The rise of the vulnerable customer

The Royal Commission into Financial Services set new expectations for banks and Fintechs when dealing with ‘vulnerable customers’, and that relationship starts at first contact. How can contact centres help banks meet a more stringent set of consumer obligations? 

When the final report of the Royal Commission into Financial Services was released nearly four years ago, it exposed a culture of unethical and predatory practices that could be traced across the sector. 

Responsible lending rules had been routinely breached, mortgage brokers had prioritised commissions over customers, and some banks were even found to have knowingly charged fees to dead customers.  

Financial advisors were accused of having collected commissions on worthless investment products sold to millions of Australians. 

The final report sent shockwaves through the banking sector and forced the regulators to set new expectations around responsible lending — including dealings with what are called ‘vulnerable customers’. 

Now, banks, mortgage brokers, financial consultants, insurers and others have to meet new standards and face tougher scrutiny if they act in a way that could disadvantage this vulnerable cohort, which means understanding the customer and their needs from the first moment an interaction takes place.  

So, who is a vulnerable customer — and how can they be identified?

The definition of vulnerability is deliberately broad.

Australia’s corporate regulator, ASIC, says vulnerable customer examples include individuals who are disadvantaged or marginalised, those on low incomes, elderly pensioners, single parents and people living with disabilities.

But it goes beyond demographics. Other factors influencing vulnerability include an individual’s financial literacy, cultural attitudes towards money, and or whether they have recently experienced unexpected life events such as an accident or illness, the end of a relationship, a death of a family member or a sudden job loss.

The Australian Financial Service Authority (AFSA) in its vulnerability framework notes that sometimes “people will self-disclose or display obvious signs such as emotional outbursts, erratic behaviour, or pleas for support. More often though, we need to piece the situation together by picking up on more subtle hints.”

Those hints might include call centre conversations, AFSA says, where staff pick up on possible signs of vulnerability, such as the caller becoming upset and confused, speaking in broken English, or “constantly checking with a third party.”

Rob Towey, an independent consultant to the financial services industry, says the Royal Commission made clear that there was a lack of customer engagement and understanding in the way many organisations were operating.

“It brought to the surface that when it came to customer contact, many organisations didn’t have adequate oversight,” he says.

“But what was previously an oversight is now a significant risk. So, if you go through the annual reports of all these banks, you’ll see the risks around customer experience are now an absolute priority at the board level.”

How can technology help identify who is vulnerable?

The shift has underscored the importance of having a contact centre model that could capture live information about the customer — including whether they might be considered vulnerable — and ensuring that is fed back into the business operation.

“A lot of organisations had a contact centre model that was not adequately connected to the core business operations — so data and insights around customers were lost,” he says.

“It’s really important from a systems perspective, and from a contact centre technology perspective, that the data captured by these interactions is stored in a manner that delivers insights that are of use to the customer.

Learn more about how real-time analytics can enhance CX in a contact centre

“The contact centre is, as we know, the intelligent, data collection hub of any business with a large customer base. Every customer interaction is valuable and potentially contains rich information and feedback for the company.”

“Even if I am speaking with a customer for the first time, I need a level of empathy and understanding in my approach. You can’t treat them as a number. You have to treat them as an individual.”

Of course, some interactions with financial sector customers can be inherently stressful.

When working with customers who are in arrears, for example, or who need to set up a payment plan, the training of the operator and their ability to navigate potential vulnerability becomes crucial.

Mr Towey says lenders need to be proactive rather than reactive in identifying whether their customers could be vulnerable.

“The operator in that scenario needs to be able to diagnose whether there are issues that are going to prevent this customer from being able to pay in the future, and if so, do they need to support them in getting some sort of hardship assistance,” he says.

“They also need to consider if there is anything that has been done specifically by the bank or the financial institution involved in delivering the product or service to that customer that might have contributed to the hardship.

“It’s a significantly more complex process that needs to be run with customers to ensure the organisation meets the expectations both of the community and also of the regulators.”

Mr Towey says call centre data collection and analysis technology can be used to provide a detailed record of customer interactions, enhancing oversight and ensuring any concerns are flagged and escalated.

“Boards in the financial sector need to have confidence that red flags will surface in real time, and a problem with customers won’t be something that gets discovered six to nine months later” Mr Towey says.

“The key to achieving this is to focus on having a robust contact centre offering that is agile enough to adapt to meet a broad spectrum of consumer obligations.

“But banks and fintechs don’t need to do it alone – it’s often more beneficial for the business to find the right partner with the experience, technology and processes necessary to meet every customer’s needs.”

TSA are Australia’s market leading specialists in CX Consultancy and Contact Centre Services. We are passionate about revolutionising the way brands connect with Australians. How? By combining our local expertise with the most sophisticated customer experience technology on earth, and delivering with an expert team of customer service consultants who know exactly how to help brands care for their customers.