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2023 has been a difficult year for many in the UK, not to mention across the world. But we’re choosing to look at the opportunities, not just the challenges. What can businesses do right now to protect themselves and their consumers, and what can we do to help?

Here are our reflections on 2023, our predictions for 2024, and our advice for future-focused organisations.

A snapshot of 2023

• The UK is forecasted to finish the year with the highest average rate of inflation in the G7.
• Food prices rose by more than 10% in the year to October.
• The price of gas and electricity was 60% and 40% higher respectively in October 2023 than in 2021.
• The Consumer Duty came into regulation in July, as we wrote about here.

The cost of living crisis: a defining point for 2023

For every discussion around the UK’s financial state, the cost of living crisis is the backdrop. The recessionary environment that we’re currently dealing with is going to continue in 2024, which means even more financially vulnerable consumers and even more widespread impacts.

According to The Money Charity, the Citizens Advice Bureaux dealt with almost 1000 debt issues daily in England and Wales in the year leading to October 2023. And in the second quarter of the year, lenders wrote off more than £700 million – a large proportion of which was credit card debt. It’s clear that the current financial climate is a lose-lose-lose for households, debt advisors, and organisations.

We recently shared insights on the cost of living crisis and why we need to continue talking about it. More specifically, we offer actionable advice for organisations on how to better support their consumers through it. You can check out the full piece here.

What does this mean for 2024 and beyond?

Unsurprisingly, we’re likely to see even more people affected by the cost of living crisis in 2024. It isn’t something that is going to go away, despite the media narrative dying down. Perhaps the biggest indicator of this is that a third of UK consumers missed at least one payment in 2023, and 14% did so for the first time.

This also challenges the idea that it’s only financially vulnerable people affected. Middle income consumers are also cutting down on non-essential spending now, whether that’s by cancelling subscriptions or eating out less.

As such, attitudes towards buy now pay later (BNPL) will likely sour in 2024. While BNPL can be positive in strong financial environments, payment schemes that stimulate debt are less favourable in recessions. But as people spend less, the wider economy is going to see a ripple effect.

Businesses in particular are going to feel the pinch. We can expect them to look for opportunities to reduce their expenses and resource requirements, but this is coupled with a general sense of financial insecurity among employees. Put bluntly, people don’t want to leave their jobs right now.

Both businesses and consumers are trapped in a worrying cycle, one that building a more financially resilient society could help to break.

What will 2024 look like for energy, housing, and financial firms?

How will specific sectors be affected by the cost of living crisis in 2024 and beyond? Here we share some of the most important updates to be aware of, alongside some of our own predictions.

Energy providers

• We expect to see more consolidation in the energy sector in 2024. While merger and acquisition activity will be regulated by the upcoming Energy Network Special Merger regime, consolidating is still on utility providers’ agendas.
• It’s also forecasted that energy bills will continue to rise for consumers, which we predict will see more households struggling to keep up with their payments.

Housing associations and the private sector

• Housing associations are typically less affected by the cost of living crisis than other sectors. This is largely because people tend to prioritise their rent payments. Nevertheless, housing associations should still prepare for many of their tenants to deal with problem debt in 2024 as energy bills and other essential expenses increase.
• Renters and landlords are also set to struggle in the private sector. Higher mortgage payments have put landlords under pressure to raise rent prices, which we expect to be a big conversation when the fiscal year ends in April 2024.
• House prices have dropped more than 13% since March 2022 – and we can expect them to keep declining in 2024.

Financial services

• We believe that credit cards are going to become an even higher risk product for banks and other financial services firms. As the cost of essentials increases, piling pressure on consumers, businesses should prepare to see more defaults on credit card payments in 2024.
• With the Consumer Duty now in place, 2024 may be the year that we see firms penalised by the FCA for non-compliance. Understandably, lots of firms will be waiting to see what this penalty looks like (and how severe it could get).

Elifinty’s advice for firms in 2024

 For the businesses that want to create a brighter financial future in 2024, all while protecting their profitability and reputation, here’s our advice.

Invest in people-first technology

If your firm plans to cut costs in 2024, make sure that your most vulnerable consumers don’t bear the brunt of your decisions.

A proactive way to ensure this is to invest in technology. Specifically, technology that frees up your support agents’ time and resource, allowing them to engage with vulnerable consumers more effectively. By using technology to streamline processes wherever possible, you can connect at-risk people to more comprehensive support, when they need it.

You should also consider technology that goes beyond freeing up resource and helps to create genuinely personalised support pathways. For instance, the Elifinty platform is equipped with an AI solution engine. This prioritises the most vulnerable consumers, connects them to the most appropriate pathway, and ensures visibility for support agents and creditors at every journey stage.

Adapt to today’s recessionary environment

We’re no longer dealing with a growing economy, which means it’s time to assess the products and solutions that you offer. There are some brilliant examples of companies doing this, like Wells Fargo offering debt consolidation loans to help make repayments easier for consumers. Wells Fargo understood its consumers’ challenges, and has now created a product that aligns with them.

For businesses, this won’t always mean offering something brand-new. If you’re a financial firm, it might be changing the eligibility criteria for a product or solution. If you’re in the energy sector, it may be signposting at-risk consumers to the hardship grants they’re available for.

The key is to keep evolving with the financial landscape so that you can help to create better outcomes for your consumers.

Consider the root of the problem

Consumers have had access to multiple subsidiaries and reliefs over the last few years, each alleviating some of the financial pressures of the cost of living crisis. But only in the short term.

In 2024, look at the very root of your consumers’ biggest challenges. Rather than putting out fires, take 2024 as your opportunity to get ahead of the problem.

Here are three tips for getting started:

• Break the current debt support cycle and provide a simplified, less stressful debt support journey.
• Equip consumers with financial education tools, such as budget optimisers and calculators, to help them understand and take control of their financial health.
• Help consumers to become more financially resilient by connecting them to the most appropriate support pathway, including affordable payment plans.

Make 2024 the year of better consumer support with Elifinty

At Elifinty, we help businesses to better support financially vulnerable consumers with our digital debt support platform. With three hubs – Eli for consumers, EliConnect for debt advisors, and EliEngage for creditors – our platform brings the key players within debt support and recovery together.

With robust analytics for early intervention, automated workflows for quicker time-to-support, and self-serve tools for financial education, our platform helps to support consumers financially, mentally, and physically.

It turns the current lose-lose-lose landscape into a win-win-win.

To find out how you could create sustainable and transparent financial health in 2024, explore our platform or get in touch.