Tag: economic response and recovery

Breaking down, rethinking, and optimizing your debt collection recovery process can be complicated — but you risk falling behind if you don't invest in your business. From managing live agents to unlocking the latest machine-learning models, there are different options and routes you can take to improve recovery rates.  Debt collection challenges in 2023 Collection agencies have embraced digitization. The benefits are numerous — cost savings, streamlined processes, and improved compliance, to name a few. However, digital tools aren't cure-alls, and they can even create new challenges if you're not careful. Maintaining accurate consumer data: Quickly reaching consumers can be difficult during times of economic uncertainty. Increased access to data can help you overcome this challenge, but only if you can manage and understand the information. If you simply turn on the metaphorical data streams, you could find yourself drowning in duplicate and erroneous entries.Keeping up with rising delinquencies: Delinquency rates steadily rose throughout 2022.1 Although rates may level out for some types of accounts in 2023, collection agencies need a plan for dealing with the potential increased volume. At the same time, continued low unemployment rates could make it difficult to hire and retain agents. Managing a tight budget: Recession worries also have companies rethinking expenses, which can impact your ability to increase head count and invest in technology. Finding effective trade-offs is going to be important for debt collection process optimization.Staying compliant: We've seen some major changes over the last few years, but there's no time to rest — debt collectors always need to be aware of new state and federal regulations. Digitization might make compliance more difficult if you're now managing an increasing amount of personal information or using text messages (or other omni-channels) to contact consumers. WATCH:Keeping pace with collections compliance changes Five ways to enhance your debt collection process Here are five ways that debt collectors can overcome today's challenges and take advantage of new opportunities.  1. Leverage clean data Continuously updating and checking the accuracy of your data can help increase right-party contact rates. But don't rely on your internal data and basic internet searches or public records. Leading data and skip-tracing services can give you access to additional data from credit bureaus, alternative financial services, collateral records, business listings and other helpful sources. Some skip-tracing tools can continuously verify and update contact information. They can also rank contact records, such as phone numbers, to save your agent's time. And identify consumers in a protected status such as bankrupt, deceased, and active military) and require special handling to help you stay compliant. 2. Implement advanced analytics and automation High-quality data can also be the foundation for a data-driven approach to collections.  Use collections-specific models: Although credit risk scores can be a piece of the debt collection puzzle, debt collection recovery models are often a better fit. You may be able to use different models to score accounts based on exposure, risk, willingness to pay or behavioral factors. Segment accounts: Increased insights and models also allow you to more precisely segment accounts, which can help you handle larger volumes with fewer resources. For instance, you can more accurately determine which accounts require an agent's personal touch, which can move forward with an automated experience and which should go to the back of your queue.  The data-driven approach also allows you to increasingly automate your collections — which can help you deal with rising delinquency rates in the face of a tight labor market and budget constraints. 3. Know when and how to make contact Segmentation and advanced analytics can tell you who and when to contact, but you also have to be mindful of how you reach out. Letters, calls, emails and texts can all be effective in the right circumstances, but no single option will always be best. For example, a text could be ideal when contacting Gen Z, but a call might work best for Baby Boomers. That's neither novel nor surprising, but it is important to stay up to date with the latest trends and preferences. Ideally, you reach people on their preferred channel at an appropriate time. You may also need to continually test, monitor and refine your process, especially if you want to increase automation.  READ:Digital Debt Collection Future white paper 4. Offer financially appropriate treatments In addition to picking the right communication channel, consider the payment options you offer consumers. Various payment plans, settlements and policies can directly affect your recovery rates — and what performed best in previous years might not make sense anymore. Chatbots and virtual negotiators can also help improve recovery rates without straining your agents' time. And for accounts that will likely self-cure, automated texts or emails with links to self-service portals could be an ideal solution. Expanding payment methods, such as accepting payments from digital wallets when you're sending a text message, could also make sense. However, you want to be sure you're not wasting time or money by contacting consumers who don't have the means to make a payment. Instead, set those accounts aside for now, but monitor them for changes that could indicate their financial situation has changed — such as a new credit line. Then, try to offer a solution that will likely fit the consumer's circumstances. 5. Invest in your live agents Modern debt management and collection systems focus on digitization and automation, and these can improve recovery rates. But don't forget about your front-line agents. There will always be times when a personal touch gets you further than an automated message. Continued training and ongoing recognition can be important for retaining top performers, maintaining compliance and increasing agents' effectiveness.  Partner for success Implementing an efficient and effective collections strategy can require a lot of work, but you don't have to go at it alone. Experian offers various debt collection solutions that can help optimize processes and free up your organization's resources and agents' time. Tap into our industry-leading data sources — including traditional credit data, alternative financial data and over 5,000 local phone exchange carriers — to find, update and verify account information. Available on the cloud or with secure file transfers, the TrueTrace™ and TrueTrace Live™ tools have led to a 10 percent lift in right-party contact rates compared to competitors. When it comes to optimizing outreach, you can prioritize accounts with over 60 industry-specific debt recovery scores via PriorityScore for CollectionsSM. Or work with Experian to create custom models for your organization. For an end-to-end decisioning solution, our AI-driven PowerCurve® Collections solution draws from internal and external data to determine the proper customer contact frequency, channel and treatment options, including self-service portals. Create your own strategies and workflows and manage the entire process with a single dashboard, cloud-based access and integrated reports. Learn more about Experian's debt collection process solutions 1Experian. (February 2023). Credit Scores Steady as Consumer Debt Balances Rise in 2022

This is the fourth in a series of blog posts highlighting optimization, artificial intelligence, predictive analytics, and decisioning for lending operations in times of extreme uncertainty. The first post dealt with optimization under uncertainty, the second with predicting consumer payment behavior, and the third with validating consumer credit scores. This post describes some specific Experian solutions that are especially timely for lenders strategizing their response to the COVID Recession. Will the US economy recover from the pandemic recession?  Certainly yes. When will the economy recover? There is a lot more uncertainty around that question. Many people are encouraged by positive indicators, such as the initial rebound of the stock market, a return of many of the jobs lost at the beginning of the pandemic, and a significant increase in housing starts. August’s retail spending and homebuilder confidence are very encouraging economic indicators. Other experts doubt that the “V-shaped” recovery can survive flare-ups of the virus in various parts of the US and the world, and are calling for a “W-shaped” recovery.  Employment indicators are alarming: many people remain out of work, some job losses are permanent, and there are more initial jobless claims each week now than at the height of the Great Recession. Serious hurdles to economic recovery may remain until a vaccine is widely available: childcare, urban transportation, and global trade, for example. I’m encouraged by the resilience of many of our country’s consumer lenders. They are generally responding well to these challenges. If past recessions are a guide, some lenders will not survive these turbulent times. This time, many lenders—whether or not they have already adopted the CECL accounting standards—have been increasing allowances for their anticipated credit losses. At least one rating agency believes major banks are prepared to absorb those losses from earnings.  The lenders who are most prepared for the eventual recovery will be those that make good decisions during these volatile times and take action to put themselves in the best position in anticipation of the recovery that will certainly follow. The best lenders are making smart investments now to be prepared to capitalize on future opportunities. Experian’s analytics and consulting experts are continuously improving our suite of solutions that help consumer lenders and others assess consumer behavior and respond quickly to the rapidly fluctuating market conditions as well as changing regulations and credit reporting practices. Our newly announced Economic Response and Recovery Suite includes the ABCD’s that lenders need to be resilient and competitive now and to prepare to thrive during the eventual recovery: A – Analytics. As I’ve written about in prior blog posts, data is a prerequisite to making good business decisions, but data alone is not enough. To make wise, insightful decisions, lenders need to use the most appropriate analytical techniques, whether that means more meaningful attributes, more predictive and compliant credit scores, more accurate and defensible loss forecasting solutions, or optimization systems that help develop strategies in a world where budgets, regulations, and other constraints are changing. For example, Experian has released a set of Spotlight 2020 Attributes that help consumer lenders create a positive experience for customers who have received an accommodation during the pandemic. In many cases motivated by the new race to improve customer experience online, and in other cases as a reaction to new and creative fraud schemes, some clients are using this period as an opportunity to explore or deploy ethical and explainable Artificial Intelligence. B – Business Intelligence. Credit bureaus like Experian are uniquely situated to understand the impact of the COVID recession on America’s consumers. With impact reports, dashboards, and custom business intelligence solutions, lenders are working during the recession to gain an even better understanding of their current and prospective customers. We’re helping many of them to proactively help consumers when they need it most. For example, lenders have turned to us to understand their customer’s payment hierarchy—which bills they pay first when times are tough. Our free COVID-19 US Business Risk Index helps make lending options available to the businesses who need them most. And we’ve armed lenders with recommendations for which of our pre-existing attributes and scores are most helpful during trying times. Additional reporting tools such as the Auto Market Tracker, Ascend Market Insights Dashboard, and the weekly economic update video provide businesses with information on new market trends—information that helps them respond during the recession and promises to help them grow during the eventual recovery. C – Consulting. It’s good to turn data into information and information into insight, but how do these lenders incorporate these insights in their business strategies? Lenders and other businesses have been turning to Experian’s analytics and Advisory services consultants to unlock the information hidden in credit and other data sources—finding ways to make their business processes more efficient and more effective while developing quick response plans and more long-term recovery strategies. D – Delivery.  Decision science is the practice of using advanced analytics, artificial intelligence, and other techniques to determine the best decision based on available data and resources. But putting those decisions into action can be a challenge. (Organizations like IBM and Gartner estimate that a great majority of data science projects are never put into production.) Experian technologies—from our analytics platform to our attribute integration and decision management solutions ensure that data-driven decisions can be quickly implemented to make a real difference. Treating each customer optimally has a number of benefits—whether you are trying to responsibly grow your portfolio, reduce credit losses and allowances, control servicing costs, or simply staying in compliance during dynamic times. In the age of COVID, IT departments have placed increased priority on agility, security, customer experience, and cost control, and appreciate cloud-first approach to deploying analytics. It’s too early to know how long this period of extreme uncertainty will last. But one thing is certain: it will come to an end, and the economy will recover someday. I predict that many of the companies that make the best use of data now will be the ones who do the best during the recovery. To hear more ways your organization can navigate this downturn and the recovery to follow, please watch our on-demand webinar and check out our Economic Response and Recovery Suite. Watch the Webinar