UK Debt Relief Organization CIO Banks bet on small scale for uncertain future

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As the CIO of Leeds-based StepChange, the UK’s largest debt charity, Lorna Allan has a busy schedule. Faced with a sovereign debt crisis and yet surprisingly low demand for free debt advice, she wants to build a scalable, digital infrastructure to support clients when demand picks up again, while adapting the company’s IT infrastructure for the hybrid workplace.

As if that were not enough, this must be done as cost-effectively and flexibly as possible. The nonprofit has been under financial pressure itself of late, and this has in part prompted Allan’s team to adopt a low-code approach to application development, which allows the charity to quickly build new services and leverage new technologies and improve them the customer experience across multiple channels.

The charity, whose mission is to get rid of problem debt and which does so by providing free debt advice and payoff plans, has helped clients repay £4billion to creditors over its 28-year existence and says the number of people with Problem Debt has tripled in the last year.

Debt is a growing problem

Separately, research by the Legatum Institute has shown that more than 20% of the UK population now lives in poverty, with the Financial Conduct Authority reporting that numbers of people are struggling with “low financial resilience” – meaning over-indebted, low savings and low or fluctuating revenue – up a third to 14.2 million last October.

On paper at least, it seems like the charity would be perfectly positioned to help in the midst of financial troubles like this. But, as Allan describes, the situation is not necessarily that simple.

For StepChange’s CIO, COVID-19 has changed the dynamics of their role. When she joined the charity in 2019 as the first CIO, her to-do list seemed simpler.

“If you think about why I joined StepChange and why StepChange even created a CIO role… it was all about modernizing and improving our customers’ experience and further transforming our digital services to our customers and creditors ‘ says Alan. “Now we have colleagues that we need to mobilize to completely transform the way they work.”

CIOs gain influence, drive strategy

Allan – who reports to chief executive Phil Andrew – says her influence has grown over the past 18 months, and she believes most CIOs are now well-positioned to drive the company’s strategic direction rather than having a seat at the helm CIO settle table.

For the nonprofit, this has meant a continuous upgrade of its debt advice platform Pulse, the launch of its Covid Payback Plan (CVPP) and even an overhaul of its offices.

In the transition to remote working, alongside furloughing some staff, the charity consolidated office space – from four offices to one in Leeds in north-east England.

“Now we have half the space we used to have,” says Allan. “We look at the real estate strategy as a whole and think carefully: how do we balance the need to have a physical space for people to collaborate and work together, but also the need to be as cost-effective as possible? And then to do those things, how do you use the technology?”

Long before COVID-19 accelerated the transition of the charity’s facilities and technology park, StepChange had launched its Debt Advice Platform.

The platform was developed in 2006 by internal developers and has proven workflows. Creditors would refer clients to the charity, and debt counseling trips would typically begin over the phone.

Aging service platform develops cracks

Cracks would appear over time. Services were available via telephony and online services, but the back-end systems didn’t communicate with each other while the debt routes were long and arduous. Often, those seeking help had to relay the same information to different employees multiple times, while the platform struggled to keep up with the growing demand.

In 2019, before Allan’s arrival, Pulse was born – replacing a mix of on-premises services, offering phone, email and web chat services consolidated through one hosted platform.

Workflows could adapt to user response to reduce call times and information duplication, while the system — built on top of Pegasystems’ Pega customer service application and running on the Pega Cloud — would pull additional information from other data sources without having to leave that client session. Employees were able to share information with creditors, view customer debt progress bars, and handle calls up to 20% faster than before.

Low-code environment accelerates development

“We needed to take any learnings from our internal development and look at how we could do something in a low-code environment, so we could make changes faster and take advantage of new technology solutions and services — without having to do a big one Overhead of a long change curve,” says Allan, adding that the charity reviewed Appian, SAP, and Oracle before hiring Pegasystems for its robust workflows.

The economic fallout from COVID-19 prompted StepChange late last year to introduce the COVID Payback Plan (CVPP), which helps customers reduce payments on monthly financial commitments like credit cards and loans.

Built on top of Pega’s customer experience application from reseller Aaseya — on a separate Pega Cloud instance — CVPP assesses candidates’ suitability through six online questions before inviting those who qualify to a more detailed income and expense analysis to perform. This, in turn, helps StepChange tailor its relief plan.

Today, these debt avenues occur across all channels, with 70% emanating from a mobile device and CVPP also supports web chat capabilities to improve customer experience and resolution times. Scalability is also provided for future needs, with CVPP supporting up to 10,000 concurrent users per hour.

Once customers select one of StepChange’s recommendations, they are placed into a legacy workflow. The charity’s API-layer architecture connects Pega systems to StepChange’s internal case management and payout platforms, which repay customer debt directly to creditors and also connects to third-party systems to collect banking information and addresses. StepChange’s data warehouses manage data collection for RMI purposes.

As the charity continues to move into the debt activation market, new platform developments are emerging.

The API interface uses Open Banking

Support for e-signatures and a new document portal will soon be available so customers can submit their bank statements and balances, as well as manage their own debt plans. Through Boomi’s API interface, the charity hopes to use open banking information to visualize financial information and break down other barriers – namely customers who have poor financial memories or are ashamed of their debt.

“Right now our dialogue is ‘Share your information with us. Tell us what’s going on’. We’re going to go digital to say, ‘That’s what I found out about you, is that correct? So I understand your debt. Tell me, tell me about it’. It’s a game changer,” says Allan.

However, that doesn’t mean such a modernization has been without difficulties, as StepChange has had financial troubles of its own lately.

Demand for debt service falls

Despite the growing debt problem, the number of customers coming through StepChange has decreased.

Less systematic pressure from banks and bailiffs, as well as payment and mortgage holidays have eased the pressure on potential customers, meaning the typical “triggers” to get help – like a bailiff knocking on your door – have been eliminated. This has impacted charitable donations and government funding.

The charity receives funds from the Money and Pensions Service, which is part of the Department for Works and Pensions (DWP), but also receives donations from creditors through the ‘fair share’ scheme. Both sources of income have declined as fewer people have sought help.

StepChange reports that demand for debt advice has fallen from 300,000 people in 2019 to 200,000 in 2020 and forecasts of 400,000 in 2021 “will not come to pass,” according to StepChange CEO Phil Andrew. Last month Andrew announced the charity would lose up to 170 staff in Leeds and Newcastle, around 10% of its workforce.

Allan says that as the national debt builds up, this lack of “triggers” is affecting StepChange’s funding.

“The banks are much more tolerant and supportive of us as individual customers. Collection agencies are not active, bailiffs are not active. What we’ve learned as an industry is that without these triggers, you won’t be prompted to sort out your debt. We’ve seen the volume of demand drop through the bottom,” says Allan. “We don’t get the volume [of cases]….so our donation volume has decreased.”

Planning for the future amid financial uncertainty

Still, despite the uncertainty, Allan needs to plan for the future and focus on delivering consistent customer experiences to meet potential growing demand, even within the charity’s own financial constraints.

With the debt build-up and actions by government and banks only a temporary solution, there is growing belief that cases will return in 2022 as a “slower burn”.

“Our focus is very much on the challenge, and for me as a technologist, it’s about making sure we’re in the best possible shape to meet that demand.”

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