How lenders can manage the unique challenges of BBLS and CBILS

By Rohit Salian, Vice President – Client Services, Firstsource

New challenges and opportunities will emerge for lenders servicing UK COVID loans in 2021. While Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS) are providing the much-needed lifeline to struggling organisations they are also adding a strain on financial institutions.

In 2020 issuing the loans tested lenders’ processing, screening and lending capacities. Caught out by high volumes of CBILS and BBLS applications, many started on the back foot. The surge in demand and processing pressure resulted in longer approval times and exposed both borrowers and lenders to unprecedented level of fraud. The government predicts anywhere between 35 to 60 percent of these loans may be defaulted on through businesses not being able to repay and fraudulent applications.

Now, due to the latest national lockdown the loans deadline has been extended until 31st March. But the challenge has shifted beyond processing loans – it lies in handling ongoing customer relationships and managing loan delinquency rates effectively in the coming year.

The challenges lenders face with BBLS and CBILS

In 2021 lenders need to put their best foot forward, they simply cannot afford to continue falling behind. Not addressing the upcoming challenges can result in swathes of disgruntled customers and serious reputational damage. While being prepared will help lenders protect and improve their reputation and increase customer loyalty. These challenges lie in:

• Respectfully handling the human side of customer interactions
• Using the existing data and information to optimise interactions and minimise risk
• Having the flexibility to adjust account servicing across channels

Thus the three key capabilities lenders need are empathy, insights and agility. Focussing on these throughout client services can ensure every customer receives a positive and consistent customer service experience while reducing the risk of fraud. Let’s dig into each attribute.

Empathy

It is key to remember that the situation is emotive; people are trying to keep their hard-build businesses afloat under the most stressful of circumstances. This makes empathy central to customer interactions.

Lenders need to be well equipped to deal with emotionally charged environment and sensitive conversations around these loans. To achieve this lenders need to look into:

• Providing staff training around empathetic listening and how to converse with vulnerable customers both at the application and repayment stage.
• Minimising unnecessary and uncomfortable interactions by using digital channels. Here, tools such as chatbots and using email can be used as the first port of call to quickly equip customers with the information they need while freeing up service teams to deal with more sensitive, difficult or complex enquiries.

By adopting a combined human and digital approach, and preparing staff to handle a range of interactions lenders will be better placed to balance empathy and recovery. Improving communications, customer experience, service team’s confidence and business relationships.

Insights

Using existing data and technology proactively is key for lenders understanding where they should dial-up the personal touch, optimise communications across channels and detect fraudulent activity. There are two ways in which lenders can use insights:

• AI-powered analytics lets lenders use existing data to build borrower profiles, in real-time, to evaluate the level of risk connected to each applicant. This makes account issues, and potential fraud, much easier to spot.
• Incorporating smart insights and analytics into account servicing can also help predict customer call volumes and customer profile interaction preferences. Armed with this insight, lenders can make informed decisions about the times that extra customer service resources may be required. And adjust contact strategies to maximise repayment.

In short, deploying AI and analytics can cut through data to better understand both customer (and fraudster) activity and their communications preferences while allowing lenders to predict and prepare for service demands.

Agility

Supporting communications across various channels and being able to adjust the strategy as new information comes to light requires agility. CBILS and BBLS customers represent a different, and much wider, demographic than usual business loan customers. Some have never taken out a business loan before. Having an agile approach to how you deal with unique profiles and challenges is key, one size will not fit all. Here lenders need to focus on two aspects of agility:

• The ability to contact customers in a variety of ways, such as email, phone or even a physical letter, can make them feel more personally cared for. This can drive customer satisfaction and improve brand reputation.
• The situation is also changing daily, as will customers’ needs. Keeping ahead of the curve when it comes to supporting them through this troubling time will help lenders stand out and positively influence the retention of customers, for longer than just the pandemic period.

A unique opportunity

CBILS and BBLS require a different approach to run-of-the-mill commercial loans. Lenders stand to either secure long lasting business customers or seriously damage their reputations. Ensure customer services can meet the upcoming challenges though empathy, insight and agility will help lenders get the upper hand. By doing so, they will be empowered to handle customers more effectively and efficiently, minimise the risk of fraud, and manage difficult conversations around defaults.