Managing Compliance Risk -
Digital collection allows you to log each and every interaction with the borrower, thereby giving you tremendously more control over what is being said and how it’s being said. All that matters not only from a compliance standpoint, but also from a customer retention point of view.
It is a fairly common occurrence in the banking and financial services industry, for businesses to lose their long-term clients due to one bad collection call. Oftentimes, these then end up in consumer forums or worst, social media platforms.
A collection strategy heavily oriented towards interactive & personalised digital communications, ensures that you can better monitor those conversations and ensure compliance at all times, thereby reducing risks of litigations and disrepute.
Builds Trust with Your Customer Base -
Let’s face it, no one wants to receive untimely collection calls. So far the debt-collection industry has largely been using this fact to call and put the borrowers in a spot, thereby pressurizing them to pay up. What the industry has so far been very unintuitive about is the fact that while such a strategy may lead to some recoveries in extreme cases, in general it ends up causing a lot of distress and agony, to well-intended folks, who may be going through a financial crunch of some sort that in about 90% of the cases is very short-lasting in nature.
The bottom line is that being treated the same way as a wilful defaulter causes in them a great deal of antipathy towards the business they already have probably years long established relationship.
Needless to say, once they’re done paying you, they’d be happy to take their business elsewhere.
As a business, you have to have a mechanism of identifying the good apples from the bad ones, metaphorically speaking.
With interactive digital communications, you can establish a line of communication with your borrower/defaulter, collect relevant information from them, and give offers, even before having to make a single phone call. It also allows your borrower to feel more in control of the interaction, and also that they are trusted and respected.
All this can make a huge impact on your business’s long-term reputation and customer retention.
Allows You to Optimize your Calling Resources and Drive Productivity Rates -
Allowing interactive digital communications to be the driver of your collection strategy allows you to optimize your calling efforts. You can prioritize your calling resources based on the responses, or a lack of it, you’re getting from your borrowers through the digital medium.
Moreover, it also allows you to collect relevant data points from your borrowers such as reason for delay and expected repayment timeline etc., which then allows you to present better repayment plans to your borrowers while at the same time changing the nature of your calls to a more positive and borrower-friendly kind.
Rather than having your agents randomly dial out from a list, you can have priority lists based on user interactions, and a more inbound call driven collection environment.
The bottom line is that you have to gauge the borrower’s financial situation and repayment ability to a high degree of accuracy, so that you can formulate a recovery process that allows you to recover your money in time, without causing a great deal of distress and anguish in your borrowers. Because in the end, you can’t draw milk from a stone.
Leads to Long Term Cost Savings and Lower Average Cost of Recovery -
Most folks in the debt-recovery industry know that one of the keys to successful recovery is to constantly be in touch with your borrowers, for two reasons -
A — To ensure that you have the accurate and current assessment of your borrowers financial situation.
B — To make sure that you are on the top of the priority list when it comes to repayments.
The prohibitive costs of doing this by calling out your borrowers mandates us to devise a more cost effective strategy to achieving the above mentioned objectives.
Furthermore, the dismal RPC(Right Party Contact) rates at close to 5% in the collection industry should make you think twice before deploying a call heavy collection strategy for your business.
In contrast the Email Open/Click rates are way higher, at between 25–30% depending on the content and nature of the emails.
Moreover, in times such as the Covid-19 pandemic, where most conventional collection agencies were rendered non-functional for months on end, digital medium has proved to be a great way for businesses to reach out to their borrowers and keep the channels of communication open.
As one can imagine, in the long run, such a strategy would lead to huge cost savings and the driving down of the average cost of recovery.
The collection industry in general still needs to wake up to the fact that we’re not living in the world we used to 20, or even 15 years ago. We have at our disposal, the technological tools we never had in the past, vis-a-vis the digital medium. This makes it imperative for any modern business in the collection industry to adopt these tools and use them to their maximum potential.
