There is barely an industry on earth that hasn’t been powerfully disrupted by technology. For some, the disruption has proven beneficial and they have emerged on the other side leaner, healthier and ready to face the next century with a wider smile and a more customer-centric attitude. Whilst retail banking is one of the industries that has truly embraced digital transformation, however, the debt collections sector still has a lot of catching up to do. But the future looks bright.
Debt collections is a complicated game. In the utility sector it also happens to have something of an image problem. Global concern surrounding energy prices continues to mount, and utility companies are cast as the bad guys in a situation they can’t control.
It doesn’t help that there has been a 60% rise in bad debt levels across energy firms over the last five years, with water utilities not far behind with an increase of 44%.
As of January this year, the UK was the most disrupted traditional banking market in the world, with 15% of revenue and over a third of new revenue going to new entrants. Traditional banks are obviously fighting back, releasing their own digital solutions.
How did this come about?
Both of the major regulatory bodies in UK banking - the Financial Conduct Authority (FCA) and the Competition & Markets Authority - have been working to improve competition for customers’ sake, and the Bank of England has fallen into step with them. They’ve introduced new rules for financial comparison and accountability, forcing banks to disclose operational or security issues and customer satisfaction data. There’s also the Open Banking Initiative which requires banks to share customer information with third parties if the customer asks them to.
For decades, economic growth in Thailand has been driven and defined by tourism and exports. However, while tourism remains steady, the demand for exports has slowed. There is one other significant economic problem that refuses to abate - household debt.
Thai households are among the biggest borrowers in Southeast Asia, (itself a notoriously complicated region for debt collections) and they are finding it increasingly difficult to keep up with payments. An October 2018 survey by Bansomdej Poll in collaboration with the Foundation for Consumers (FFC)’s Chaladsue (Smart Buyer) magazine indicated that up to 77.5% of Bangkok residents - over 6 million people - are in debt. Even more shocking, however, is the fact that more than half (53%) of those who are in debt have fallen behind on repayments and are in danger of defaulting on their loans.
Vietnamese society is changing shape rapidly. Generation Z now make up 25% of the country’s 15 million-strong workforce, and the figure is growing.
For many years, the countries of the Gulf Cooperation Council have followed an oil-based development model. The black stuff has been, as LSE economist Sophie Olver-Ellis put it, the "elixir of life" for many of the region's economies.
This has been particularly true for Kuwait. Oil has transformed this small nation on the Arabian Peninsula from a prosperous trading port into an oil-exporting powerhouse with a highly developed, albeit non-diverse, economy.
Colin Dinn, the CTO of Siam Commercial Bank (SCB) - Thailand’s largest retail bank - joined the organisation in April 2016 with a big remit: to build new technological capacity and help create “Thailand’s most admired bank”. Achieving this required a ruthless audit of all of SCB’s existing systems, and for Dinn, a key target was the bank’s existing collections software.
When he was appointed, SCB was nearly three-quarters of the way through a marathon five-year implementation process of a new debt collections system. “The day they fully implemented it was the day I said we’re going to replace it,” he says.