The benefits of digital transformation are increasingly recognised across the housing sector, but how can housing providers ensure tenants aren’t left behind and what steps can be taken to prevent financial exclusion?
There’s no doubt that more housing providers are doubling down on their digital transformation strategies. Amid rising costs and increasing demand for services, more public-sector organisations are looking for savings and increasing efficiency while improving service delivery.
Research shows that financial constraints are having the greatest impact on procurement directors and supply-chain officers at housing providers, and this squeeze on budgets is driving the move towards new approaches which can free up cash to support communities and future investments.
Growing numbers of tenants in arrears, combined with ongoing economic pressures, mean that any attempts to increase revenue through rent increases or higher service charges could risk creating additional challenges. Creating more efficient digital systems to deliver more streamlined and cost-effective services are therefore vital.
Payment systems are a key area for attention; collecting more payments on time can have a huge impact on cashflow. Making it easier for tenants to pay their rent by offering greater choice and convenience about how and when payments can be made has huge potential to reduce the likelihood of missed or late payments.
At the same time, it’s important that this development isn’t at the expense of people who may be financially or digitally excluded.
The rise of digital payments
The good news for housing providers considering the implementation of digital payment systems is that the majority of tenants are accustomed to using similar technologies in their daily lives.
The 2023 Payment Markets Report (source: UK Finance, September 2023) found that almost 90 per cent of adults used at least one form of online or mobile banking in 2022, rising to 95 per cent for those aged 25-34 compared with 80 per cent of those aged 65 and over.
Other technologies such as Open Banking and mobile wallets are providing tenants with a greater level of convenience. Data from Open Banking UK showed that one in nine UK consumers are now active Open Banking users, with an 88 per cent increase in payments via Open Banking in June 2023 compared with the same month in 2022.
Addressing financial & digital inclusion
While this data points to more people becoming familiar and comfortable with digital payments, it’s important that housing providers don’t leave any tenants behind in their digital transformation strategies.
The UK government’s Future of Payments review in November 2023 highlighted the impact of digital and financial exclusion. Estimates published in the report suggest that around eight million people are dependent on cash and three million ‘pay for everything or most things in cash’. This is backed by research by the British Retail Consortium which pointed towards cash usage rising as more households used cash to help budget during the cost-of-living crisis.
Digital exclusion, poor IT skills and a lack of trust in online banking services are among the reasons that could lead to someone being digitally excluded, and data shows that these factors are more likely to impact housing providers’ tenants more acutely.
Overcoming exclusion challenges
While much of the attention around tackling financial exclusion is on the preservation of cash, there’s no doubt that digital solutions have a vital role to play in providing agile and flexible solutions which work for all members of the community.
For example, in the past if a tenant couldn’t access a computer to pay their rent online, they might have needed to travel to make an in-person card or cash payment which could be challenging for those with mobility problems.
Digital solutions mean that housing staff can now use mobile applications to take rent payments on-the-go. This means that housing providers can authorise secure card payments quickly and easily without tenants needing to leave their homes.
Another key innovation has been the rise of real-time payments. Previously, tenants might have made payments online and then needed to wait up to five days for funds to clear; this delay could leave the tenant in arrears if their rent payment cleared late. The rise of real-time payments removes this delay and consequent effect on potential arrears.
These are just two examples where digital payments are helping housing providers to address obstacles which previously prevented them from successfully collecting rent payments, but the greatest benefit of digital payments could be around freeing up vital staff resources.
Instead of spending valuable time confirming that payments have been made or chasing overdue rents, housing staff can focus their attention on the areas where it’s most needed. This could be extra time to focus on complex or more vulnerable tenants, or on strategic projects which can strengthen services across their communities.
For example, flexible payment arrangements enable housing providers to secure commitments to pay based on choice, without the need to demand a direct debit. A commitment to pay can empower staff to have open conversations with their tenants, enabling affordable payment planning based on the individual’s current and future circumstances.
With account affordability features available through Open Banking, providers can make better decisions to tackle debt avoidance while ensuring that tenants have flexibility and choice around how they approach payments.
Reducing arrears and creating additional cost savings can have a huge impact on how housing providers deliver their services. People increasingly expect flexibility and convenience about how and when they make payments and we see the impact this can have on fostering stronger, long-term relationships with tenants while helping to streamline operations.
As digital payments move from a being ‘nice to have’ option to becoming an essential element of public-sector service delivery, it’s vital that housing providers don’t miss out those people who may be digitally- or financially-excluded.
Wayne Campbell is head of pre-sales at Access PaySuite Pay360.