Debt collections is a complicated business. There are many moving pieces to juggle and any number of things that can go wrong. That’s why many banks choose to outsource some of their debt collections operations to third party agencies.
Vietnamese auto-finance is big business right now. A buoyant consumer confidence index, constant prime lending rates and growing car sales have been major drivers set within a healthy economic climate of GDP growth to rival China’s. This is coupled with a surge in new car ownership following a period of stagnation in 2017 while customers waited for a 0% tax on imported cars to kick in on January 1st 2018.
The UAE is a thriving market for banks right now, with gross assets increasing by 7.9% year-on-year in 2018 for the top 10 local banks. As a result, many major international players have been making moves in the region in recent months. Indeed, HSBC, which is comfortably one of the largest banks in the world, recently increased its stake in HSBC Saudi Arabia to 51% and smaller retail banks are beginning to follow suit.
In the telecommunications (telcos) sector, debt collection is often an afterthought. Debts in telcos are often small when compared to the financial and utilities sectors but they can still lead to losses. Indeed, losses due to bad customer debt can be as high as 2% of total revenue. However, it’s one area of their business that can easily be turned around and bring in more revenue from customers and companies already on their books.
Utilities are something many customers take for granted. They need them, therefore they assume they will always be taken care of. Utility companies are, however, just as likely to take their customers for granted.
In such an environment, customer service in the utilities sector has never been more important. Because if customers forget that they need to pay for their utilities, they will invariably fall into debt and end up resenting their suppliers. So begins an endless cycle of codependent resentment.
In certain locales, field collections have long been an essential part of recouping debit. But everything needs to evolve eventually. As customers and collectors alike become more accustomed to the ease and convenience that modern mobile devices have brought to their lives, all methods of collections should take advantage.
The solution to optimising debt collections is already being utilised by many financial institutions - a combination of mobile devices and routing algorithms to plan routes and communicate in real-time with debtors. It’s a subtle disruption that could make the process that much easier for young and old financial institutions alike.
Traditional utility firms are finding themselves at a crossroads in 2019. One path leads down the road of tradition - with outdated legacy systems, face-to-face collections and antiquated customer service solutions. The other follows close behind the retail banking industry into a digital future where the customer is put at the forefront of every major decision. The latter path is the one with real legs and it is one the industry looks ready to tread, but before the utilities sector can make a significant change, it needs to sort out its image problem.