British households spent around £900 more on average than they received in income during 2017. As a result, household finances were pushed into deficit for the first time since the 1980s. Such figures pose a major challenge for debt collection agencies, many of whom are struggling to adapt their processes to help today’s borrowers resolve outstanding account issues.
- Household defaults in the UK set to rise to 3.8 million by 2022.
- Personal insolvencies will also increase to 105,000 per annum by 2022.
- By 2022, mortgage possession rates will be 17% above their 2017 level.
Borrowers are More Mobile Than Non-borrowers
Recent research indicates that optimizing debt collection for an increasingly mobile population is no longer an option, but an industry requirement. In the United Kingdom, 45% of households have no landline, while close to 85% have a mobile phone.
Another key insight: PEW research reveals that the indebted population segment relies more heavily on mobile devices than higher-income households. However, debt collection agencies have been slow to optimise their customer experience for this mobile generation.
Today’s Collection Methods Aren’t In Real Time
Debt collection is comprised of a wide variety of processes and tactics. But even though collectors employ various methodologies, the lack of real time collaboration between borrower and collector is an industry-wide pain point and challenge. Indeed, frequent communication breakdowns are making it difficult for collectors to create customised payment plans based on each debtor’s unique abilities. As a result, collecting is a long, complicated and often times incomplete process that does serious harm to the customer experience.
Because of the inherently tense nature of debt collections it’s important for collectors to establish trust with debtors instantly. To do so, document exchange, repayment plans and calculations need to be shared instantly. Conversely, forcing a debtor to run around and get documents printed or scanned only increases resentment and decreases the likelihood that a debt management program will be arranged.
Collectors and Debtors Both Lose
Even though both collector and debtor have an interest in quickly agreeing on payment terms, inefficient technologies heighten tensions between both parties. It’s much more difficult for collectors to engage with today’s mobile debtors since they don’t have the tools necessary to engage with them wherever they happen to be. As a result, debtors quickly become frustrated and what should be a win-win scenario oftens turns into a lose-lose proposition.
Too Many Calls, Not Enough Communication
A major customer experience pain point is the amount of calls that debtors receive from collectors. Although there are regulations to minimize the amount of such calls, debtors continue to complain about being harassed. Such an unpleasant consumer experience is partly the result of inefficient in-call processes that many collectors use. Repeat calls are frequently the result of long, cumbersome processes that can’t be completed in one call. As a result, debtors become less amenable to reaching an agreement and collectors waste valuable time on chasing reluctant clients.
Contacting the Wrong People
Many consumers continue to receive calls from collectors even after a debt has been paid. An ineffective communication process makes it extremely difficult for people to have themselves removed from a collector’s call list. This kind of communication breakdown also has a negative impact on collectors who are constantly distracted from real collection opportunities.
Technology-based CX Is The Key
The debt collection industry has invested heavily in traditional automated dialer technology to boost efficiency by speeding up connections. However, today’s platforms go much further, offering a complete customer-facing package that makes it easier for agents to increase their collection rates.
After all, the biggest debt collection pain points today center around a lack of seamless communication between debtors and collectors. Ultimately, confusing, time consuming processes frustrate debtors and collectors, making it less likely that both parties can come to terms. Processes that implement efficient ways to match debts and debtors, reduce the number of collection calls and stop unnecessary pursuits altogether will reduce customer complaints.
Technologies are the key to optimising a more customer-centric process. Through text/SMS- initiated technology, collectors can now complete collection processes in one call. For example, by sending the terms and conditions to debtors in-call and allowing them to process the information as they wish, collectors can maximise phone calls and ensure that they are making progress towards resolving outstanding balances.
Another way to enhance the debtor’s experience is to have an instant signature function so that collectors are no longer required to read terms and conditions verbatim during a call, dramatically reducing handling time.
Today’s technological tools are the key to creating a more efficient and enjoyable collection process for collector and debtor alike. And a more customer-centric approach to debt collections is a more profitable way for debt collectors to conduct business.
Learn How to Improve Debt Collection
On Wednesday 30th of January 2019, Lightico, a Credit & Collections Technology Winner, is hosting a seminar on technologies for debt collectors to better manage processes with mobile customers and create a win-win debt collection scenario. Join this free to attend web-event to gain valuable knowledge on some of the challenges other collectors are facing and techniques to address them, even with a customer on their mobile device.
The webinar takes places on Wednesday 30th of January at 12 pm