Adversity leads to great solutions in collection services
Just as the pandemic accelerated technological innovation in many labor markets, collection services are also making great strides toward more efficient performance for both businesses and debtors.
Confinement brought many businesses and individuals into recession, they even lost their source of income. Creditors struggled to keep their micro, small, medium and even large businesses on their feet despite the reduction of their workforce and customers, but still, the amount of debtors of financial institutions began to grow.
Banks and even utilities had to plan in 10 days what used to take 10 months to define how to handle a much larger-than-usual portfolio by focusing on eliminating as many delinquencies as possible but also keeping compassion and economic viability without bleeding compliant customers dry.
To achieve this, these institutions had to focus on digital interaction, while telephone collection executives had to obtain additional new information that would allow them to define which debts were pandemic-related and which were not in order to determine which ones could be returned to a good financial status according to their work and family situation.
Once this was done, they decided to provide additional credit options that would allow creditors to have a reprieve in the midst of the crisis.
The importance of data in collection services
As Kate Smaje, Global Co-Director of McKinsey Digital, points out, “The road to recovery is paved with data”. The information collected by the collections and operations team was critical because, based on it, an order could be established to call creditors in order to save resources, while keeping a customer focus and a relationship of trust with responsible creditors.
On the other hand, several banks work with predictive models with artificial intelligence to improve collection performance.
Therefore, digital speed played a key role in enabling organizations to review strategies and analyze data for optimal decision making. Several companies were finally encouraged to use real-time and cloud-based tools to obtain the large amount of up-to-date information they needed to achieve this.
This last point has already been emphasized, but we stress it again because it is common for situations arising from the crisis to sometimes leave the customer behind. Moreover, with new improvements in IT, companies can now have more tools to translate this customer focus into gains ranging from 20% to 50% of the cost basis.
The biggest example: Considering that 84% of consumers in the Americas currently prefer payments without physical contact, several companies decided to offer multichannel collection services, not only by traditional telephone but also by SMS, WhatsApp, e-mail and even voice bots. In addition, new software allows functions such as automated and self-service collections, which have reduced operating, management and risk costs. They also allow collection agents to know what the customer’s preferences are (time to call, preferred channel, current situation…).
Although these functions are designed to save costs, they do not replace the experience of the collections staff, but improve their performance when combined with data analysis to help define which channels should be used at any given time.
These actions are just one example of how innovative actions, generated by the need for early response to the contingencies of the 2020 pandemic, are here to stay and will only continue to accelerate from now on.