The success of Provident Financial depends on our ability to build and maintain long-term relationships with new and existing customers by providing well-suited products and outstanding service.
Understanding our customers
- Consumer Credit
- Consumer Credit Division
- of customers are women
- have electronic bank accounts
- have overdraft facilities
- have credit/store cards
- have a savings account
- have a mortgage
- work full or part time
We have almost two million customers, which means that Provident Financial has the largest non-standard customer base in the financial services sector in the UK. An integral part of our CR agenda involves continuing to deliver high quality products and outstanding levels of customer service. This will enable us to address the ten million people in the UK who make up the non-standard credit market and increase our market share.
To ensure that we maintain high standards in product and service delivery, we need to understand first the varying needs of our diverse customer base. Being a specialist within the non-standard sector and having a good understanding of our customers enables us to price our products appropriately for the risk levels involved and provide the high degree of simplicity and certainty our customers prefer.
With many of our customers living on a modest income, we are keen to ensure that our lending is always conducted in a responsible manner. In practice, that means providing our customers with clear information on our products and their charges and not lending more than our customers can afford, so that they can make informed choices and not be overstretched with their repayments.
By having a comprehensive knowledge of our customers, we can offer a range of products that are tailored to their specific needs with a service that is in line with their lifestyles. The products and services we offer to customers are delivered through two business divisions: the Consumer Credit Division and Vanquis Bank.
In the Consumer Credit Division, our customers are drawn from a range of socio-economic backgrounds with the majority coming from the C, D and E groups (refer to the table for a breakdown).
|Socio-economic breakdown of home credit customers compared with UK population|
|Social group||Consumer Credit Division 2007 (%)||UK population 2007 (%)|
At the heart of our home credit service are 11,600 self-employed agents who play a fundamental role in issuing credit to and collecting repayments from our customers. A typical agent is female, often coming from the same community as her customers, with approximately 130 customers. We find that the local connections help develop good relationships between agent and customer as the agent has a real understanding of their customers' needs and their circumstances. For many of our customers, the agents are the face of the company as they are the only representative of Provident Financial with whom they have direct interaction. Therefore, the relationship the agent has with the customer is crucial in terms of maintaining a positive impression of the company. The agreement we have with our agents requires that they adhere to our credit control policies, therefore ensuring that they deliver against our commitment to lend in a fair and responsible manner.
Our agent commission scheme
We have designed our agent commission scheme to encourage responsible lending. Commission is only paid on what agents collect, not on what they lend, so the agents have no reason to lend more than their customers can afford to repay. We are constantly reviewing how we can improve our approach to paying commission, and during 2008, we will introduce a new scheme which will align agents' behaviour even more closely with the objectives of the company. It will, among other things, pay in line with collections performance and reward agents who are taking on good new customers. The scheme will also be much easier to understand and therefore be clearer for agents to see what lending practices are required of them and so act and be rewarded accordingly.
Supporting our agents
Support is provided to agents via the area managers and development managers in our extensive network of branch offices. Meetings are held between development managers and agents on a weekly basis and cover issues varying from customer service to personal safety. Agents are also provided with a comprehensive manual which sets out details on a range of issues, including our commitments to minimise our environmental impacts and provide benefits to the communities in which we operate.
The principle of responsible lending continues to be at the heart of our business strategy and our corporate responsibility programme.
Home credit and Real Personal Finance
To support our agents and employees in their lending decisions, the Consumer Credit Division uses a range of credit scoring systems and models. These systems and models, which have been designed to supplement the skills and expertise of our staff and agents, play an increasing role in enabling us to determine whether to accept new customers or to offer further credit to existing ones.
For our existing customers, the lending decision process is underpinned by our System Enhanced Lending (SEL) programme. SEL is used to assess the loan applications made by existing customers on the basis of their previous payment history.
For our new customers, we have revised and introduced additional systems to support our lending decisions. The Single View of Customer (SVC) system is used to create a risk profile of new customers using a bespoke risk index scorecard which draws on the data from all the products a customer has with the Provident Financial group of companies. These systems are used to inform our lending decisions and ensure we provide the right amount of credit to customers at an appropriate rate and time.
Though Vanquis Bank is willing to lend to a customer base that most lenders are not prepared to lend to, we do it with risk in mind. To minimise risks, we set a much lower credit limit than that of mainstream credit issuers - as low as £250. We then continue to observe the payment performance on the account with a view to giving a controlled increase in the credit limit when it is appropriate to do so. This approach to new customer applications and increases to existing customers' credit lines, continued to develop during 2007, with around 70% of new customer applications being declined.
Maintaining high levels of customer satisfaction is key to ensuring that our business continues to grow. During 2007, we continued to achieve high levels of customer satisfaction across our business. In the Consumer Credit Division, 94% of customers rate their home credit experience as being either very or quite satisfactory. At Vanquis Bank, 81% of customers rated the service they received as being satisfactory or extremely satisfactory.
- Consumer Credit Division
- CUSTOMER SATISFACTION
- Vanquis Bank
- CUSTOMER SATISFACTION