit providers should proactively monitor the financial health of their customers to anticipate difficulties, according to a new survey.
The study by news service firm Experian, based on a survey of 1,000 consumers, found that the majority (80%) of borrowers don’t know if their credit providers are monitoring their financial health – although half think they should, to avoid difficulties.
Additionally, few consumers were unaware that some lenders can detect financial stress at an early stage. About half (44%) thought they were only identified as in trouble when they defaulted.
A fifth think this is only possible if they contact the lender themselves, while one in 10 think things like a change in income or spending habits could be a trigger.
But some lenders may be able to spot financial stress through a loss or decline in income, a greater reliance on savings, a shift in spending toward high-priority items, and an appetite for high-cost loans.
About two-fifths (39 percent) of consumers believed lenders should proactively identify people who might be facing financial hardship, while 46 percent said there should be earlier communication with creditors. people who might face difficulties.
The belief that lenders should constantly monitor a client’s financial condition was strongest for home loans, with 55% of survey respondents. Next come credit cards (52%), as well as personal loans (49%) and buy now, pay later (43%).
Mathew Demetriou, managing director of decision analysis at Experian Australia and New Zealand, argued that credit providers should be able to see all the products that a customer may have at different institutions, because “a customer can look healthy in one wallet but look different in another “.
“Using data and analytics to fully understand a client’s current circumstances, needs and preferences and combining them with automated decisions can help lenders deliver personalized treatment plans quickly and at scale,” and to reach customers on their terms, ”said Mr. Demetriou.
“It gives every customer the support they need, whether they’re already in the recovery process, or better yet, to help them avoid it in the first place. “
However, three in five consumers felt that lenders had done a good job in 2020 providing financial help to those in need, with more than half saying more support would be needed this year.
Half of consumers believed lenders could offer more flexible payment holidays or deferral plans to help those facing financial difficulties.
“A proactive assessment doesn’t just show genuine concern for customers and solidify your reputation as a fair and socially responsible company, it is crucial in being able to identify and assist those who may be financially vulnerable and at risk of facing difficulties. .
“Ultimately, it helps lenders make the right lending decisions for each individual and provide the right support at the right time, while giving clients the confidence that they are supporting them at all times. “
Regarding people facing financial difficulties, two-fifths of respondents believed that there should be more alternative ways for them to contact their supplier.
Almost a third (32%) think it is best to offer a mix of digital and phone conversations, while two-fifths would prefer to chat over the phone only. One in five said they would prefer to seek help through digital channels only.
Mr. Demetriou commented that it is “essential” for providers to offer multiple channels of communication, including self-service options.
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Sarah Simpkins is the managing editor of Mortgage Business and The Adviser.
Previously she reported on banking, financial services and wealth for InvestorDaily and ifa.