As the economic environment changes on what feels like a daily basis, the importance of having information about consumer credit trends and the future direction of credit becomes invaluable for planning and achieving strategic goals. I recently had the opportunity to speak with members of the collections industry about collections strategy and collections change management — and discussed the use of business intelligence data in their industry. I was surprised at how little analysis was conducted in terms of anticipating strategic changes in economic and credit factors that impact the collections business. Mostly, it seems like anecdotal information and media coverage is used to get ‘a feeling’ for the direction of the economy and thus the collections industry.
Clearly, there are opportunities to understand these high-level changes in more detail and as a result, I wanted to review some business intelligence capabilities that Experian offers – and to expand on the opportunities I think exist to for collections firms to leverage data and better inform their decisions:
* Experian possesses the ability to capture the entire consumer credit perspective, allowing collections firms to understand trends that consider all consumer relationships.
* Within each loan type, insights are available by analyzing loan characteristics such as, number of trades, balances, revolving credit limits, trade ages, and delinquency trends. These metrics can help define market sizes, relative delinquency levels and identify segments where accounts are curing faster or more slowly, impacting collectability.
* Layering in geographic detail can reveal more granular segment trends, creating segments for both macro and regional-level credit characteristics.
* Experian Business Intelligence has visibility to the type of financial institution, allowing for a market by market view of credit patterns and trends.
* Risk profiling by VantageScore can shed light on credit score trends, breaking down larger segments into smaller score-based segments and identifying pockets of opportunity and risk.
I’ll continue to consider the opportunities for collections firms to leverage business intelligence data in subsequent blogs, where I’ll also discuss the value of credit forecasting to the collections industry.
