How deeper, smarter data delivers good consumer outcomes.

In their recent Financial Lives Cost of Living report, the FCA explore the financial impact of the increased cost of living on adults across the UK. Our Affordability and Financial Vulnerability Expert, Andrea Cox, explores the subject further, discussing how Equifax can help provide a better, fairer financial future for all.

The world turns. Circumstances evolve. And, it appears, pressures can be relieved. The FCA recently reported an improvement in the number of people who are finding it hard to manage the higher costs of living. So far, so good.

That said, it is telling that the FCA also states “challenges remain for some groups.” For these consumers, the pressures of the Cost-of-Living crisis remains. Which means for every finance, lending and utility provider, the responsibility to identify and help the people struggling to cope also remains. After all, one of the FCA’s key messages is the continuing need to “drive good consumer outcomes.”

One of the ways we can do so is by identifying consumers that are most at risk. So how can we best achieve this?

 At Equifax, we firmly believe it is by seeing people as individuals, and not as a demographic. While this approach has been proven effective time and again in identifying vulnerability and reducing risk, there are still barriers.

It often happens that businesses view their customers solely through the lens of their own data, missing out on a broader and more detailed perspective. Through continuous monitoring of individuals, we can get a more accurate understanding of whether they might face difficulties soon, or whether they’re slowly slipping away from that “good consumer outcome.”

For example, an early sign of imminent difficulties might be defaulting on multiple credit card or loan payment, even if for a few days. Most people will cut or delay these payments rather than their mortgage or gas, because they perceive them as having lower long-term consequences. But by seeing these trends early, it’s easier to prevent future stress…both financial and mental.

The key is in gaining an understanding of how an individual’s behaviour has changed. Data can reveal these changes.

While an individual once might have had one credit card which they cleared each month, perhaps they suddenly have lots of cards with high balances, or show lots of new credit searches. Should this be the case, we can sensibly assume they’re under growing pressure. If we look closely, we can see in data the behavioural changes that reveal vulnerability and potential financial stress.

This of course requires robust, up-to-date and relevant data. It needs data gained from a variety of sources to ensure its veracity. This can include your own data, combined with high quality third-party – like Equifax’s 1 billion records on 46 million individuals – and open banking data. Utilising all available data, is key to ensure a good outcome for your customers, and for your business.

By engaging vulnerable customers with more empathy, and by using AI-powered digital channels, you can resolve consumer debt more efficiently, more cost-effectively and in a smarter more considered way. Crucially, you can do so before problems arise, and in a way that aligns with the FCA’s wish to “drive good consumer outcomes.”

Equifax is the only UK-based credit reference agency to cover the entire consumer lifecycle. On track to become the first Cloud-native data business (Equifax Cloud™), our partnership with Google is just one more evolution in a 125 plus year history which continues with one simple aim – to create a better, fairer financial future.

Find out more.