How our technology is supporting lenders and consumers through the cost-of-living crisis and beyond

9th June 2022.

The cost of living has been increasing across the UK since early 2021 and, during April of this year, inflation reached its highest recorded level.  

This is affecting the affordability of good and services for households, with consumer prices, as measured by the Consumer Prices Index (CPI), being 9% higher in April 2022 than a year before. 

To combat this, Chancellor Rishi Sunak has outlined a £37bn package of measures to support people struggling with the cost of living. 

All households will receive a £400 discount on energy bills from September 2022 while eight million of the lowest income families will also get a one-off payment of £650 (paid in two instalments in summer and autumn). 

Consumers are already feeling the impact of increasing living costs 


Unique insight from across our clients,  not only shows a continuation of self-employed renters falling into debt, but also a new demographic of consumers with a high household income struggling with their finances.  

It’s the first time we’ve seen – through our Embark I&E data – an increase in consumers seeking debt help from households with incomes of £60,000 or more since the 2008 financial crisis, with 13% of consumers falling into this bracket. 

Consumers with costs above their income is also growing – last month this issue accounted for 20% of consumers who completed an income and expenditure through Embark. 

How our technology is supporting lenders and consumers through this crisis 

Our latest statics highlight the effects of the cost-of-living crisis throughout the UK. It’s not just affecting people already struggling with debt, but it’s pushing those who have historically always been able to keep up with their minimum payments over the deficit line. 

Our creditor clients are seeing more and more consumers struggling with their expenditure and, as a result, there’s a need to complete more and more affordability assessments, in the most efficient and outcome-focussed way. Since February 2022, we’ve seen a 23% increase in the number of affordability assessments being completed by consumers. 

With banks and other lenders – including building societies and utilities companies – heavily focussed on driving the right consumer outcomes, our Embark affordability software is helping to identify more people in the pre-arrears space, who aren’t necessarily at this time in a state of crisis, but are at some point likely to suffer from an increase in their monthly expenditure. 

 
Through Embark, there’s a clear, easy path into PayPlan’s free debt advice and this is part of every journey whether the customer chooses to self-serve their income and expenditure – or engage via an agent. 

Recognising signs of budget distress – or potential budget distress in the near future – and ensuring consumers experiencing this are signposted to effective solutions is key. 

The good news is we are seeing more consumers refer themselves to PayPlan through our Embark I&E, helping people to engage with debt advice, with people more open to having a conversation much earlier in the traditional journey, thanks to our PayPlan integration within our clients’ I&E workflows. 

Open banking, which is also available through Embark, has been a must for many organisations who want to determine consumers’ spending patterns. It provides insights which can also help identify vulnerable consumers, meaning banks and other lenders can be more proactive in their approach to spotting struggling consumers. 

It’s all about providing digital tools which are engaging and offer choice to consumers, whilst allowing lenders to focus on those who are vulnerable and most in need. 

 Paylink’s solutions empower consumers to improve their financial situation whilst helping creditors to ensure the most sustainable outcomes are achieved. It’s all about ensuring there’s an effective triage in place to get people to the right outcome in the most efficient way.

Find out more about how our affordability software can enhance your collections processes,  here.

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