There’s little doubt about it – the UK’s financial landscape is going to continue throwing challenges at companies and their customers throughout 2024. But, with the right focus and the right tools, it doesn’t have to be all doom and gloom.
Here’s how you can create a brighter tomorrow for you and your customers with financial resilience at the fore.
What is financial resilience?
Financial resilience is a measure of how effectively individuals can absorb financial shocks, such as an unexpected drop in income. In theory, the more shocks someone can absorb, the more financially stable they are.
This will look different across households. For some, it may be having enough savings to cover a few months of little to no pay. For others, it may be owning an insurance policy that would cover the costs of damage to a house or car.
However, as we discuss in this blog on the cost of living crisis, it’s the people who are already the most vulnerable that are hit the hardest by financial challenges. This is a catch-22 known as a “poverty premium”.
For instance, although insurance policies can provide greater financial resilience, they require monthly or upfront payments. When people can’t keep up with these payments, they become even more vulnerable to financial difficulty. And unfortunately, paying for insurance isn’t something that everyone can do. In fact, 13% of the UK adults who were insurance or protection policyholders in May 2022 either cancelled, reduced their cover, or did both in the six months leading to January 2023.
Why should companies care?
As of May 2022, almost a quarter of UK adults had low financial resilience. This is catastrophic for organisations. After all, consumers with more financial cushioning are more likely to display normal payment behaviours, whether that’s paying bills on time or rent when it’s due.
If you’re a financial firm, having financially resilient customers is particularly important. You can’t stimulate positive debt with a consumer base that’s vulnerable to financial difficulty, so it’s within your best interests to prioritise their resilience.
Here’s how companies across all sectors and industries can do so.
Three ways to help your customers build financial resilience
Understand their circumstances
Understanding your customers means building a holistic picture of them and their real-time circumstances, not just their financial health. With this in-depth understanding, you’ll be better equipped to match them to the most appropriate products, tariffs, or agreements.
By looking at more than just the symptoms of the problem, such as missed or late payments, you can also help customers to overcome their specific barriers to financial resilience. It could be poor mental wellbeing, for instance, which you might help with by bringing in specialist advisors.
This enriched signposting is made simple with the Elifinty platform, our customer engagement platform that helps creditors to provide holistic and targeted support. With a digital hub for individuals, companies, and debt advisors, it creates a direct line of communication and accelerates the process of connecting at-risk people to the right help, the first time around.
Help them take control of their financial health
For real, long-term change, building financial resilience needs to be a joint responsibility between you and your customers.
For companies, a big part of this will be making sure that every customer truly understands the ins and outs of the products, tariffs, or agreements you provide them with. This is already regulated for some by the Consumer Duty, and for good reason. Understanding is key to making informed decisions.
As such, focusing on financial education is crucial for individuals. This might be by learning how to budget or proactively searching for the grants and benefits they’re eligible for.
The Elifinty platform can help with this too. With Eli, its customer-facing hub, you can connect at-risk people to financial planning tools, alongside tailored support from specialist debt advisors, to help them become more educated, empowered, and resilient.
Get rid of short-term thinking
We’d like to see a world where financial education and resilience are a priority for households, wider communities, and institutions – but this relies on longer-term thinking.
With the Elifinty platform, you can start to implement the tools and processes for this future-focused thinking, immediately. It’s designed to connect companies to more socially conscious debt support practices, and customers to the resources needed for sustainable behavioural change.
From developing a full customer view with open banking and CRA APIs, to creating achievable payment plans with an AI solution engine, the Elifinty platform simplifies the debt support process for both short- and long-term relief.
If you’d like to learn more about our platform and its potential for your customers and business, you can find our use cases for energy companies, financial services, and housing associations here.