I had a chance recently to do some work on digital collections and I was left wondering What is all the fuss about? I’m not saying getting the digital strategy right is easy, I’m just saying that if you can get your bog standard collections strategy right, then digital isn’t much harder.
Sure, you absolutely need the technology, but these days you do for any collections strategy
(I can’t imagine your agents are calling your customers with tin cans and string, or even manually dialling from a list on a piece of paper). With digital systems it is just a case of thinking through what experience you want your customers to have, working out what functionality you want, and understanding the data you need. Then you write functional requirements just like for any other collections system specification. Either your internal IT or an external provider delivers this 3 / 6 / 12 / 24 months later.
Customer Experience
Isn’t the customer experience completely different with digital? I would suggest the basics are the same. When we get inbound calls we measure customer experience and agent performance in a number of ways:
- SLAs and KPIs – what percentage of calls abandoned? Did you answer 80% of calls within 20 s?
- Objective Call Outcome – did the customer make a promise to pay / refinance / payment?
- Qualitative Call Outcome – from call listening to a sample of calls: was the customer outcome the correct one? Did the customer suffer any potential or actual detriment?
Well when using other channels it’s the same idea. Let’s look at in-app chat for example:
- SLAs and KPIs – what percentage of chats abandoned (i.e. no reply after > 1 hour)? Did you answer 80% of the chat replies from the customer within 3 minutes? Obviously, the actual figures should be set based on a customer outcome analysis just as you would have done (at some point) for inbound SLAs.
- Objective Chat Outcome – did the customer make a promise to pay / refinance / payment?
- Qualitative Chat Outcome – from reviewing a sample of chats: was the customer outcome the correct one? etc…
Sticking on the chat theme – just as common queries on a telephony platform can be handled by IVR – well so can chatbots handle mundane tasks.
I could go on. It’s true that digital opens up more opportunities: for example, if you are sending customers emails you should be able to use receipts to see if it has been delivered, if it has been read (and perhaps make clever use of out of office replies). But… although it’s a different process, it’s the same kind of thinking. A good collections manager should be looking to seed their letter file with example letters to check they’ve all gone out and understand how long they actually take.
It’s also true that people are taking advantage of digital to advance customer engagement – that is to move away from a pure collections based strategy to a customer strategy – focussing on the customer’s needs at all points of contact and serving them. This is definitely a modern trend, though thinking back to the role of the traditional bank manager, perhaps the idea isn’t so new. And it’s not only through digital channels that banks are focusing on customer, but even at traditional points of contact like branches, banks are keen to ensure that customers’ needs are met. None of this changes the fundamentals of collections strategy, it simply opens up more opportunities for engaging with the customer.
There is one other concept that often, rightly or wrongly, gets lumped in with digital and that is data. In a world where affordability is more important but customer inputs no more reliable, where it is easy to send data and (at least in the UK) easy to share if your Ts&Cs allow it, data is increasing in importance.
I’m not sure there is that big a difference though. From allowing agents to see customer’s bank accounts and what they are spending their money on, to specifying the data going into the collections decisioning system, good collections strategy managers are already used to working with data. It’s true that the focus now is moving on to increased use of external data, but this isn’t new to collections and certainly not to credit risk.
I suppose on data you might point to GDPR as an example of increasingly strict data protection regulations. However, whilst penalties are harsher and regulations more numerous, the basic idea hasn’t changed:
It is important here to stress the strict duty of secrecy maintained by all Banks.
Teach Yourself Banking, by J.B. Parker, 1953, p9
If the ideas haven’t changed it’s true that regulations and technology have and will continue to do so. However ideas, principles and strategies are the difficult part – regulations need simple understanding but not creativity and technology is just a tool to implement a good strategy.
So if you are happy with your strategies and confident in the principles behind them, then applying them to the new digital age won’t be difficult.
What if you aren’t?
In that case: feel free to drop me a line.
