There is a convergence happening between the physical and the digital, especially in the debt collection world. As big players in the financial services ecosystem like the banks embark on their digital transformation journey, they kick-start a “domino effect” on which smaller players will eventually have to adapt and follow.

As the financial industry matures digitally, it’s time to leverage the ecosystem for better debt collection. As we can see, there is a huge concern on how long the COVID-19 pandemic will last and its effects on the economy, businesses, and even individuals. Regardless, the management of cash flow is a common concern for all and it boils down to the efficiency of collection systems in place. Being able to automate your collection processes efficiently, on top of managing third parties, will help you to survive and maybe scale during these challenging times.

Here, we are highlighting some of the biggest debt collection challenges that can easily be resolved if the collection industry leverages the financial ecosystem to access real-time data, on top of leveraging on robust technologies to create a more frictionless and agile process when it comes to collecting debts.

Biggest debt collection challenges

• Insufficient or inaccurate information of consumers:

According to the Federal Trade Commission (FTC)’s report “Collecting Consumer Debts: The Challenges of Change”, the Commission expressed concern that debt collectors may have insufficient or inaccurate information when they collect on debts. This may result in collectors seeking to recover from the wrong consumers or recover the wrong amount. The Consumer Finance Protection Bureau (CFPB) received more complaints from consumers about inaccurate information on their credit and consumer reports in 2020 than in 2019 (Figure 1).

Figure 1: Monthly complaint volume for issues(s) of credit or consumer reporting complaints that make up 80% of overall product volume

• Lack of real-time information and processes:

According to The Edge, financial technology has upended many segments of finance and banking in the last decade, but the debt collection industry has been slow to change. For an industry that heavily relies on information to collect debts, the flow and quality of information are crucial for collectors to direct the right collection strategy to the right consumer. Without real-time information and processes within the collection system, collectors are unable to gain real insights such as consumers’ payment behaviours, preferences, and intent. It also robs them of the opportunity to offer consumers personalised collection methods and make better business decisions. This has caused major pain industry-wide. As a result, we hear complaints from consumers, collectors going through an arduous debt collection process, and this results in a low customer acquisition rate stifling the business’ cash flow.

How can leveraging the financial services ecosystem overcome the debt collection challenges?

When it comes to debt collection, there are stages as shown below (Figure 2) that involve multiple parties such as the banks, financial institutions, debt collection agencies, lawyers, and even the borrowers themselves.

Figure 2: Modules for different collections touchpoints

If all the parties involved in the collection process can bring their set of services on a single integrated platform, we would be able to eliminate the insufficient or inaccurate information of consumers and the lack of real-time information and processes. Ultimately, an ecosystem should ensure a win-win relationship for all involved parties. The idea is that each party in the ecosystem affects and is affected by the others. This creates a constantly evolving relationship in which every party can leverage on one another to reap the benefits of being in an ecosystem.

You see, the ecosystem is enabled by digital platforms to bring different parties across industries together to seamlessly collaborate and create new value-added products and services. In order to build a strong cohesive ecosystem, it requires a robust end-to-end system to streamline data and operations. Furthermore, there is also the need in developing APIs to enable interaction with those parties in the ecosystem. Application Programming Interfaces (APIs) — which act as the connectors of networks, enhance consumer’s collection journeys, improve consumers’ data intelligence, and automate back-office collection processes.

Benefits in leveraging the financial services ecosystem for better debt collections:

• Seamless collaboration and communication between all parties

The fluent exchange of information from a centralised platform can help banks, financial institutions, debt collection agencies, lawyers, to optimise business processes, automate and unify communications within and outside the network including data sharing. This removes miscommunication, data discrepancy, and inefficient or redundant processes. For example, banks and financial institutions can manage third parties such as external lawyers and collection agencies with effective and automatic case distribution. Moreover, they can also track and monitor performance in real-time tracking and ensure the payment reconciliation process runs efficiently.

• Easy access to quality data with increased transparency

Having a centralised platform with real-time data and insights allows collection agencies and lawyers to easily retrieve real-time data from verified sources. FTC states that they have received more consumer complaints about debt collectors than about any other single industry. Many of these complaints appear to have their origins in the quantity and quality of information that collectors have about debts. The transparency and authenticity of data retrieved by collectors can now be validated via leveraging technology and the ecosystem. This can help collectors identify gaps and improve their collection processes. For example, with quality data, debt collectors can personalise their collection treatment process by enabling personalised payment plans or alerts customisation.

• Frictionless and agile process

The ecosystem leverages APIs to connect data, systems, and applications, creating a truly omnichannel experience for customers. It empowers all parties involved to take a closer look at what steps can be removed, simplified, or automated. Furthermore, all parties involved can better understand individual customers’ decision processes, behavioural characteristics, and likelihood to pay their debts. Thus, increasing the ability to be agile and go beyond traditional techniques. These are all paramount to effectively managing the customer base and providing tailored customer experiences.

The right software, exceptionally delivered

JurisTech’s end-to-end, fully compliant Collection Suite connects collections, recovery, customer communications, and artificial intelligence all-in-one complete ecosystem. By automating operational processes, extracting insights with advanced analytics, and offering personalised experiences, JurisTech’s solutions improve efficiency while increasing revenue and customer satisfaction.

Figure 3: JurisTech’s Collection Suite

Our Collection Suite has a highly automated system for detecting early delinquencies, a system of tracking consumer contacts and following up on repayment promises, and the development of an adequate information base for the collectors to work on. Furthermore, JurisTech’s integration-ready API feature helps achieve a cohesive and seamless customer journey experience.

An award-winning end-to-end debt management and collections enterprise system that helps banks and financial institutions implement different collection strategies for different customers to achieve the most efficient use of their resources from early-stage delinquency to final approval of write-off. Juris Collect lays the foundation for the entire Collection Suite. With Juris Collect’s robust and advanced workflow engine, banks and financial institutions can automate the collection process and the treatment of account receivables in various stages of the collection cycle without breaking a sweat, not to mention incorporating behavioural scoring that tracks customer’s behaviours, payments and contact patterns for you.

A customer self-service portal, where customers are able to make their payment anytime, anywhere, through any device. Juris Concierge reduces collection efforts required from good paymasters and also provides real-time information and updates to the collection system.

Juris Mindcraft, a plug-and-play artificial intelligence (AI), can seamlessly integrate with JurisTech’s products or third party software and redefines the entire collection process. When Juris Mindcraft is embedded into the collection ecosystem, collectors are able to leverage the ecosystem for quality data to make better business decisions. It uses advanced machine learning techniques to learn from historic data and recognise patterns to build AI models that can help enterprises solve collection roadblocks. For example, identifying behavioural late payers, creating a self-curing strategy, personalising the collection treatment journey for delinquent customers, or even optimising collection effort for financial institutions.

A robust legal management platform connecting law firms, banks, and financial institutions with complete legal workflow for late-stage recovery. With Juris Legal, banks or financial institutions can streamline and optimise the standard civil suit and foreclosure litigation processes by automating the legal case distribution, billing, and approval process, and providing a portal for lawyers to collaborate on litigation matters.

An end-to-end administration and management platform that seamlessly connects DCAs, banks, and financial institutions. Juris Agency eliminates the need for manual handling of case distribution and commission payment to DCAs. With Juris Agency, banks and financial institutions can now streamline the agency management process and provide a portal for DCAs to collaborate on agency collection matters.

The one-stop software solution for debt collection agencies (DCAs) with process automation, dashboard and analytics, and tracking and monitoring features that are secure and accessible anytime, anywhere. With NexColl, DCAs can easily facilitate the reconciliation process between the amount that has been collected and the amount actually received, pinpointing any discrepancies.

An all-in-one computer-telephony integration software with powerful dialers, inbound routing, and information tracking. Juris Predator helps collectors modernise their call processes with powerful and intelligent diallers – predictive dialler, progressive dialler, and preview dialler, centralising all call agents on a single interface, and tracks performances in real-time.

In a nut shell

To compete and survive, it’s time that the collections industry embraces and leverages the financial services ecosystems to drive growth and generate value. It is a technology that powers the ecosystem and brings about a new world for businesses to redefine their capabilities and opportunities. It is imperative to have the right technology to run with your vision on top of delivering excellence. To find out more about JurisTech’s Collection Suite, kindly email us at contact@juristech.net

Source:

1. https://www.investopedia.com/terms/b/business-ecosystem.asp
2. https://www.credit-connect.co.uk/industry-opinion/the-biggest-challenges-facing-debt-collection-in-2019/
3. https://www.ftc.gov/sites/default/files/documents/reports/collecting-consumer-debts-challenges-change-federal-trade-commission-workshop-report/dcwr.pdf
4. https://www.ftc.gov/sites/default/files/documents/reports/structure-and-practices-debt-buying-industry/debtbuyingreport.pdf
5. https://files.consumerfinance.gov/f/documents/cfpb_2020-consumer-response-annual-report_03-2021.pdf
6. https://www.consumerfinance.gov/about-us/newsroom/cfpb-annual-complaint-report-highlights-more-than-a-half-million-complaints-received-in-2020/
7. https://store.legal.thomsonreuters.com/law-products/solutions/clear-investigation-software/skip-tracing-collections/the-top-four-challenges-for-the-collections-industry
8. https://bankloch.blogspot.com/2020/02/eco-systems-welcome-to-new-cooperating.html
9. https://www.polycom.com/content/dam/polycom/common/documents/solution-briefs/fs-connected-final-sb-enus.pdf
10. https://www.finextra.com/blogposting/19537/ecosystems—the-key-to-success-for-all-future-financial-services-companies
11. https://www.ey.com/en_gl/banking-capital-markets/will-financial-services-build-ecosystems-or-just-be-a-participant