The accelerated rollout of digital services has been one of the most notable business trends of the Covid-19 pandemic.
Often this is framed around improved customer onboarding experiences and organisations adapting to reach previously untapped markets through digital means.
This year’s Global Debt Collections & Recovery Forum offered a rare chance to compare notes with industry peers on another digital trend – this time in the collections cycle.
Economic conditions caused by the Covid-19 pandemic have put people under financial strain who will never have been on the collections radar before. For the majority, this is a deeply uncomfortable position they would like to find a route through with the minimum of fuss and embarrassment.
From the presentations and speaking to people outside of the sessions, it’s clear those who have been the fastest to embrace technology have been the most successful in reducing their nonperforming loans (NPLs).
Europe has led the way in adopting self-serve digital services, allowing people to share more information about their circumstances and agree to a revised payment plan. Using Open Banking technology, they can opt to use their bank account transaction data to receive advice on affordable options.
Chatbots can shepherd customers by working through commonly asked questions without the need for human intervention, where costs for collections can mount up.
One utilities company from the Nordics region shared its story about how it digitised at speed. It adopted AI for its collections processes from March 2020 and used segmentation to understand its customers’ payment behaviours. It reduced costs in the early stages of collections and helped them prioritise for the future.
This business was ready with its digital strategy when Covid-19 hit, and managed to increase the proportion of its customers using online services from 24% to 75% during the pandemic.
Many other organisations at the conference expressed regret about not investing in digital earlier, fearing it would not produce a return on investment soon enough. Now they have missed the opportunity to benefit from it at the height of Covid.
Yet all of the success stories about implementing new technology into processes were underpinned by one thing – data quality. The book’s quality provided by each business to its collections department directly impacts how they can contact customers and the worth of those conversations.
Open Banking can help alleviate the issue by allowing organisations to cleanse their data and triangulate it with third-party sources to act earlier and give the customers more options.
Companies that have a handle on their data quality and moved quickly to digital are at the front of the queue to receive payments and upsell. In contrast, those who have been slower to change are extending payment holidays and find themselves at the mercy of government moratoriums.