It’s difficult to talk about the APAC region as a whole - it includes industrial giants like China, global financial centres like Hong Kong, and burdened economies struggling to handle their debt-to-GDP ratio. That said: three specific factors recur as concerns for debt collectors across the region:
EXUS Collections & Recovery Blog
Many Asia-Pacific countries are notorious for the complexity of their debt collections operations, with a report from credit insurance company Euler Hermes ranking the vast majority of APAC region countries as ‘severely’ complicated.
PwC predicts that by 2020, consumer intelligence will be the most important predictor of revenue growth, the public cloud will be the most dominant infrastructure model, and - crucially - that Asia will emerge as a key centre of technology-driven innovation.
Although the Asia-Pacific (APAC) region is currently under a severe amount of debt pressure, the rate of regional household and business borrowing has actually slowed in recent years. That being said, debt levels remain high overall. Across APAC, a 5% increase in the household debt to GDP ratio over a three-year period is expected to lead to a 1.25% drop in GDP growth in another three years.
In a world where you can access mobile banking in the blink of an eye, the technology used to identify customers still falls far behind.
By now, banks are used to fintech scare stories. It’s all challengers, startups and open banking. The new guys, it’s said, are coming for the incumbent banks.
Truth is that, for now at least, these challengers struggle to match the power of an established bank. The more likely result is partnership, rather than competition. But there is the exception: The FAANGs (Facebook, Amazon, Apple, Netflix and Google).
Facebook, Amazon, Apple and Google have already embarked on well-documented forays into financial services. So what, we wonder, would their collections departments be like if they become fully-fledged banks?
In the mid-nineties, Bill Gates said that ‘banking is necessary, banks are not’. Back then, Gates’ pithy comment was merely a bit of throwaway futurism. The supremacy of the big banks seemed insurmountable. But as the years passed, his words have become increasingly prophetic.
Tags: debt collection
Singapore has a problem with credit cards. Specifically, it has a rising problem with bad credit card debt that has to be written off: $20.74 million as of March of this year, according to the country’s Monetary Authority.
While credit card debt constitutes a modest 2-3% of household debt in Singapore, a rise in non-repayment could indicate more significant economic issues to come - think 2008. If credit cards continue to go unpaid, banks will raise rates to compensate for the written-off debt; consumers will find their spending power cut, and the cost of their debt on the rise, which will combine to drive down spending.