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Streamlining the Growing Complaints Problem

(London, UK) Financial services customer complaint volumes are set to increase amid the uncertain macroeconomic environment and customers’ growing awareness of potential complaint payouts. According to Auriemma Group’s latest Customer Service and Complaints Roundtable, approximately one-third of members have already reported increases in the last three months. This, coupled with customers’ growing desire to complain via voice, will require firms to invest in their complaints management strategies.

“The increase in complaints volume is a real threat to operational efficiency – quick wins will be hard to come by,” says Louis Stevens, Director of Industry Roundtables. “This will likely lead to increased call volumes, the need for further headcount, longer resolving timeframes, higher redress values, and a heightened reputational risk.”

Although customers are showing a growing preference to self-serve for most transaction types, Auriemma’s research found that filing a complaint is one of the few areas where preference for voice chat is growing (i.e., 30% of respondents preferring voice in Q2-23 up from 22% in Q2-21). However, while some consumers may prefer voice chat, the channel is more costly to service and can often be less efficient. Streamlining this channel is crucial for success.

“We’ve heard some great examples of how firms are tackling these trends in our roundtable network,” says Stevens. “Some are empowering front-line agents to resolve at the first point of contact, others are increasing the number of SMS updates they send customers to reduce repeat contact, and a few have implemented a front-line phone team to deescalate and categorise complaints, all of which have already led to noticeable efficiencies.”

Looking ahead, roundtable members have indicated an intention to improve their root-cause analysis processes, as they believe this can help mitigate these predicted volumes and help them to better serve customers.

This along with a wide variety of other complaints-focused topics are already on the agenda for the upcoming Customer Service and Complaints Roundtable meeting on the 15th and 16th of November in Birmingham. If you or any of your colleagues are interested in attending as our guests, please contact us via roundtables@auriemma.group.

Survey Methodology

Cardbeat UK

This Auriemma Research study was conducted online within the UK by an independent field service provider on behalf of Auriemma in July 2023, among 80o+ adult credit cardholders. The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted. The purpose of the research was not disclosed nor did the respondents know the criteria for qualification.

About Auriemma Group

For nearly 40 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, visit us at www.auriemma.group or contact Louis Stevens at louis.stevens@auriemma.group.

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Buy Now, Pay Later Soars in Europe Amid Regulatory Chatter

(London, UK): Buy Now, Pay Later (BNPL) services continue to see significant growth across the UK and European markets.  Over 19 million UK consumers have used Buy Now, Pay Later (BNPL) services, including 40% of credit cardholders, according to Auriemma Group’s latest issue of Cardbeat UK.

Much of this growth can be attributed to Klarna and Clearpay, which are the top two providers used and preferred by BNPL users.  As of mid-2023, half (51%) of Buy Now, Pay Later users have used Klarna before, while 47% say it is their preferred provider. Use of Clearpay remains notably lower, with one-quarter (24%) of Buy Now, Pay Later users trying the service, and 10% preferring it over other providers. Regardless of the provider, the BNPL experience is overwhelmingly positive for those who have used the service. Over nine-in-ten (91%) BNPL users say they had a positive experience using it (up from 74% in Q4-22).

While expectations of regulation coming to the sector have placed a spotlight on Buy Now, Pay Later practices, discussions have not dampened customer appetite for BNPL. New providers continue to enter the marketplace whilst established players continue to increase their investment and focus on service enhancements. Earlier this month, Klarna confirmed an intention to continue investing in the UK market despite calls for tightened regulation.

Whilst growth continues with the younger generations (54% of credit cardholders under 35 have used at least one BNPL plan), there is increasing evidence that the relevance and appeal of BNPL has broadened. The UK Finance Payment Market Report found that the percentage of pensioners now using BNPL services doubled in 2022 compared to the previous year.

“UK banks and traditional lenders are beginning to recognise that BNPL is here to stay as a way for consumers to pay,” says Simon Cottenham, Head of International Partnerships at Auriemma Group. “The key for these players is to create a product, value proposition and customer journey which can appeal in this competitive marketplace.”

Similar trends are being seen in other European markets with Germany reporting 30% growth in BNPL use in the last year. Around one-quarter of consumers in Europe are believed to have made a purchase using BNPL with annual growth rates forecast in the 20%-40% range by most industry observers.

Auriemma Group will continue to monitor this space closely in upcoming Cardbeat studies and within its Customer Service Roundtable groups.

Survey Methodology

This Auriemma Research study was conducted online within the UK by an independent field service provider on behalf of Auriemma in July 2023, among 80o+ adult credit cardholders. The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted. The purpose of the research was not disclosed nor did the respondents know the criteria for qualification.

About Auriemma Group

For nearly 40 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognised experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximise their performance. Auriemma serves the consumer financial services ecosystem from our offices in London and New York City. For more information, visit us at www.auriemma.group or call Jaclyn Holmes at +44 (0) 207 629 0075.

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Join Auriemma’s Inaugural Regulatory Compliance Roundtable Meeting on Consumer Duty

Consumer Duty is finally here, but how is the financial services industry approaching it?

Join us for our inaugural Regulatory Compliance Roundtable meeting on the 18th of October at the St. Pancras Renaissance Hotel London from 9:30 – 17:00 GMT.

The discussion will be primarily focused on the FCA’s New Consumer Duty Act; however, the group will be open to discussions on other regulatory areas (e.g., BiFD findings, ISO 20022 and early discussions on what the industry would want to see from PSD3).

Our meeting agendas are attendee sourced; however, we expect to cover:

  • Changes already made to processes and procedures
  • Early learnings post 31st July go-live date
  • Focus areas for future changes
  • Internal governance structures
  • Third-party oversight models
  • MI and reporting usage
  • Other regulatory areas of focus

If you or your colleagues are interested in attending, please contact nicole.toussaint@auriemma.group.

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Announcing our Autumn 2023 Roundtable Schedule

Our autumn set of roundtable meetings are taking shape, and we would welcome you and your team to join us as our guest.

The dates for the upcoming meetings are:

  • Fraud Control Roundtable – 2nd and 3rd November – Manchester
  • Customer Service and Complaints Roundtable – 15th and 16th November – Birmingham
  • Collections and Recoveries Roundtable – 23rd and 24th November – Birmingham

Roundtable meetings provide a unique environment for the industry to openly discuss challenges, concerns, best practices, learnings and more, whilst networking amongst peers.

Agendas are entirely sourced from those who attend and prioritised accordingly, so you can be sure that the subjects currently pertinent to you are covered.

If you or your colleagues are interested in joining for any of the above sessions, please contact nicole.toussaint@auriemma.group.

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Operational Areas Transforming Under the New Consumer Duty

(London, UK) The Financial Conduct Authority’s (FCA’s) New Consumer Duty went into full effect on the 31st of July 2023. Auriemma  Industry Roundtable members have been eager to collaborate with one another on how the regulation could affect each operational area and on what changes they are prioritising. At each meeting this year, roundtable members shared department-specific plans for tackling Consumer Duty as well as greater, overall objectives.

Collections and Recoveries Roundtable members are aligned in their focus on ensuring their forbearance toolkits are fit for purpose – with 23% of members introducing new forbearance options for struggling customers. Additionally, 54% of members indicated an intent to make changes to their supplier-oversight strategies—another focus area of the regulation.

“Our Customer Service members are hyper focused on communication structure and readability,” says Louis Stevens, Auriemma Industry Roundtables Director, “They are reviewing their entire communications catalogue and leveraging external partners to ensure verbiage meets the average UK reading and numerology levels.” To further ensure comprehension, many are also utilising customer research groups.

Complaints and Disputes departments alike are improving the customer experience around submitting a complaint/claim. They have increased the number of touchpoints to keep customers updated on the progress of their claim, with 15% of roundtable members intending to introduce text message updates as part of their journeys. As with Customer Service teams, 46% also intends to change their communication content, especially with complaints.

Fraud Control Roundtable members are pivoting to track more outcomes-based metrics and building new reporting structures around them. Many members have also recognised the need for Fraud Departments to become more involved in the vulnerable customer journey given that vulnerable customers are often targeted victims of fraud.

When looking at Operations as a whole, roundtable members have common themes within their plans. At the recent Auriemma Consumer Duty Workshop, 92% of members indicated they intend to run new training plans under Consumer Duty with the goal of building awareness amongst the department and delivering pinpointed training on how the regulation will affect individual roles. Outcome testing is a primary focus for many with 70% of firms already having had outcome testing frameworks in place, and the remaining 30% having planned to implement it in the months leading up to the deadline.

“Although it is crucial that the industry makes specific changes to comply with the New Consumer Duty, we must not forget that the intention of this regulation is to trigger a cultural change not just act as a tick-box exercise,” says Stevens. “This is not just a cultural change at the company level either, but rather across the industry as a whole. Collaboration amongst firms is crucial not only to comply with the regulation but to ensure the best possible outcomes for customers.”

To assist in this change, Auriemma is excited to announce its newly launched Regulatory Compliance Roundtable, with the pilot meeting specifically covering Consumer Duty. The agenda will be participant-led but will likely cover early learnings post the go-live date, planned future changes, internal governance structures, third-party oversight models, MI & reporting usage and more.

“We’re really excited for this new group and the enthusiasm we’re already seeing behind it,” says Stevens. “We hope that the group can become an extension of firms’ Consumer Duty teams and help shape the future of how this regulation is successfully implemented within the industry.”

The meeting is scheduled for the 18th of October at the St. Pancras Renaissance Hotel in London. If you or any of your colleagues are interested in attending as our guests, please contact us via roundtables@auriemma.group.

About Auriemma Group

For more than 35 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognised experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximise their performance. Auriemma serves the consumer financial services ecosystem from our offices in London and New York City. For more information, visit us at www.auriemma.group or contact Louis Stevens at louis.stevens@auriemma.group.

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Dr. Stephanie Fitzgerald Visits UK Roundtables to Discuss Burnout

On the 7th of July we had the pleasure of having Dr. Stephanie Fitzgerald join us at the Collections and Recoveries Roundtable meeting in London to discuss best practices for preventing and managing burnout.

Since the pandemic, burnout has become particularly challenging for Collections front-line agents given the challenging conversations they have whilst working from home. Dr. Fitzgerald provided the group with practical techniques to use on their own teams to prevent burnout and build a healthier working culture.

Dr. Fitzgerald will also be joining us at the upcoming Customer Service and Complaints Roundtable meeting on the 15th and 16th of November in Birmingham. If you are interested in joining for the event, please reach out to roundtables@auriemma.group, or you can purchase a copy of her upcoming book “Reworked” on Amazon.

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Klarna is the UK’s Top Buy Now, Pay Later Provider, But How Can Competitors Gain Market Share?

(London, UK): Klarna is the leading Buy Now, Pay Later (BNPL) provider in the UK with 13 million customers using its products and services, but the Swedish FinTech reported $1bn of losses in 2022, its largest ever, adding to the strain of incoming regulation following the UK Government’s draft legislation in February.

Despite losses, the UK giant continues to have a strong foothold in the marketplace. According to Auriemma Group’s latest issue of Cardbeat UK, 50% of BNPL users say they prefer Klarna to other BNPL brands. Clearpay comes in a distant second at 16%, with the remaining providers such as Laybuy in single digits.

Klarna and its competitors offer similar services, including 0% interest on instalment purchases, and weekly or monthly repayment plans. One of the key differentiators, however, is each provider’s portfolio of merchant partners where customers can utilise the competing services.

For example, ASOS, one of the UK’s largest online retailers with 8.9 million customers, lists Klarna and Clearpay as BNPL options at checkout, while major sports retailer JD Sports has deals with Klarna and Laybuy. So, is it really just availability at checkout that drives usage?

Auriemma Group’s research found that 31% of BNPL users have previously tried Clearpay and 12% tried Laybuy, compared to 50% who have tried Klarna. Furthermore, while 45% of BNPL users have only used one BNPL provider, a notable 36% have tried two or more, highlighting a willingness to use alternative providers even if they are not preferred. This open tendency could play to the advantage of regulated entities following February’s draft legislation.

“Though Klarna remains the top BNPL provider for the majority of cardholders, a considerable portion have tried other options,” says Jaclyn Holmes, Director of Research at Auriemma Group. “This shows that accessibility can take priority over brand loyalty, highlighting an opportunity for the competition.”

While availability at checkout plays a large role in BNPL selections, familiarity with a provider is also important. 42% credit cardholders say they would use Klarna if presented the option at checkout because of familiarity with the brand. This supersedes user experience (23%), attractive rates (15%) and customer service (10%). More generally, 34% of credit cardholders say that familiarity with the provider has the greatest influence on BNPL usage though the strength of the terms and conditions (33%) are also a notable factor.

As regulated entities like NewDay with NewPay and Zopa make headway in the space, the focus on consumer awareness will be as critical, if not more, as product strength and customer experience.

“Regulation may require changes from Klarna and others that disrupt their current customer journey, opening the door for competitors already accustomed to regulation,” says Holmes. “If new players can quickly build brand awareness and availability at the point-of-sale, we could see Klarna more readily challenged as consumers’ top choice.”

Auriemma Group will continue to monitor this space closely in upcoming Cardbeat studies and within its Customer Service Roundtable groups.

Survey Methodology

This Auriemma Research study was conducted online within the UK by an independent field service provider on behalf of Auriemma in October 2022, among 80o+ adult credit cardholders. The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted. The purpose of the research was not disclosed nor did the respondents know the criteria for qualification.

About Auriemma Group

For more than 35 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognised experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximise their performance. Auriemma serves the consumer financial services ecosystem from our offices in London and New York City. For more information, visit us at www.auriemma.group or call Jaclyn Holmes at +44 (0) 207 629 0075.

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Will the UK Government’s Draft Legislation on Buy Now, Pay Later Drive Growth Forecasts?

(London, UK): The growth of Buy Now, Pay Later (BNPL) services among UK consumers has been consistent since 2016 when Klarna launched its partnership with Arcadia Group, bringing its product to mainstream retail. Today, over 17 million consumers have used BNPL services, including almost half (49%) of credit cardholders according to Auriemma Group’s latest issue of Cardbeat UK.

Despite the popularity and usage of this new wave of lending, BNPL agreements remain unregulated, and unlike credit card issuers, providers are not required to be authorised by the Financial Conduct Authority (FCA). However, new draft government legislation may soon change the readiness in which consumers can access and use BNPL services in order to reduce the risk of consumer detriment.

Indeed, some consumers are already experiencing some detriment due to their BNPL plans. According to Auriemma’s latest study, 37% of credit cardholders say using BNPL has created an additional burden on their finances, while a further 26% have been unable to afford essential purchases due to outgoings on BNPL repayments. According to the Bank of England, rising credit card borrowing could perpetuate this issue further, highlighting the urgency to reform the BNPL sector.

Almost one-third of those offered BNPL at online checkout never opt to learn more about the terms and conditions, and just 10% say they almost always click to find out more information, according to Auriemma’s Cardbeat UK.

“Our research shows that very few cardholders opt to learn more about terms and conditions when offered BNPL options at checkout,” says Jaclyn Holmes, Director of Research at Auriemma Group. “When large groups of consumers with this mentality toward borrowing aren’t required to pass affordability or credit worthiness checks, there’s greater risk on many of those consumer’s finances.”

What will the legislation mean for the likes of Klarna and other unregulated firms?

If the draft legislation is passed and the FCA takes action, firms such as Klarna could be required to make significant changes to their business such as applying to be authorised by the FCA, ensuring advertisements meet regulatory requirements and integrating rules around customer credit files and credit worthiness.

Does the legislation place regulated lenders in poll position to seize market share?

Though Klarna remains the top used BNPL service in the space, a wave of new entrants (many of whom are already subject to regulations) may threaten their stronghold. Several UK banks and lenders already have BNPL products in market, such as NewDay with NewPay, NatWest and Virgin Money. Moreover, regulated FinTechs such as Monzo and Curve joined the BNPL space in 2021, with Revolut following in 2022. Zopa recently acquired Divide Buy to enter the UK market with BNPL 2.0. 

However, for card issuers, establishing an entirely new BNPL business may not be needed to meet customer demand. Auriemma’s Cardbeat UK found that 44% of cardholders would be interested in monthly instalment plans attached to their existing credit card. A further 43% said they would be likely to enrol an in-person or online credit card purchase into an instalment plan if prompted by a push notification.

“Whether it’s building a BNPL solution or adapting existing lending tools to offer instalments, technology has enabled traditional lenders to become competitive in this space,” says Holmes. “This, in turn, could shore up the certainty around acceptable business models and future growth.”

Auriemma Group will continue to monitor this space closely in upcoming Cardbeat studies and within its Customer Service Roundtable groups.

Survey Methodology

This Auriemma Research study was conducted online within the UK by an independent field service provider on behalf of Auriemma in October 2022, among 80o+ adult credit cardholders. The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted. The purpose of the research was not disclosed nor did the respondents know the criteria for qualification.

About Auriemma Group

For more than 35 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognised experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximise their performance. Auriemma serves the consumer financial services ecosystem from our offices in London and New York City. For more information, visit us at www.auriemma.group or call Jaclyn Holmes at +44 (0) 207 629 0075.

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