Bruce Curry, Vice President, Collections and Recovery, FICO
Discovering vital new strategies for improving debt collection in the pandemic.
Debt collectors are putting out a raging wildfire of delinquencies caused by Covid-19. Planning under these circumstances is difficult, but it’s still important. I would like to propose a phased approach to collections in the current crisis, with three phases for collection operations post-Covid:
- The tactical phase, with a fast-moving, reactive response and intra-day changes, where critical data capture is essential and reputational risk and customer outcomes are driving the decisions. It’s critical to understand which customers are impacted by Covid and likely to quickly bounce back, and which would be in financial trouble regardless of the crisis. It is important that Covid-19 is captured and registered as a reason for payment holidays.
- The mid-term phase, with payment holidays rolling off at 90 days and follow-up action required in advance of expiry to ensure the right options are put in place for the best outcome in the longer term. Customer communications and interaction are essential at this point, and the customer journey may take a detour and change to an affordability discussion or forbearance options.
- The long-term strategic phase, where understanding the reasons for payment holidays or forbearance is critical for regulatory reporting (was it related or unlrelated to Covid-19?). Collections volumes will still be high, and journeys will get more complex as the initial volumes flatline. You will need to repeatedly validate the customer’s financial wellbeing. We expect an increased need for digital-led payment plans.
In all three phases, an omnichannel communications platform can help you engage effectively with customers to optimise their journey through recovery and rehabilitation.
The first step is to integrate and orchestrate the channels available to the organisation – email, SMS, WhatsApp, mobile apps, voice – to help with responses to payment holiday requests and a change in payment plans. By “orchestrate”, we mean that you can reach out to a customer throughout a day, on differential channels, and when the customer choses to respond they can take a customer journey using the most appropriate channels for different steps of that journey, again seamlessly and confidently.
Having an automated, centralised view and co-ordination of the customer interactions will help you offer the right payment plan through the right channel for each customer, as well as keep in touch with them during the crisis to gather information or offer advice. Self-service payment terms will reduce operational costs and help your contact centre team focus on customers who need human interaction to deal with their financial difficulties.
Challenging your operating model is critical in today’s environment. This is the time to adopt the technologies used widely in other parts of your bank. In a crisis, collections must lead!
For more information on managing debt collection in the current crisis, visit the FICO Blog.
Learn more about how analytics can help debt collectors manage through the COVID-19 debt tsunami: fico.com/covid-collections