Credit, Collections & Insolvency News
Credit Connect’s hosted its fifth Online Collections Technology Think Tank 3.2 last week which saw collections strategies and the impact of cost of living economic stresses discussed by twelve collections professionals from a variety of industry sectors.
The themes of collections risk, customer engagement, affordability and the future of collections were discussed by panellists and Chair Chris Warburton from ROStrategy. The insights from the event were recorded and re-runs can be viewed by clicking on this link.
Over 180 collections professionals from banks, building societies, motor finance, utility firms, local authorities, telecoms, media, debt collection agencies, and fintechs were amongst the viewers across the four sessions.
Commenting on the event host Colin White Founding Director at Credit Connect said “It was great to see such a great mix of collections professionals take part in the industry panel discussions supported by the viewer interactions responding to the survey polls and asking questions at the event.”
“We have had some great feedback from attendees and intend to repeat this event next year with a face to face version of the event taking place on 17th November in Manchester planned.”
Event Chair Chris Warburton from ROStrategy said “Another interesting Collections Technology think tank. A couple of key themes came up for me. Arrears levels still don’t seem to be increasing significantly, yet. There are some concerning smaller indicators starting to bubble and many are starting to think ahead around a potential spike in volume which is a concern to watch. Technology upgrades and digital approaches are playing a big part in preparedness for this and there is lots going on. There was however plenty of caution to make sure we retain the human element in the process, with the smart thinking considering how we now blend digital processing with the human touch… still plenty to do on this front for sure. It was great to be able to chair and listen from experts across the industry.. the sessions certainly got me thinking!”
Simon Bayley from Specialist Motor Finance said “The CTTT is a great way to get people from different areas of the customer collections journey together to discuss both differences and similarities between industries. It shows how far the industry has come when you hear how aligned the collection functions are to the debt charities which is the right outcome but not where it was ten years ago.”
Rick Britt from CallMiner said “With prices soaring, inflation rising and the cost of living increasing it’s important to have access to the right tools to gain insights from your customers to better plan for the future. We can do this by using AI to learn about behaviours and patterns, such as when a customer calls to pay their bill versus when a 3rd party bill payment situation arises. By organising your conversation data into valuable actionable insights, we can explore and identify those at risk or who need additional support.”
Dale Williams Telrock said ” A very well organised and administered event with thought provoking, relevant and interesting subject matter discussed by informed panelists, which I hope was well received by attendees. It was a pleasure working with Credit Connect and my colleagues on the panel, Eleanor, Harry and Chris and Telrock look forward to future opportunities to contribute to these important think tank sessions.”
The next Online Collections Technology Think Tank will take place in 2023 with some of the topics being discussed at the Credit & Collections Think Tank on Thursday 17th November at the Midland Hotel, Manchester.
If you are interested in speaking or becoming a sponsor for the next event then call 01622 535075 or email events@credit-connect.co.uk for more information. More online events will be confirmed soon.
Responses to selected questions:
● The FCA release yesterday around encouraging consumers in problem debt to engage with creditors and debt advice providers included some research. This highlighted the ‘gap’ between the corporate perception and consumer perception of awareness and accessibility. How do we collectively close the knowledge gap around basics like sources of debt advice and what happens to your credit file?
Simon Bayley, Specialist Motor Finance: I think historically there was a large gap between credit companies and debt advice, I believe both parties have become more professional, creditors realising working with a customer (alone or through a debt advice business) more often that not provides the best outcome for the customer and ultimately the creditor. In my business which has a vehicle as the asset, removing that asset from the customer has to be the last resort. I believe in the main debt charities have also seen creditors be more customer centric which has helped to work together rather than be on opposite “sides” when working with a customer.
● The FCA research yesterday highlights the blockers as to why consumers don’t engage or delay engagement. How do we learn from this?
Simon Bayley, Specialist Motor Finance: As I mentioned a few times on the panel, I believe giving the customer both the right communication tool (phone, chat etc.) that makes them most confident to speak to a creditor is the first step, then training your agents to make the customer comfortable to open up (adult to adult conversation). Key words will help as well as tone of the agent if a voice call to help the customer realise others are in the same situation and there are tools to help in a lot of cases
● What are your right party connect rates via telephony like today versus 3 to 5 yrs ago?
Simon Bayley, Specialist Motor Finance: They have dropped, but not as far as you would imagine. Mobile phones have meant access to the call is easier although screening calls if customers do not want contact is also easier for a customer.
● How are you using data and analytics in relation to improving customer engagement? What examples do you have of your test and learn strategy delivering tangible benefits in relation to channel usage/engagement rates?[
Simon Bayley, Specialist Motor Finance: We are in the early stages of some of these, an example of our online portal, to increase engagement through this we have moved from providing a welcome letter to sending an email with a personalised video clip, and include the connection details to register with a call to action in the video. There is a paper option if emails are not opened.
● Do we put enough effort into explaining the collection’s journey where we know there will be a clunky bit where an affordability assessment is required, where this works best digitally and with the consumer seeing the value of giving access to open banking and their credit file?
Simon Bayley, Specialist Motor Finance: Take up rates on open banking in the collections space is still a lot lower than in originations, we use a light version of an I&E for shorter term plans and then refresh every six months as this can then be useful data to understand things like the current cost of living impact and any pre arrears strategies.
● Where does BNPL debt fit into collections risk? Does the panel predict that this will grow into a problem?
Andrew Alder, Paylink: Through our affordability data we are seeing increasing numbers of over-indebted consumers with multiple BNPL debts in financial difficulties on their other credit products. While this form of credit can help people spread essential products at a time when most people are struggling financially, this new loyalty scheme is likely to contribute to more problem debt. Many people, especially younger age groups, now use this as part of their everyday spending habits and this scheme will drive impulse purchases – because it is not linked to the same affordability checks this will be dangerous for some. Although cheaper than credit cards it can still be accessed when the repayments are unaffordable and could be the thing that tips someone into an unmanageable situation.
● How do the FCA see us implementing vulnerability checks for applications for mental capacity? If we can have form they note can we ask for Doctors notes to confirm they are ok?
Andrew Alder, Paylink Solutions: The FCA define mental capacity as ‘the ability to make an informed decision at a specific point in time is called mental capacity. Customers with the mental capacity to make a decision can understand, remember and ‘weigh up’ information which is presented to them, and then communicate their decision.’
In contrast, the FCA says that: people with a mental capacity limitation are unable to understand, remember, or weigh-up information presented to them, or to communicate a decision. Mental capacity limitations are caused by “impairments or disturbances in the functioning of the mind or brain. This can potentially include customers experiencing a range of conditions such as:
Regulatory guidance and Law expect staff to presume that all clients have a mental capacity to make an informed decision, unless the firm also knows or reasonably suspects that a mental capacity limitation exists.
It is an organisations responsibility to:-
● What are the views on the regulator possibly asking for I&Es to be shared across lenders to support consumers?
Andrew Alder, Paylink Solutions: The FCA has so far not expressed a view on this, the closet guidance provided was in their Tailored guidance for mortgage lenders in March 2021 with an emphasis on lenders providing a copy of the I&E that has been completed. Where a customer indicates that they are experiencing payment difficulties with other debts, the firm should, where possible within their existing systems capabilities, share a record of any income and expenditure assessment that they complete with customers or make these available to customers so that they are able to share them with other lenders and debt advice providers. Although firms are not required to rely on information collected by third parties, firms should support and encourage customers to re-use up-to-date income and expenditure information previously gathered where possible. For example, an income and expenditure assessment completed by another lender.
● How soon do you think the collector agent will be obsolete?
Dale Williams, Telrock: I don’t believe the role will ever become obsolete, there will always be a team of empathetic agents for difficult cases.
Eleanor Demuth, Curve: The collections agent will never be obsolete but rather the role will evolve to be more specialised and have input to automated communications and processes. I think there is enormous score for: further improvement in self serve technology for both lenders and customers e.g. in litigation and in setting up repayment plans and varying them. i think there is also great scope for integration of debt counselling and collections and for paytech solutions to payment in collections e.g. where customers are overseas with no standard banking etc.
● In relation to the subject The Future of Collections Technology what part of the end to end collections and recoveries process do you believe has the biggest opportunity for technology improvement/implementation?
Dale Williams, Telrock: Telrock believe that truly integrated omni-channel (traditional telephony and letter, together with responsive 2 way SMS, email and rules-driven self-serve consumer portal) engagement capabilities are key to optimising customer relationships and collection results whilst effectively managing collection operating costs. In many legacy collection platforms, and indeed even in some newer market entrant solutions, these are either incomplete and thus do not offer full channel choice to consumers, are delivered as minimally integrated ‘bolt-ons’ and thus cannot fully utilise response attributes to refine strategies, or are incapable of being triggered by or interpreted by rules and thus are inevitably sub-optimal. Similarly, many incumbent solutions do not provide the level of rules and workflow based segmentation or the breadth of data schema to support refined omni-channel strategies. As discussed during the think tank, the current economic climate of high inflation and rising interest rates is driving higher volumes of borrowers with unsustainable commitments, many of whom have not been overdue before. Delivering a truly omni-channel consumer experience and engagement strategy, underpinned by sophisticated segmentation rules and workflow built upon a well-conceived and expansive data schema, will optimise customer loyalty, improve collections performance and effectively manage operating costs.
What do you find is the most effective method of customer engagement?
● Letter 3%
● Phone call 39%
● Text message 12%
● Digital message (e.g Whatsapp) 19%
● All of these 1%
● Other method 26%
To what extent is your Collection system future proofed to cope with market and regulatory change without reverting to IT or Vendor?
● Develop and test new strategies 70%
● Implement regulatory change 30%
When your customer self serves, does an action/payment automatically update strategies without manual intervention? Are you able to automatically:
● Remove account from other current strategy in real time 44%
● Redirect account to correct strategy after action 56%
Do you think the accessibility for customers to digitally share their I&E’s with creditors will be industry standard in the next few years?
● Yes 56%
● Maybe 37%
● No 7%
Do you have a digital self-serve way for your customer to disclose any vulnerabilities?
● Yes 39%
● No 45%
● No but we plan to 16%
Are you planning to pro-actively approach your customer base who are not in arrears?
● Yes, doing so now 14%
● Yes, we are planning to 17%
● Yes but we are undecided on best approach 24%
● No 45%
Does AI have a place in the collection’s strategy?
● Yes 71%
● No 6%
● Undecided 23%
How can AI help shape the collections space?
● It can provide better insights into customers 65%
● I don’t know – I need to learn more 35%
* ALL EVENT DATA AND POLL RESULTS ARE COPYRIGHTED TO CREDIT CONNECT MEDIA AND SHOULD NOT BE USED OR SHARED WITHOUT PERMISSION
Recordings will also be added soon to Credit Connect’s Youtube channel. An archive of all past digital events can be viewed on Credit Connect’s Youtube channel which can be found here.
