Utility Week

38 | FEBRUARY 2021 | UTILITY WEEK Operational Excellence Analysis Doubling down on debt A new Utility Week report explores the potential for AI and machine learning to help utilities navigate a swelling crisis in consumer debt. Here's an overview of what's covered. U tilities in consumer and B2B markets are trudging through a grim winter as they begin to grapple with the arrival of the debt crisis which has been dolefully expected since the start of the first national lockdown in March last year. Extensions to government support schemes for companies and individuals impacted by the pandemic masked the full extent of this challenge for utilities through- out 2020, and to some extent, they continue to do so into 2021. Inevitably though, the effects of long term income loss or reduction are beginning to feed through and swelling ranks of customers are falling behind on or failing to meet payments for their energy and water supply. By autumn 2020, figures from Citizens Advice suggest that around 6 million UK adults were behind on at least one house- hold bill during the pandemic, including 3 million on their water bills and 2.8 million on energy bills. A fresh period of national lock- down, despite the continuation of furlough, will see this problem deepen. The complex and unfolding impacts on finances has forced many utilities to ques- tion their existing debt management strate- gies. Many are exploring emerging artificial intelligence (AI) and machine learning tech- nologies as a means to get ahead of the debt environment and help support customers in maintaining payments for life's essentials. The ability to crunch through large and varied datasets can create a clearer picture of the trajectory of debt in the short and longer term, it can more effectively identify behav- ioural triggers or other signs that individuals are experiencing financial hardship. AI has the potential to optimise the debt resolution workflow by identifying actions most likely to have the biggest impact when collecting debt, also reducing the number of steps involved. This can streamline engage- ment with customers, ease their long-term accumulation of debt, and improve company profitability. In a new report created by Utility Week in association with AI specialist Inawisdom, the experiences of utilities beginning to access these benefits and more are explored. The report summarises the developing pic- UK debt: hard facts 2020 research from debt support charity Step Change showed: 1.2 million people had fallen into a severe debt by November, double the number in March. 7.1 million people have either fallen behind on utility and council tax bills, or borrowed money. £1,577. The average debt of affected individu- als. Average individual arrears stood at £1,365. ture for consumer debt and bill arrears in the UK and provides practical insights into the ways in which AI and machine learning can help utilities overcome pressing challenges in creating debt prevention, provision and collections strategies at a time when pre- existing approaches to modelling debt pro- pensity in customer bases have been heavily undermined. Go to utilityweek.co.uk and download the report for free to learn more. Jane Gray, content director

• Cover