The Impact of the Cost of Living Crisis on Creditors’ Portfolios 

Posted by
Maysam Rizvi
on
2 Nov 2022

The cost of living crisis is presenting many financial pressures for creditors. One of the overwhelming challenges that is happening in parallel is portfolio management. As more people fail to keep up with debt payments, due to the cost of living crisis, more companies are watching their portfolios worsen day by day.

A one-size-fits-all approach will no longer suffice if you, as a creditor, want to make it through the cost of living crisis. There’s a severe structural underinvestment in customer management systems that needs to change. An entire shift in your infrastructure isn’t going to be easy, we know that, you know that.

But, we’re here to help you to look after your customers, offering them bespoke solutions that promote longevity and financial resilience. This will be the most effective way to protect your portfolio and reduce risk.

The threats to creditor portfolios

There are two main issues; the revenue challenge and the impact of internal costs. 

Customers financial stability is suffering. They are less equipped to buy services, or to pay for the services that they are already using. We are seeing new demographics facing debt, and people who have never been in debt before.  

It’s not just the cost of living crisis or surging energy prices that are contributing to this trend, but the recent pandemic too. Covid-19 and lockdowns plunged 18 million Brits into debt, and the current financial climate is only exacerbating this.   

Shifting the focus from the customer to the institution 

Salaries are increasing, operational costs are going up, and many more everyday items such as energy and groceries are also on the rise. Costs must keep in line with inflation, and where these costs would usually be passed off to the customer, we’re now in an economic climate where this is going to cause more problems.  

There’s a very vicious cycle coming into play. Banks, energy companies and other financial organisations are trying to cover their own costs, but raising costs will only take more of a toll on customers who are already struggling to pay. 

It’s clear that using customers to cover costs is no longer a ‘solution’.   

What solutions are out there for creditors? 

In a time of unprecedented economic crises, institutions don’t have the tools to solve the problem. In fact, the system has never been built to support customers in the way that they need. Current infrastructures are not built to sustain, or to be resilient, through times of financial hardship – making it difficult for creditor and consumer alike.  

Now, financial institutions, energy companies, debt management companies, and local governments, amongst others, need to establish a system that looks after customers. One that redeems them and nurtures them back to financial health. Portfolios, and in fact the entire livelihood of businesses, are only going to suffer if institutions continue to abide by cease-and-desist. And options such as selling your portfolio will only make matters worse – one reason for this being that you are likely to lose value during a downturn in the market.  

With the influx of customer correspondence that’s going to be taking place over the foreseeable future as a result of the cost-of-living crisis, creditors need to be ready to offer the right support and solutions to every one of their customers. They need adaptable solutions that can help with the assessment of customer needs, based on internal company policies and procedures.  

The scale of this challenge, however, is huge, especially to do this without the use of the right technology. Of course, creditors are using technology, but their tools are not designed to streamline, automate and manage processes in the way that they need to be to service customers on a mass scale. 

It’s clear that a sophisticated yet easy-to-use digital solution is needed to help creditors facilitate the right customer support in a way that is bespoke, and does not drain resource or internal costs.  

The only solution: Elifinty’s TrustConnect platform 

Elifinty’s socially conscious debt management platform helps creditors to support every kind of customer profile. From people with shorter-term and quicker to resolve problems, to those who will require a much longer-term repayment strategy, we can help creditors facilitate effective customer support.  

We offer a self-service approach for your customers, directing them to the support that they require, quickly, and freeing up the time of your customer support team to focus on other areas.  

Through our end-to-end integrated platform, customer service advisors will have a new set of tools to work with – without needing to invest in new hires or elaborate (but undeveloped) technologies. Institutions can also have full visibility of their customers’ financial profiles and the resolution process for those seeking debt advice.  

Building the right foundations to begin to solve problem-debt and retain your customers for the long term, TrustConnect delivers better and more sustainable outcomes for both businesses and customers.  

If institutions keep turning to evidently ineffective solutions, customers will continue to default and business will decline. Elifinty’s TrustConnect platform is the answer to help protect your portfolio and to nurture a world free from problem debt.  

Want to know more about Elifinty and how we can help your organisation? Get in touch with us today  

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