The debt collections process involves countless data points, multiple people and numerous channels of communication. For those reasons, it’s also fraught with friction points. Perhaps it’s the overburdened Excel spreadsheet from which you run your collections, or maybe it’s a lack of cohesive strategy holding back your NPL results.
If you ever thought to yourself, 'there must be a better way', your instinct is correct. Specialised collections software is one of the savviest investments you’ll ever make. And there are quite a few red flags that signal you’re in dire need of it.
Here are ten good indicators your bank needs to take the leap.
Banks and collections teams have a data problem. The issue isn’t the data itself or even a lack of data. Indeed, banks with thousands of customers are swimming in data.
Instead, the challenge is data governance and management. Large banks are complex entities with more than one core banking system. And it’s not only difficult to find the right information in the right system but also to sketch a holistic portrait of individual customers.
Despite its relative nascency, Islamic finance is growing at a staggering rate. Between 2000 and 2016, the capital of Islamic banks rose from $200bn to $3trn, and according to Ernst & Young’s 2016 Islamic Banking Competitiveness Report, there are now over 65 Islamic banks worldwide.
In 2014, the UK became the first non-Muslim country to issue ‘Sukuk’, or ‘Sharia-compliant bonds’. Five years on, over 20 UK banks offer Islamic products and there are five licensed Islamic banks. Similarly, Germany and Luxembourg have issued several sukuks over the past few years, and in 2015, Germany opened its first entirely Islamic bank, KT Bank AG.
So, what is fuelling this growth and what does it mean for debt collections processes?
While it is amongst the world’s most advanced economies, Japan has the highest rated public debt to GDP at a staggering 253% (as of 2018), completely dwarfing Greece’s 177%. This debt mountain is the inevitable result of the monumental fiscal deficits that Japan has run since the 90s and it’s a debt that will probably never be “repaid.” At least not in the normal sense of the word.
Perhaps even more shockingly, Japan’s national debt currently sits at over one quadrillion yen (that’s 15 zeros). According to the International Monetary Fund, in order for Japan to pay down this substantial debt to 80% of GDP by 2030, it would need to reach a 5.6% of GDP surplus by next year (2020) and sustain that surplus for a decade.
The EXUS Financial Suite (EFS) might primarily exist to help retail banks take control of their debt collections operations, but it also offers a significant amount of flexibility when it comes to planning and testing new collections strategies.
Our software uses sophisticated simulation tools, which allow our customers to test different approaches to ensure the most effective collections possible. The “Champion Challenger” wizard, meanwhile, lets teams conduct real-world strategy tests on a percentage of their accounts.