Customer Vulnerability

What does customer vulnerability in the UK look like in 2024?

5 min read

The state of the economical and political landscapes has vastly changed customer vulnerability in the UK over the last 12-18 months. Energy prices have skyrocketed, food costs continue to increase, and inflation is at a 40-year high. Just this week, it was announced that the UK has entered a recession after the economy fell by 0.3% in the last 3 months of 2023.


Not only that, our health has been affected by a global pandemic in ways that we’re only just beginning to understand. Long-term sickness, months of lockdown and a continuous infection rate are still taking their toll.


This perfect storm is bringing about a number of challenges in every household, and they’re not always instantly or easily identified. It’s why we decided to break down the reasons that this year is shaping up differently than the ones that came before.


1. Cost of living crisis and recession



Since Brexit, we’ve seen the cost of living rising rapidly in the UK. Many customers find themselves in vulnerable positions with the cost of essential items increasing from between 7-19% over the last 12 months. Growing queues at food banks, reports of people unable to heat their homes properly, and increasing demand for debt counselling provide clear evidence of the hardships many face.


And we see rises in other areas, too, with 29% of mortgage owners and 34% of renters experiencing payment increases. Maslow’s hierarchy of needs tells us that we need food, water and shelter, yet many are struggling to meet their basic needs to live.


2. Post-pandemic financial pressure


Customer Vulnerability in the UK


It feels like the pandemic happened decades ago. Sometimes, it feels like it was only yesterday. Regardless, we can’t ignore the fact that between May 2022 and January 2023, the number of adults who missed 3 or more of their previous six months’ payments rose by 1.4 million, according to FCA’s Financial Lives Report 2023.


The burden of meeting payments weighed heavily on shoulders that were experiencing uncertainty in their job, their finances, and their health. Furlough schemes were often confusing and self-employed people found themselves battling stringent justifications for consistent payment.


As reported in the FCA’s Financial Lives 2023, we also have COVID-19 itself, which spread viciously through the population, causing a rise to 2.5 million people now dealing with long-term sickness, which is an increase of 400,000 since the pandemic began. Globally, the prevalence of anxiety and depression has risen by a massive 25% since the pandemic, with the accessibility of healthcare also in severe decline.


There was a lot of pressure to return to “normal” post-pandemic, without factoring the damage of social isolation, the fear of catching and spreading the virus as well as grief and loss. But with gaps in appropriate support and lengthy waiting lists for treatment and care, it’s no wonder we’re still feeling the effects in 2024.


3. Health crises and ageing populations


It would be redundant to say that this is all taking an immense toll on people’s physical and mental health. More than half of the inactive workers due to long-term sickness said, in the first quarter of 2023, that they suffered from depression and anxiety. And over 28 million people–that’s just over 1 in 2 adults–in the UK stated they were more stressed and anxious due to the rising cost of living. 


A recent report found that people in their early 20s are more prone to being out of work because of poor health compared to people in their early 40s.


The cost of medication itself is on the rise, along with affordable, nutritious food. Treating and caring for ourselves is becoming harder than ever and with expected rapid rises to the age of the population, there’s a lot that we need to do to ensure that all generations are cared for.


Intervention and support


So, why is it important that we ensure that we’re taking steps to better identify and report customer vulnerability in the UK? Not only does this impact every single one of us and our customers, we know that it will massively impact our businesses.


The FCA has been direct in its demand that companies improve the way that they identify customer vulnerability. The most efficient way to do this is through the introduction of technology.


Customer vulnerability in the UK is changing over time, and the rise in vulnerability markers means that there’s regulatory pressure on firms to do more to better analyse and understand customer needs. Beyond identifying and understanding trends at an individual level, firms need to pay attention to how they change over time across a population. This is the key to providing customers with the care they need, but such a challenge has to utilise tech to be able to achieve it at scale.


We shouldn’t be using small teams of quality assessors, armed with spreadsheets and questionnaires checking a small percentage of customer calls to help catch vulnerable customers as they fall through the cracks.


Vertically-aligned, generative AI (artificial intelligence) can do much and more to revolutionise the way that the industry operates, streamlining and automating many outdated processes.


Utilising AI means that you can monitor 100% of customer interactions and build the voice of the customer into vulnerability identification. The larger sets of data mean better understanding of vulnerability not only at an individual level, but also at a population level.


NLP (natural language processing) can be embedded into AI platforms to analyse customer interactions with chatbots, and it can be used by agents for language patterns that identify stress, confusion, or key words that showcase their vulnerability. Social media monitoring allows sentiment analysis to flag possible financial distress or exploitation that advisers and support might otherwise have been unaware of.


All of these tools can be used to alert human advisers so that they can provide personalised support and intervention where necessary, ensuring that customers are appropriately protected and cared for.


It allows the introduction of education materials and resources, such as AI-powered chatbots that can provide accessible information to vulnerable customers, returning the power of informed decision making to them.


Chatbots can also provide this support 24/7, in multiple languages, with personalised user interfaces so that communication is easier to understand especially for those with lower financial literacy or cognitive limitations.


By leveraging emerging technologies like generative AI, NLP and sentiment analysis, the finance industry can gain deeper insights into customer vulnerability at both individual and population levels. These AI-powered tools offer 24/7 support, personalised communication, and accessible resources to empower vulnerable customers. 


By embracing AI solutions, firms can revolutionise their approach to vulnerability, streamline outdated processes, and provide the care and protection that customers deserve in these challenging times.


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