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.
In 2019, the average debtor carries multiple obligations and uses more channels than ever before to organise and pay their debts. Crucially, they also prefer to resolve debts on their own terms. There is something to be said for the autonomy and the agency that digital payment solutions have afforded debtors. The ability to settle their debts through an app or piece of software takes much of the shame and the stigma away from the process. This is particularly relevant in a society where 95% of the UK population have owned and operated a mobile phone since 2015.
Indeed, with the proliferation of smartphones and the app-based finance culture catalysed as a result, most millennials don’t simply see self-service smartphone solutions as a nifty gimmick but as a necessity. They expect mobile interfaces to be a part of the collections process and they expect AI to be applied to it in order to make everything run more smoothly. This is the generation of the collaborative consumer and they are a generation that demands a certain level of customer service alongside their digital conveniences.
The age of the collaborative consumer
Collaborative consumption is a concept that has been floating around for years now and whilst there are opposing theories on both the origins of the phrase and its true meaning, the sentiments can essentially be boiled down to the death of hyper-consumerism and the idea of ownership being a thing of the past. Netflix would be an ideal example. So how does the age of the collaborative consumer affect debt collections? These are consumers that demand speed, simplicity and, above all else, transparency and these are all tenants espoused by digital transformation.
New technology, by its very nature, both enables and limits collaborative consumption. So why, with their close cousins in the retail banking sector spending $20.2 billion on digital transformation in 2017 alone (that’s expected to grow at a CAGR of 22.5% by 2020) are collections agencies holding back? The CEB technology adoption and investment survey found that, of the executives asked, only 31% had already implemented collections technology, whilst 21% had no intention of implementing it and 19% were ‘unsure’.
The same study also found that only 8% of the executives believed technology had a high value when it came to keeping up with competitors, which shows that either they have their blinders on, or they are wary of the fact that business models succeeding in this environment depends on the behaviour of consumers in response to the technology that connects them. In short, the technology needs to be ‘right’ but there are already plenty of solutions on the market, with the EXUS financial suite particularly equipped with the tools to help promote better customer service.
A new world for debt collections
So what does this bold new tech-focused world look like for collaborative consumers and collectors alike? It’s all about using digital means to streamline and simplify the process in a manner that disrupts it just enough to make a difference but not so much as to throw the baby out with the bathwater.
Today’s debtors want to be able to help themselves using self-service collections tools that are both web-based and app-based and are based around the same centralised system. Through this service, they will be able to find information on their various debts, propose solutions and, of course, sort payments at their 24/7 convenience in a format that gives them complete control. They also only want to engage with collectors when they’re ready. This is reflected in the increasingly poor success rate in traditional high-pressure and potentially alienating tactics such as cold-calling.
This new world is also one in which no customer is unreachable due to the various channels through which they can be reached (and can reach you) and one in which AI is used to not only focus field collection routes to maximise recovery but to increase the performance of call centre agents too. The former can be achieved both through the use of chatbots that recognise complex requests and offer an immediate answer and through the utilisation and analysation of customer data, which means human operatives can predict customer behaviour and know the right things to say and when to say them.
Generally speaking, it’s a world where collections agents don’t work against the customer, but work for the customer and this is a world where customer loyalty increases, complaints begin to vanish and kept promises soar. Indeed, according to the research of Chris Maranis, head of business development at EXUS, investing in the same kind of debt collections technology being utilised by retail banks will lead to a 75% kept promise ratio and a 30% decrease in customer complaints. Chris also found in his research that those institutions that had spent exponentially more on IT solutions had achieved a substantially larger CAGR over the last 5 years than those that had not.
The march of progress
Ultimately, tech is a tool and in the case of debt collections, it’s a tool that is being used to facilitate warmer relationships between collectors and debtors. In an industry that has historically suffered from negative press and sour customer relationships, tech has proven something of a lifeline - a chance for the industry to shake its bad-boy image and reframe the narrative surrounding collections culture.
The ROI potential of implementing the already market-ready self-service portals and predictive and prescriptive analysis alone is reason enough for those on the fence to take one bold step forward into the digital future. And with over 50% of customers preferring a self-service solution and over 20% preferring to resolve their debt out of business hours, digital debt collection has never been more necessary for agencies looking to increase collection rates and efficiency alongside customer satisfaction.
By adapting their collections strategies around progressive new tech trends, collectors are doubling down on their commitment to customer service and are giving the profession a more approachable and relatable face in the process.