Debt collection agencies must leverage technology to become more successful in improving consumer communications.
In the Consumer Financial Protection Bureau’s June 2017 report, statistics showed that American consumers are vocal in their complaints about collection efforts. Debt collection complaints make up nearly one-half of the more than 1.2 million consumer complaints the agency receives every year.
What does this mean for the debt collection industry and more importantly the businesses that employ them? The old methods of debt collection are simply not working and may no longer comply with the ever-evolving regulations that govern debt collection. The way that consumers interact with business, and potentially the debt collectors that come to recover any outstanding funds, has permanently altered the way consumers expect to be communicated with.
With the sheer number of ways consumers can be reached and the means and methods constantly in flux, you need an agency able to keep up with these ever evolving trends. If not, consumers won’t be reached, and your potential cash flow may be compromised.
Debt Collection in 2018 – and Beyond
The onset of technology applied in debt collection has radically transformed the industry. For the mom-and-pop collection agency struggling to afford the latest technology upgrades, it is simply adapt to the needs and wants of the consumer, or fail.
Tighter restrictions on debt collection were released in 2017, including the FCC’s ruling that restricted the use of automated telephony or “robocalls.” The latest trends show the debt collection industry – with a few exceptions – has failed to adopt technology that could better equip them to reach consumers in ways that are less harassing and more acceptable.
Coupled with this trend comes the reality that debt collection agencies are more in demand than ever, as consumer debt is rising exponentially, according to Nasdaq. Add this to the increasing volume of regulatory restrictions in the industry and you get the perfect storm of pressure for small agencies trying to keep up with big agencies that are able to invest in new technologies and compliance.
Interestingly, InsideARM shows a downward trend in collections, from $13.3 billion collected in 2012 to $11.4 billion in 2016. Could outdated debt collection methodologies have caused a decline in collection efficacy?
Tech is Important to Debt Collection
Whether it is the predictive analytics that dictate collection strategies, or multichannel communication strategies employed to engage with consumers in a compliant fashion, technology drives success in the world of debt collection.
With technology, debt collection agencies can tailor communication strategies in ways that resonate in a more meaningful fashion with the consumer. Consumers are “mobile-first” in 2018, and with that, demand personalized attention that takes into account when and how they want to be contacted as well as easy online payment options.
Debt collection agencies must respond to these trends by having responsive websites and payment portals to reach consumers where they spend the most time. Similarly, clients have come to expect the same; mobile-friendly access to all of their vendor-placed accounts.
TSI understands that many consumers now want to pay online. Our responsive payments portal is extremely user-friendly and secure. Similarly, we know that our clients want easy online access to all of their account information. With our myTSI Client Portal, our clients can create custom reports, view payment information, account notes, see and pay invoices, and more, all at their fingertips.
Debt collection firms must also invest in sophisticated analytics capabilities to help determine account collectability and recovery strategies. This utilization of data not only helps to improve recovery rates but also improve consumer experiences due to the targeted, empathetic strategies that can be employed based on tactics developed by predictive scoring.
TSI takes data analytics a step further than other collection companies. Our proprietary data analytics platform, CollectX, scores accounts using our ever-growing pool of data points, and then dynamically updates scores weekly. This allows TSI’s collectors to have the most up to date information. Scores are used to tailor recovery strategies for our clients and to drive efficiency in the collection model, allowing us to collect more for our clients at a lower operational cost. Our clients in turn can use this to make their placement models more effective. Since implementation of CollectX, our clients have seen an average lift to their liquidation rates of 22%.
To learn more about TSI leverages technology to recover the most for our clients, contact us today. We understand your business and we would love the opportunity to discuss how we can help you achieve your A/R goals.
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