Around the world, regulators and consumer advocates are intensifying their focus on how organisations identify and support financially vulnerable customers.
From the FCA’s Consumer Duty in the UK to ASIC and the AER’s hardship requirements in Australia, and similar frameworks across Europe, North America, and Asia-Pacific, the message is consistent: firms must move beyond reactive compliance to proactive, evidenced fairness and good outcomes.
Yet many organisations still face a critical question that I want to explore in this blog: how can financial vulnerability be identified consistently and objectively, at scale?
Differentiate vulnerabilities to drive better outcomes
Vulnerability is not a single state but a spectrum. Customers may experience temporary hardship, longer-term difficulty, or disengagement for non-financial reasons. Treating these scenarios uniformly risks both customer harm and regulatory concern.
Despite this, many collections strategies still apply blanket treatments, such as identical “Welcome to collections” communications for all new arrears cases. This approach fails to distinguish between those who won’t pay and those who can’t, leading to inappropriate contact, broken arrangements, higher complaints, and poor customer outcomes.
Utilise analytics-based vulnerability scoring
Leading organisations are addressing this by embedding analytics into their collections strategies. A financial vulnerability score doesn’t replace human judgement but provides a consistent, explainable way to triage customers.
Drawing on indicators such as payment behaviour, affordability data, engagement patterns, and contextual risk factors, vulnerability scoring helps firms identify who needs tailored support, and evidence that support for regulators.
The real power comes when analytics is connected through modern, cloud-native collections platforms. With real-time data streaming and API integrations to internal systems (core banking, CRM, digital channels) and external providers (open finance data, credit bureaux, affordability tools, hardship partners), vulnerability profiles can be continuously updated and next best actions automatically triggered. This enables firms to respond proactively to early signs of financial stress rather than reacting once arrears accumulate.
Unlock business and customer value beyond compliance
Structured vulnerability assessment delivers benefits well beyond regulatory compliance:
- Improved sustainability of repayment arrangements, tailored to actual ability to pay.
- Reduced complaints through sensitive, relevant communication.
- Lower operational cost via automation and smarter routing.
- Enhanced trust with both customers and regulators.
When combined with integrated technology, analytics can automatically recommend the next best treatment, whether digital self-service, specialist team contact, or referral to hardship partners.
Doing the right thing for vulnerable customers consistently drives better commercial and reputational outcomes.
Start small, learn fast, and embed for long-term success
Implementing vulnerability scoring doesn’t require a full-scale transformation. Many firms begin with a focused pilot, applying analytics to a specific portfolio and measuring impacts on engagement, arrangement sustainability, and complaint reduction.
As maturity grows, firms integrate vulnerability models directly into their collections platforms through real-time API connections with affordability tools, open banking data, and third-party support services. This creates a continuous feedback loop where every interaction refines model accuracy and enhances decisioning.
Closing thoughts
Economic pressures, affordability challenges, and heightened scrutiny are now global realities. Organisations must demonstrate (not just claim) that they treat vulnerable customers differently.
Analytics and scoring provide a scalable foundation, but true transformation comes when data, analytics, and modern technology platforms work together to deliver proactive identification, personalised support, and seamless collaboration.
By moving beyond one-size-fits-all approaches and embedding explainable vulnerability measures into connected ecosystems, firms can balance compliance, fairness, and efficiency, while proving their commitment to better customer outcomes.
How Arum IQ can help you deliver proactive, fair, and measurable support
At Arum Global, we’ve developed the Financial Vulnerability Score (FVS) within our Arum IQ suite to help firms meet exactly this challenge.
FVS combines portfolio data, customer engagement patterns, and affordability signals to deliver a transparent, explainable view of vulnerability, complete with reason codes and recommended treatment paths.
When integrated into modern, cloud-native collections platforms, FVS can automatically trigger next best actions and inform engagement strategies in real time, supporting early intervention and consistent experiences across all channels.
Designed to align with global regulatory requirements, FVS enables firms to move away from uniform treatments and ensure customers receive appropriate, auditable support.
The principle is universal: better segmentation, fairer treatment, stronger outcomes, powered by data, analytics, and technology working seamlessly together.
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About the author
James Breadon
Senior Business Development Manager
James is a financial services specialist with over a decade of experience across collections, recoveries, lending, and credit data. He has led strategic growth initiatives at major firms including TDX Group, Capquest, TransUnion, and Oakbrook Finance, delivering high-value partnerships and credit lifecycle optimisation. At Arum Global, James oversees clients across the UK and APAC, as well as leading our Global Partnership Alliances, helping organisations transform their collections and recoveries performance through data-driven and technology-led solutions.