Navigating the Financial Landscape

How 2023’s Economic Realities Impacted Financial Institution Borrowers

Throughout 2023, the financial landscape underwent various shifts, resulting in substantial impacts on consumers’ financial well-being. To gain deeper insights, we engaged in conversations with some of our financial institution partners to hear how the lives of their customers were impacted. Through these discussions, we gained a deeper understanding of the factors that impacted their borrowers, as well as ways that financial institutions could help them navigate these challenges.

• Escalated Cost of Living: The relentless upward trajectory of the cost of living cast a shadow over the financial well-being of borrowers in 2023. From housing to groceries, borrowers grappled with the increasing strain on their budgets. Financial institutions, recognizing this hardship, should assess and adapt their services to better support borrowers facing the daunting reality of higher everyday expenses.

• Inflationary Pressures: The weight of inflation was heavy, impacting the purchasing power of financial institution borrowers. As the prices of goods and services rose, consumers were faced with the challenge of maintaining their standard of living while stretching their budgets further. To help borrowers navigate this inflationary environment, financial institutions must be proactive in evaluating interest rates, investment strategies and loan terms.

• Housing and Auto Financing Woes: For many consumers, the dream of homeownership or securing a new car became a labyrinth of challenges in 2023. Fluctuating interest rates and tightened lending conditions required financial institutions to reassess their financing models. Offering flexible solutions and counseling services becomes paramount to help borrowers overcome obstacles on the path to property and vehicle ownership.

• “Buy Now, Pay Later” (Loan Stacking) Trends: The surge in “Buy Now, Pay Later” (BNPL) offerings available to consumers became a double-edged sword for financial institution borrowers. While offering convenience, BNPL programs also contribute to the phenomenon of loan stacking — the accumulation of multiple debts. Financial institutions must acknowledge this trend and provide education and guidance about responsible borrowing to ensure that the allure of instant gratification does not lead to financial distress.

• Student Loan Repayment Challenges: October marked a pivotal moment for financial institution borrowers as student loan repayments resumed. The reactivation of student loan obligations added an extra layer of financial pressure that borrowers have not had since before the pandemic. Financial institutions must now assist borrowers in managing these repayments while also offering educational resources to help them navigate this complex financial terrain.

• Discretionary Spending Struggles: The cost of discretionary spending, especially on fast food and dine-in experiences, became a significant concern for consumers. As budgets continue to tighten, borrowers are re-evaluating their spending habits. Financial institutions can play a pivotal role by providing financial literacy resources, encouraging prudent spending, and offering solutions to alleviate the strain on discretionary budgets.

In 2023, borrowers faced a multitude of economic challenges that necessitated strategic responses from their financial institutions. The impact of rising living costs, inflation, housing and auto financing hurdles, BNPL schemes, student loan repayments and discretionary spending strains require a nuanced approach from financial institutions. By understanding these challenges and adapting their services, financial institutions can serve as pillars of support – helping borrowers navigate these turbulent financial waters and emerge stronger on the other side. The journey toward financial resilience begins with recognizing the specific impacts that 2023 has imposed on borrowers and then helping them navigate those challenges.

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To a certain degree, all of these factors will play a role in the financial health of borrowers. However, even with the help of their financial institution, some will still struggle and their accounts will fall delinquent. Delinquencies continue to rise as we near the end of 2023, and financial institutions must be prepared to handle the volume of delinquencies this year has brought. Consider partnering with an organization like TriVerity & The Loan Service Center, which can provide financial institutions with a single source for delinquency management with the highest quality agents and technology available.

TriVerity is a full-service collection agency managing non-performing and charged-off loans with a comprehensive menu of third-party collection services. Since 1990, TriVerity has worked with over 2,700 financial institutions nationwide and is a leading industry expert for financial institution collections of all loan types. The Loan Service Center (TLSC) provides first-party delinquency management to minimize loan loss by managing early-stage delinquency. TriVerity and TLSC’s broad spectrum of collection resources and extensive training programs help financial institutions manage and mitigate loan delinquency rates. Our agents work under the direction and procedures of financial institution collection departments.

By: Wendy Elieff, SVP Client Service and Marketing, TriVerity and The Loan Service Center

Wendy Elieff has over 23 years of experience in the financial services industry. Wendy oversees the success of the client service and marketing teams at TriVerity, where she is responsible for developing, implementing and monitoring cohesive marketing strategies to increase brand awareness. She is also responsible for building and maintaining client relationships by staying abreast of and responding to changes in the marketplace.