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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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Recession Concerns Spark Adjustments to Spending

(New York, NY) Jamie Dimon, CEO of JPMorgan Chase recently cautioned that the US and the world would face a recession in the next 6-9 months. And if the UK’s cost-of-living crisis is any indicator, some consumers may soon be pinching pennies to afford everyday expenses. Auriemma Group recently conducted research in both regions and found that 55% of US credit cardholders and a staggering 83% of credit cardholders in the UK say rising costs will have a negative impact on their finances in the next 12 months.

Rising food and fuel costs are already having a significant negative impact on half of US cardholders, and these consumers anticipate costs to swell further over the next year. Looking to the UK, these impacts are even greater, with about nine-in ten (88%) reporting a negative impact from rising food costs and 81% saying the same about fuel.

“We’ve been studying changes to consumer spending and borrowing behavior throughout the cost-of-living crisis in the UK and believe those shifts may be predictive of things to come on our side of the pond,” says Jaclyn Holmes, Director of Research at Auriemma Group. “Navigating these increasing costs comes at a price for many, particularly those with heavier debt loads or fixed incomes.”

According to Auriemma’s research, US cardholders are already acting in response to rising costs. Over the past 6 months 52% curbed non-essential spending, 36% sought out more sale items than usual, and 33% switched to more affordable brands.

While often opaque to cardholders, the economic outlook due to the impacts of inflation, rising interest rates, and Russia’s war with Ukraine may cause these measures to intensify. In the UK, tensions are already hitting a fever-pitch with some activists going as far as flinging tomato soup at a Van Gough painting to draw attention to the impact of fossil fuels, but also rising costs.

“These are very, very serious things which I think are likely to push the U.S. and the world — I mean, Europe is already in recession — and they’re likely to put the U.S. in some kind of recession six to nine months from now,” Dimon said.

US cardholders agree with Dimon. Auriemma’s research found that 80% believe the US will enter a recession within the next 2 years. And this belief is changing attitudes towards spending. Over nine-in-ten of those who think it is ‘very likely’ that the US will enter a recession say they have changed their spending behavior because of rising costs.

“The UK’s cost-of-living crisis has gained media attention for the better part of the year, and the US may not be far behind,” says Holmes. “Dimon’s assertion highlights the delicate state of the economy, and US consumers have already begun to feel the effects. Looking to the UK as an example, US issuers and merchants can expect some notable changes to spending over the next year.”

Survey Methodology

Cardbeat US

This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma from August-September 2022, among 80o+ adult credit cardholders. The number of interviews completed 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.

Cardbeat UK

This Auriemma Group study was conducted online within the UK by an independent field service provider on behalf of Auriemma from April-May 2022, among 80o+ adult credit cardholders. The number of interviews completed 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.

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Consumers More Pessimistic About Financial Health as Cost-of-Living Crisis Intensifies

(London, UK): Consumer expectations for future financial stability is worsening, with many looking to credit cards for support during the cost-of-living crisis. According to Auriemma Group’s latest issue of Cardbeat UK, 37% of cardholders believe their financial health will worsen in the next 6 months.

Gen Z and younger Millennials express greater optimism about their future financial health than their older counterparts despite increased levels of borrowing. Auriemma’s research found that 20% of cardholders are borrowing more to afford everything they need, rising to 32% among Gen Z and Millennials, and 33% of sub- and near-prime customers. The added strain of rising costs will likely cause these figures grow in the coming months.

“Since the start of the pandemic we have seen a resurgence in consumer spending on debit cards and a rise in transfers from savings to current accounts,” says Jaclyn Holmes, Director of Auriemma Research. “Today it appears rising inflation is furthering the strain on consumers, leading some to rely on their credit cards for essential spending.”

According to Auriemma’s latest findings, over 90% of credit cardholders anticipate rising costs of food, housing, fuel or energy bills to impact their personal finances negatively over the next 12 months. While energy prices were capped at £2,500 for 2 years beginning this month, some households may still see their bills double.

“At a time when all other costs are skyrocketing, the price cap will offer little comfort for many households,” says Holmes. “With more monthly outgoings attributed to energy bills, the pressure on credit card usage and borrowing will likely be even higher.”

But consumers aren’t the only ones bracing for impact. Issuers are also trying to assess how the cost-of-living crisis is currently impacting their cardholders and anticipate the enduring impact moving forward.

“Lenders have already begun seeing the operational impact of this change in customer behaviour,” says Louis Stevens, Director of Auriemma’s Industry Roundtables. “This comes at a time where regulatory initiatives, such as The Consumer Duty Act, are already taking up considerable time and resources.”

As issuers likely tighten risk criteria for customers seeking credit, some may turn to Prime and affluent customers for lower-risk lending opportunities. 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 from April-May 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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How Rising Cost of Living is Impacting Spend and Borrowing Habits

(London, UK): Rising costs for fuel, energy, food shops and housing are already impacting consumers around the UK, but many believe this is only the beginning. According to Auriemma Group’s latest issue of Cardbeat UK, 73% of credit cardholders expect the rising cost of living to have a negative impact on their personal finances over the next 12 months.

Others factors will further impact consumers, including the Bank of England’s forthcoming increased interest rates. Coupled with rises in the cost of living, these elements are set to put considerable strain on some UK cardholders.

“Rate increases will create added pressure on homeowners across the UK at a time of significant financial uncertainty,” says Jaclyn Holmes, Director of Research at Auriemma. “Meanwhile the volatility of the rental market is already putting a strain on those who do not own their own home.”

The rising costs of food, energy and fuel have impacted over eight-in-ten credit cardholders, and rising housing costs have impacted about six-in-ten. Auriemma’s research found that rising housing costs were of particular impact to Millennials, who more commonly rent—a cost that has increased 9.5% on average since 2021 according to the latest HomeLet Rental Index.

“These indicators are a sign that banks and lenders must ready themselves to provide additional support to struggling customers,” says Holmes. “When rising costs become insurmountable it often leads to cardholders making spending cuts, missing payments or even becoming delinquent.”

In fact, 67% of credit cardholders agree that they are already spending less on non-essential or luxury items due to the state of their finances. And four-in-ten say they are unable to afford a holiday, a figure that increases to 57% among sub-prime and near-prime customers.

“These changes in spending habits could have an impact on the retail, entertainment and travel sectors,” says Holmes. “This could be a considerable blow after such a short period of recovery following the start of the pandemic.”

Looking ahead, the cost of living crisis will have a notable impact on consumers. Auriemma’s research shows one-fifth of cardholders are already borrowing more to afford everything they need, and as prices increase Auriemma anticipates this figure to rise. Auriemma Group will continue to monitor this space closely in upcoming Cardbeat studies and within its Card Customer Service and Complaints roundtable.

Survey Methodology

This Auriemma Research study was conducted online within the UK by an independent field service provider on behalf of Auriemma in April 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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3 Ways Banks Are Implementing Hybrid Working Models

(London, UK) Widespread work-from-home started as an adaptation to COVID-19 but is here to stay. In Auriemma Group’s recent roundtable meetings financial institutions discussed long-term working models, all of which include some element of working from home. Their next challenge is developing a hybrid engagement model for their hybrid workforce.

Some have already taken then leap, and since implementing these hybrid models, Auriemma’s roundtable members received employee feedback that some feel less engaged and connected with the company. This, in conjunction with high attrition rates and challenging recruitment, means engagement strategies have become an area of focus.

Those who feel they have developed strong hybrid engagement models have focused on three areas: intentional scheduling, variety of choices and well-being considerations.

Intentional Scheduling

Firms strategically schedule location-appropriate activities when employees are onsite or working remotely. When onsite, firms try to have full teams concurrently present to build comradery and schedule more team-building activities like catered lunches and happy hours. When remote, roundtable members manage engagement via gamification and weekly competitions like step counts and quizzes.

“When managing a hybrid workforce, it is crucial that firms give equal treatment to employees regardless of on-or-offsite work,” says Louis Stevens, Director of Roundtables at Auriemma Group. “Otherwise, this can create a divide in the workforce and even lead to further attrition. Engagement models must cater to both demographics.”

Variety of Choices

Workforces are composed of a diverse mix of people with a diverse set of interests, which can make it challenging to find engagement activities that appeal to everyone. The solution? Including variety in the engagement offerings.

According to members, offerings should cater to both extroverts and introverts alike. One firm developed a successful monthly engagement programme for its employees, which allowed them to choose from a variety of activities like cocktail making classes and sporting events.

Well-Being Considerations

As part of their engagement strategies, financial institutions have incorporated well-being initiatives to protect the mental health of their employees. Initiatives vary from providing access to therapists to scheduling inspirational speakers and allotting weekly personal time in schedules.

30% of Auriemma Customer Service and Complaints Roundtable members have intentionally increased off-phone time for front-line agents since the start of the pandemic as a means of dedicating more time to employee well-being. Employees have the choice to use this time as they wish whether that be for professional development or something like meditation or yoga. Since implementing, firms have seen an improvement in productivity levels.

Auriemma’s roundtable members are still developing their engagement strategies. New developments and learnings will be discussed in depth at the upcoming Collections and Recoveries Roundtable meeting on the 9th and 10th of June in Edinburgh, as well at the Customer Service and Complaints Roundtable meeting on the 16th and 17th of June, also in Edinburgh.

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 Louis Stevens at +44 (0) 207 629 0075.

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Declining Mental Health Takes Toll on Financial Services Operations

(London, UK) Absence and attrition rates are on the rise for front-line agents working in financial services. Mental health concerns are a primary driver, forcing financial service providers to address a once-taboo workplace subject. According to members of Auriemma Group’s Customer Service and Complaints Roundtable, mental health is frequently the cause for taking time off or leaving the company entirely. This, in conjunction with recruitment challenges facing the industry, has made mental health and well-being a top priority for firms.

According to the researchers at the University College London (UCL), only 49% of working age adults say they feel in control of their mental health, down from 54% six months ago. The study also found that the proportion of people with symptoms of anxiety and depression is at its highest level in 11 months.

There are several reasons why mental health issues are growing at higher rates amongst front-line agents. Increasingly complex calls and a rise in vulnerable customer volume has taken its toll on the mental health of many agents. Concurrently, the cost-of-living crisis is placing more pressure on all consumers, which agents are also not immune from.

“This compounds when considering many are still working from home and missing out on the social elements of the workplace,” says Louis Stevens, Director of Auriemma Roundtables. “It is easy to see why many firms are in firefighting mode in terms of capacity planning.”

The combination of these factors has led to a marked increase in both attrition and absence rates. In 2021, Auriemma Group’s Customer Service and Complaints Roundtable members reported an average attrition rate of 23%, up from 16.5% in 2020. Mental health-related absence rates showed a similar trend up to 14%, in 2021 from 11% in 2020.

“The cost-of-living crisis will only put further stress on both customers and employees, meaning without sufficient support measures in the place, this trend will likely only worsen throughout 2022,” says Stevens.

To combat this, firms are taking a varied approach by making mental health resources more accessible, building overall engagement amongst their employees to improve job satisfaction and embedding mental health awareness into their company culture and rhetoric. Roundtable members have also reported more return-to-office strategies, which will help those who have not taken well to home-based work.

This is an area of focus within Auriemma Group’s Customer Service & Complaints and Collections & Recoveries Roundtables, both of which have upcoming in-person meetings at the Sheraton Grand in Edinburgh. The Collections and Recoveries meeting is scheduled for the 9th and 10th of June, and the Customer Service and Complaints Roundtable meeting will be on the 16th and 17th of June. If you are interested in attending either session, please contact 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 call Louis Stevens at +44 (0) 207 629 0075.

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How High Street Banks May Benefit from Incoming Buy Now, Pay Later Regulation

(London, UK): Incoming FCA regulation could add restrictions on how consumers can use Buy Now, Pay Later (BNPL) services, but these changes may be welcome. According to Auriemma Group’s latest issue of Cardbeat UK, there was an 80% increase in negative experiences with BNPL plans between September 2020 and July 2021.

The increase is uniform across customer segments, including different age groups, household income, and levels of familiarity with BNPL, signalling concerns around the product itself, rather than new or unfamiliar user experiences.

“Our research shows that the few who have negative BNPL experiences most commonly attribute it to unexpected fees or issues it’s created for their other finances,” says Will Moody, Manager at Auriemma. “With a growing segment of consumers turning to BNPL options for borrowing, regulation may play a role in maintaining positive customer sentiments for the product.”

Auriemma’s latest findings show an increase in negative experiences using BNPL or instalment plans–from 5% in September 2020 to 9% in July 2021. While 9% remains the minority, it represents a large community when considering that 17 million UK consumers have used BNPL services as of November 2021.

“This sentiment is being reflected within other markets too,” says Moody. “In the US, a market where over half of adults have used a Buy Now, Pay Later service, about one-third had a negative experience. This rapid growth has caught the attention of the CFPB, and surprisingly enough, half of BNPL users in the US agree these plans should be more regulated.”

Klarna is the leading BNPL and instalments provider in the UK with 16 million customers using its products and services, but the Swedish FinTech reported a round of substantial losses in H2 2021 to add to the strain of incoming regulation.

Many of the UK’s High Street Banks and lenders already have products in market, such as NewDay with its NewPay product. Moreover, regulated FinTechs such as Monzo and Curve also joined the BNPL space in 2021, with Revolut soon to follow.

“Auriemma expects that BNPL regulation will put significant strain on compliance resources for unregulated players such as Klarna,” says Louis Stevens, Director of Roundtables. “This, in turn, could impact innovation, development and growth, opening the door for regulated lenders such as High Street Banks and credit card issuers to step in.”

Could the future of BNPL in the UK rest with traditional players integrating instalments into their existing product sets? And will this be the solution to reversing the rise in poor customer experience? Auriemma Group will continue to monitor and discuss BNPL in upcoming Cardbeat studies, and within its Customer Service Roundtable groups when they next meet June 16-17 at the Sheraton Grand in Edinburgh, Scotland. Email research@auriemma.group to learn more about our consumer studies and roundtables@auriemma.group to inquire about our forums.

Survey Methodology

These Auriemma Research studies were conducted online within the UK by an independent field service provider on behalf of Auriemma from in September 2020 and July 2021, 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 Will Moody at +44 (0) 207 629 0075.

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