Thanks to a volatile mix of rising interest rates, soaring
consumer debts, and growing competition, collection shops are open to new
approaches – perhaps more than ever – to boost collection rates and beat the
competition.
Technology is where collection executives are turning.
Everything is in play, from automated voice inflections to calling patterns
designed to learn when debtors are commonly at home. Some are even
discussing the merits of instant messages and e-mail exchanges with debtors.
Gone are the days when the business accepted low success
rates that were a product of never finding debtors at home, dialing wrong
numbers, or reaching debtors – only to offer them zero options for rendering
payments, even a partial payment.
Technology that targets optimum calling times for specific
debtors, as well as technology that tailors settlement offers, is gaining
industry acceptance. “I am finding that [the collection industry] is
interested in increasing options to the debtor to get payments made,”
confirms Christopher Imery, president of Apollo Enterprise Solutions.
Apollo recently introduced “Intelligent Debt Settlement
System,” a Web-based collections software system that presents settlement
offers to debtors. The system applies analytics similar to those used in the
credit underwriting process. “Many debtors fall delinquent because they
aren’t able to make payments in full,” Imery says. “If a company can present
settlements that match the debtor’s ability to pay, they may be more
successful in getting payments made.”
Pulling together data from credit reports and account
activity, collectors can make better informed decisions about what payment
offers best suit an individual’s circumstances. Offering the settlement
process on the Web also adds to the debtors’ convenience by allowing them to
make payments at any hour, as well as avoid the embarrassment of dealing
with a collector.
And many technologies such as Web-based portals for
collections, automated notifications, and call-optimizing services, can be
integrated into a company’s current collections software, meaning there is
little interruption to existing operations.
Most technology vendors agree that financial institutions
and collections agencies are more interested in using technology than they
were two years ago. “The technology is more and more commonplace, so less
education is needed now,” says Kael Kelly, director of market management for
PAR3 Communications, Seattle. “Now the conversations I have with prospective
clients are about why they should choose us over another vendor [rather than
will this technology be of any help].”
Bob Tate, vice president of marketing for Austin Logistics,
agrees. Most agencies and financial institutions want to do more with less
staff and fewer resources, which piques interest in technologies that can
help them with little disruption to their business. “We’ve seen demand for
products in May and April of this year outstrip demand for products last
year,” Tate says.
Austin Logistics is working with clients to help them
perfect the best time to call debtors. A collections department often has
information stored in its systems about what time an individual returned a
call to the center or when a person answered a call.
Austin Logistics, based in Austin, Texas, harvests such
information daily to determine the probability of reaching an individual at
a certain time so collectors can know when to call them. “A common strategy
for a lot of collections call centers is high saturation rates, to just keep
calling and calling,” Tate says. “But doing this, you are risking a negative
reaction from the debtor.”
Austin Logistics each month automatically rebuilds the
models for when is the best time to call, helping detect if there are
changes in a debtor’s schedule or pick up on data about new debtors in the
system, Tate says.
Meanwhile, taking the human collector away from the process,
either by offering a Web channel or an automated messaging system, is an
important customer service feature that collections departments are using to
make the process less stressful.
“Customers are clamoring for more self-service options. When
people go to a bank, 99% of them go to an ATM,” says Vytas Kisielius,
president of Adeptra, a Norwalk, Conn.-based provider of auto-resolution
technology, which automatically delivers customer communication messages via
voice, fax, pagers, text messaging, and e-mail without involving an agent.
Adeptra’s auto-resolution platform originally was developed
to work in fraud prevention, sending out notifications to consumers about
possible fraudulent transactions, Kisielius says.
Eventually, a client approached Adeptra about using it in
the collections space. “I was surprised. I didn’t think people would want to
talk to a computer about debts,” he says.
The auto-resolution technology automatically calls consumers
and, after verifying their identity, asks them to make a payment. Customers
using Adeptra’s system typically find that debtors using the auto-resolution
technology end up paying a higher average payment than those contacted by a
call center agent, Kisielius says.
Since a computer always asks for the entire amount, while a
collector may be more likely to react to the consumers’ hesitations and
negotiate a payment, the technology can often net larger payments than a
live agent can, he explains. “The computer has the advantage of being
insensitive, without being impolite,” Kisielius says.
PAR3 also provides automated messaging technology to
financial institutions. Along with streamlining the process, the company’s
technology collects data about customer transactions to help collectors
determine the best way to contact a debtor. “We have historical data on
every transaction,” Kelly says. “We can see how many people interact with a
notification, how many wrong numbers were made, which can be analyzed to
come up with the best way to contact a debtor.”
The company also works to customize the content for how a
company wants to use the system. They can create different personas for the
messages that are sent. For example, Kelly says, if the system calls a
low-risk debtor, a company may want a friendly voice on the recording
reminding debtors to pay. But, on the other hand, if they are dealing with a
mid-to-late stage delinquent, they may want a more authoritative, firm
recorded voice.
The automated-resolution technology is much more common
today than it was a year ago, Kelly says. “Banks are realizing that contact
center costs are up and if they go to India or the Caribbean to cut costs,
they are really losing control over the collections process,” he says. “Now
[with this technology] they can reach more customers at a lower cost.”
Also aware that individuals respond differently to various
collections tactics, Intelligent Results, based in Bellevue, Wash., builds
models using historical data aimed at helping firms choose when settlement
offers are appropriate and when accounts might self-cure.
The IR Self-Cure service identifies which accounts are
likely to pay in the first cycle of collections, regardless of contact, to
help collectors avoid making unnecessary calls and therefore reallocate
resources to higher risk accounts. “It’s dangerous to try technology without
the proper measurement and predictions in place to help understand the
results,” says Trevor Rubel, Intelligent Results’ director of marketing.
The results of the self-cure tactic can help collections
departments decide whether they should use voice-broadcasting services such
as those provided by PAR3 and Adeptra.
With collections and recovery becoming increasingly
competitive, Rubel agrees that it is clear more companies are interested in
adopting new technologies. “Collections agencies are seeing voice
broadcasting and other technologies as a competitive advantage,” he says.
But many collectors hesitate to discuss new technologies for
fear of losing that coveted competitive advantage.
Nextel Partners Inc. is at least one exception. Having
implemented PAR3’s automated communications service, Tom Poston, Nextel’s
director of customer finance, says the company’s positive experience
motivated him to share. “We went from $1 million collected in a month using
our dialer to $5.4 million collected in a month with PAR3’s system,” he
says.
Nextel, using just a dialer, had struggled to handle the
volume of both in-bound and out-bound calls. PAR3’s system took over
Nextel’s out-bound dialing, handling the entire interaction and updating the
collections system with the results of the calls. The company previously had
to have two or three analytical experts analyzing the data, but the new
technology allows PAR3 to manage all out-bound calls on a daily basis,
Poston says.
Pay Schemes
Still, with pressures mounting on businesses to cut costs,
finding effective technologies that will not tap a company’s financial
resources is key. Apollo, for its part, offers a debt settlement system as
“a pay as you go” service with no installation fees. Apollo receives a
percentage of each dollar collected, Imery says.
Adeptra sells its service on a “pay for what you use” basis,
without up-front capital expenditures or software license fees, Kisielius
says. The typical charge is one fee per account submitted, so clients can
budget costs ahead of time. They also customize products for clients, so
pricing can vary, he says.
Rubel, of Intelligent Results, says in a lot of cases the
firm works with a client to develop a business case for the technology first
to determine what results the company can expect. From there, they work out
a percentage Intelligent Results will get from what the company brings in
with the new technology.
Now that more companies and collections agencies are seeing
results using the many self-service and debtor-friendly technologies,
industry interest is building. Some forward-thinking banks and businesses
are even considering instant messaging and e-mail communications for
interactions with debtors, technology vendors say.
Whether nontraditional channels gain wide acceptance in the
collections business is as yet uncertain. But given the need to adopt new
technologies, and the pressure to stay ahead of the competition, expect
collections shops to consider any technique that so much as hints at nudging
them ahead of their peers.
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