The right offer delivered to the right customer at exactly the right time. It is more important than you could ever imagine. Customers use multiple channels to communicate and resolve debt obligations. They also may have multiple debt obligations with a bank or company.
EXUS Collections & Recovery Blog
Each stage of delinquency—soft, pre-litigation, litigation and recovery—requires a different approach to keep collections on track.
Several years on from the world financial crisis, banks still have to deal with its consequences. Besides the financial impact and the damage to their reputations, banks have had to learn to operate in a new world – a world of flat economies and rising levels of customer debt. Non-performing loans have increased and customer indebtedness, in general, has been seen to have a significant effect on the banks’ net profitability. Increasing collection costs, growing bad debt write-offs, and the requirements for higher provisions against loan losses have all combined to make managing credit loss a key business driver, with a direct impact on the banks’ profits.
Loan collections costs are spiraling out of control, according to CEB TowerGroup - Now Gartner. Thanks to a variety of factors, including a fourfold increase in delinquencies from 2007 to 2010, the cost of servicing non-performing loans has skyrocketed. It stands at 15 times the cost of servicing a performing loan.
Personal debt is something everyone handles differently. In a fast-paced and consumer-focused society, not all customers are receptive to collector outreach. Many consumers prefer to have non-interruptive, self-driven resolutions to their problems. This is especially true for sensitive matters like personal debt.
To put it in perspective, you’re more likely to purchase something when you’re browsing on your own rather than when a sales person contacts you. You can apply this same frame of mind to paying off debts. Answering the phone about debt you owe is even more uncomfortable than an unwanted sales call. Consumers usually avoid this discomfort by not answering. As a result, nothing gets resolved.
A self-service collections tool allows customers to manage their own debt obligations. Even better, banks that provide self-service as an option for customers increase collections rates, since customers can resolve obligations on their own time, in their preferred way. That’s because self-service tools give customers three major features they crave: control, convenience and mobility.
Debt collection software can only solve so many problems without a solid team behind it. Implementation can take years if done incorrectly, as issues are time consuming and expensive to correct.
The better your software provider, the faster the implementation and onboarding process, and the sooner you see the desired return on investment. Picking the right one is essential if you want to achieve better debt collection results. Here’s what to look for when choosing a debt collector software provider.
People want to help themselves. That’s why debt collections organizations should seriously consider implementing a self-service collections tool.
Today’s consumer wants to go his or her own way. The younger they are, the more they wish to undertake the consumer journey alone. A full 70% expect companies to have websites with self-service options. And companies that comply—even those in non-ecommerce businesses—see significant results: A typical utility could save $1 to $3 million a year by increasing self-service adoption rates, consultancy Accenture estimates.