Over the past decade, technological, social and economic changes have had a profound impact on collection and recovery operations. While the effects vary across countries and regions, all organisations need to adapt to one or more of these developments:
- Ubiquity of mobile phones
- Increasing competition in the race for payment share
- Complex, changing regulations
- Impact of social media
- Evolution of consumer attitudes toward debt
- Rising consumer use of the Internet for financial transactions
These changes aren't necessarily positive or negative - often they're both. Take the growth of mobile and prepaid phones, and the disappearance of residential land lines; it's a trend that poses many challenges for collectors. Mobile phone users can easily evade contact by diverting calls to voicemail or swapping out their phone's SIM card for a new number.
On the other hand, the ubiquity of mobile phones also offers opportunities for more effective collections. Many people have their phones with them nearly round-the-clock, increasing the likelihood of contact. Because mobile phones are personal rather than household communications devices, the odds of a right-party contact also increase.
As the collections landscape changes, collections organisations must change how they operate. But even while the technology gets more advanced, the basic advice remains startlingly simple.
Contact customers in the way most likely to succeed
The spread of mobile devices and advance of Internet technologies have opened up new avenues for collections organisations to quickly and efficiently contact delinquent customers. That's important as competition for payment share intensifies and debt increases. In Singapore, for instance, household debt levels are expected to hit 77.2 percent of GDP in the coming months, up from 55 percent in 2010. Singapore isn't alone, with South Korea at 88, Malaysia at 80.5, and Thailand at 77.5 percent.
Creditors must get the customer's attention before other creditors vying for a piece of what may be a monthly paycheck. In countries shaken by financial crisis, even where consumer indebtedness and delinquency levels are declining, many customers are still struggling to pay all their bills. Changing payment priorities have pushed some creditors "down in the stack." Considering automobile loans as well as electronics and appliance loans in Asia almost doubled since 2007, competing creditors must develop smarter strategies to move toward the top. Those with multiple product lines need to coordinate customer-level collections that take changing payment priorities into account.
The quickest method (and most scalable for high volumes) is usually an automated call, text or email to a mobile phone. Asia-Pacific countries have recognised these advantages for some time and are currently setting an example for other collections organisations around the globe. Yet the undifferentiated SMS blasts some creditors send every few days to all delinquent customers are not very effective. In most cases, the creditor has no visibility into whether these one-way outbound messages were even delivered to a valid number.
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