Inefficient, out-dated management and analysis of customer data is threatening the UK banking industry's ability to support growing numbers of consumers falling into the downwards debt spiral, warns Detica, the business and technology consultancy. Many banks and building societies are likely to struggle to actively support these consumers under the requirements of the new Banking Codes which came into force at the beginning of April.

Under the new UK voluntary Banking Code, banks and building societies should provide more support to consumers heading into debt problems, including actively identifying and contacting those customers who may be at risk. Detica believes that a significant number of UK retail banks are not currently equipped to identify these customers under the new Code's requirements.

Maggie Scott, Executive Manager from Detica's Financial Services unit, says: "Due to a stream of recent regulatory requirements, banks actually have a great deal of data in place to build an accurate profile of their borrowers. Historically, however, banks have only used this data to assess their customers' financial circumstances when applying for credit. The challenge now is for them to apply this intelligence to identify financial stress and to act on the information to get in touch with customers to discuss ways to support them. If banks can't do this, then consumers won't benefit from the aims of the new Code and we risk debt spiralling further."

Scott adds: "Key to success for banks is creating the right organisational change. They need to put the insight developed by back office analytical teams at the fingertips of frontline customer service agents who are speaking to consumers directly."