When it was suggested in the late 1980’s that telephone collections for serious debt would be a far more effective method of recovery from every prospective the response was ‘our customers will never respond to telephone collections’ – can’t be done.
BACs, power diallers, pay by card, web portals – all met with the same level of resistance from many quarters – and in some cases derision was the reaction most encountered.
Some of my peers from that time are now still in senior roles, some are on the Boards of multimillion-pound debt management companies. Some are even on the Board of the CSA.
When I’ve mentioned to them that the next seismic change for debt recovery is imminent, I have again been met with ‘our customers will never allow that’. Some of them have taken to adopting Lord Nelson poses and seem convinced that an ‘open banking’ digital alternative will never be acceptable to the consumers they manage.
So, here is a question for my old industry. Will Digital and open banking make the majority of you redundant in the next ten years? No you say? Well I believe that you have five years before the risk becomes noticeable – five more for your role to become superfluous to requirement unless you have already begun to embrace the benefits of digital open banking and all that it can and will deliver.
Now – I suspect many of you think you know what open banking is. I also suspect that basic flat data provision is the extent of this thinking. Let’s start by exploring what open banking could already deliver.
Sophisticated underwriting solutions – no not for lending – but instead for fixed and/or flexible repayment programmes or even saving programmes. Better still- both.
Accurate cash flow predictability – likely variances, adjustments for seasonality, provision for payment holidays, predictability for default – and all at actual account level – not based on algorithms or arithmetic criteria
Cost of recovery reductions – impacting sale/purchase prices as well as providing better overhead management
Sophisticated write-off processes
Automated triage for advice signposting/recovery methodology selection/IVA/bankruptcy
These are just some of the headlines. The list is extensive.
I can hear you all shouting – ‘why would the customer allow anyone access to this data – especially anyone chasing them for money?’. The real question should be – why not?
The power of what open banking can deliver for the consumer ‘at risk’ is the autonomy and control it gives them over any outcome.
I’m not going to visit the benefit sell at this stage. The key element, however, is paramount to understanding why digital is a force to be reckoned with.
The customer is in control. Add in the parameters laid down now by legislation and relevant ‘guidance’ and all the safeguards needed for the customer are already in place.
So, here are some of the reasons consumers will start to opt for the future digital ‘open banking’ solution.
Your priority and essential monthly outlays are fully protected.
Your capacity to repay is assessed ‘neutrally’ and for your eyes only until you feel comfortable with the outcome.
Your income from other sources ( for example DWP) is fully maximised.
Your ‘essential outlays’ expenditure is compared to approved and recognised local and national standards agreed by independent assessors in conjunction with the Free Advice Sector and consumer protection agencies.
The ‘app’ will predict pinch points and any needs for payment variation, notify all relevant parties of negative (or positive) changes in payment and explain why.
Jan Mosiewicz, Chief Executive Officer, Digimass
Your incapacity to pay now or in the future ( if that is the outcome) is clearly defined and cannot be disputed by any creditor.
Payment distribution is fully automated and creditor allocation fully in compliance with regulatory requirements.
Your ‘offer to pay’ proposal is recognised by the Courts and will support any defence needed should legal action ensue.
Your assessment can be revisited and, if needed, revised quarterly, monthly or even weekly if needed.
Your assessment is done in ‘real time’ and based entirely on factual data
You own the solution – it’s not one forced upon you by some debt collector looking after the interests of their client and trained to negotiate in ways that can disadvantage you.
Granted a lot has to happen in respect of digital apps and how they currently utilise what open banking delivers but many of the incremental steps are now in place and I haven’t even mentioned the added value impact of behaviour modification, nudge theory, loop boxes ( currently infamous in gambling circles) but with great potential for positive outcomes and even ‘token’ therapies all of which can be utilised to great advantage through digital interface.
Debt managers take note – I am not a lone voice. If you are not already talking about digital open banking and how you are embracing it’s future potential – you may not have a future.