'Technology Shift’ promises more efficient collection account management
As every collections manager knows, today’s unprecedented consumer debt and escalating unemployment are pushing case volumes higher, making accounts more difficult to collect and increasing call times.
Rapidly changing customer behaviours and increased collections workloads are straining client infrastructure and resources.
But there’s a silver lining among the clouds covering the collections landscape - it’s a renaissance of innovation and technology as many organisations shift their attention and resources to their collections departments and inspire practical creativity from software, analytic and data vendors. The result is nothing less than a technology shift in the collections workflow software industry away from legacy systems to modern, next-generation offerings.
Cutting-edge tools and collection management software designed to address changing collections business objectives are now available. And these innovations will help maximise productivity and efficiency while minimising costs and increasing cash flow.
Legacy Technology Limitations
Today’s rapidly-changing business needs require that infrastructure be modernised and ineffective business models be updated. Older, legacy technology prevents many clients from controlling operational costs, reducing losses and improving cash flow by preventing management from executing ‘real-time processing’ – the ability to react quickly to volatile business environments and re-prioritised business objectives.
Changing strategies or flows illustrate the limitation and inefficiency of current technologylegacy systems to perform real-time processing. For example, when some clients want to make even a minor change to a letter, edit a script or modify the colour and layout of a computer screen, these changes have to be made by an IT department. Employees have to stop what they are doing, call for help and wait for changes to be made.
And for major changes, the time and resources required using old technology are even greater. Labour-intensive tasks such as changing a day-to-day layout
or adding in more data could take anywhere from two to 18 months because teams of people are required to investigate, make coding changes and then conduct tests. An average task requiring six months for an internal IT department to complete could cost as much as $100,000 US .
Results
As a result of the technology shift, many business tasks are easier and less expensive. New technology has eliminated coding and made configuration possible with GUI screens and drag-and-drop features. By eliminating labour-intensive coding, trained people can now make most simple changes and even many extreme changes without calling the IT department. Six months to make a significant change has been reduced to three weeks or less. New technology empowers business users, client managers or collections managers, to make these changes themselves.
With old technology, accounts were parked in queues where they were extracted, worked on and then returned to queues; extracted, worked on, etc. New technology eliminates this batch processing by enabling work to be ongoing in real time. The account is active with simultaneous access. As a result, debt is collected faster, collections are more effective, more debt is collected and the bottom line improves.
These technological enhancements are none too soon. When the housing market declined earlier this year, many borrowers found they owed more on their homes than their houses were worth. While banks struggled with delinquent loans and home foreclosures and the federal government began to shore up troubled banks, borrowers were encouraged to contact mortgage lenders requesting new lending terms that would reduce monthly payments. Frightened borrowers have overwhelmed lenders with calls and many financial institutions have been unable to keep up with business. New technologies could have enabled lenders to turn on a dime and react to the intense demand. Rigid, inflexible, legacy technology does not enable clients to quickly reconfigure operations and work allocation systems to manage drastic change in such a short period of time.
Justifying the Technology Shift
For clients considering acquiring new technologies, there are at least five reasons to make the technology shift:
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New technologies can maximise resource productivity and effectiveness almost immediately |
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Operational costs can be dramatically reduced |
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Cash flow improvements means more debt can be collected |
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More effective change management enables strategic change when necessary |
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Customer retention |
One of the most important by-products of the technology shift is customer satisfaction. New technologies allow clients to segment customers in collection by identifying those that can be rehabilitated and those where ongoing relationships can continue. Many rehabilitated customers who resume payments can become profitable customers, eliminating the need to spend marketing budget required to replace them.
Another important consideration when making the technology shift is return on investment (ROI). Two primary considerations when acquiring new technology are initial implementation costs and ongoing licensing fees. Based on recent experience with existing clients, ROI can be achieved in four to six months. With one client, implementation costs were recovered in 72 days. Among the expected improvements new technology brings:
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Productivity improvements of 20 to 70 percent |
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Cure rate improvement of 10 to 30 percent |
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Operational cost reductions of 10 to 40 percent |
Mike Sutton
Director of Collections Solutions
Decision Analytics
Experian
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