4 Needs for Next-Generation Debt Collections Solutions

The right offer delivered to the right customer at exactly the right time. It is more important than you could ever imagine. Customers use multiple channels to communicate and resolve debt obligations. They also may have multiple debt obligations with a bank or company.

Your business can’t read minds to determine when the time is right to contact customers or what approach to use for optimal collections success. Next-generation debt collections solutions help your team collect with a customer-centric approach that improves performance and preserves customer relationships.

What capabilities should you look for in a collection solution? Which features deliver the best performance improvements? Below, we share the most important needs to consider.

1. Portfolio Segmentation

An advanced collections solution can segment portfolios to maximize customer retention and recovery success. This helps organizations determine which customers to collect from first and how to create an appropriate offer for each one. 

This is achieved by using the following types of analytics:

Static metrics such as product type, exposure, and account balance.

Behavioral metrics such as kept promise ratio or time since last max bucket. 

Once segmented, accounts are pursued in order of priority. Separating in this way increases self-cure rates, as customers respond to offers tailored to their needs. This reduces the cost of operations and increases revenue captured from recovery practices.

It also does wonders for the customer relationship, resulting in less irritation and higher retention. Utilize software that lets you segment portfolios into batches based on shared characteristics or risk levels. 

2.  Multi-Channel Tracking and Communication

Today’s customers and clientele use multiple tools and techniques to conduct business. Moreover, customers can hold multiple obligations, making the repayment relationship more complex for collections departments.

Recovery success is a function of how many customers you contact. Therefore, tap into technology that lets you track account history, communication preferences, and past interactions. This level of intelligence presents the insights required to identify big-picture performance potential and keep customer conversations consistent.  

3. End-to-End Deployment

An end-to-end system is a must for modern collections' success. An appropriate solution covers every stage of the loan cycle, and deploys across the following three areas:

Lifecycle stage. To have a consistent strategy throughout your collections operations, your solution should cover everything from pre-collection and pre-legal stages to legal proceedings and portfolio write-offs.

Product line. A robust solution will also cover many products, such as retail products with or without collateral, factoring, leasing, etc.

Organization. An end-to-end system serves as a single authority principle across the organization, no matter if you have centralized or distributed management. Any solution must be able to work with various departments, offices and subsidiaries.

4. Insights to Improve Collector Performance 

Human capital is your biggest collection expense. The ability to measure and optimize personnel performance is critical to bottom-line returns. Insight into account and individual performance helps you better understand problem areas, identify quick fixes to improve, and hold personnel accountable. A next-generation solution should provide the following performance-enhancing features:

Scorecards that track collector performance and provide insight into productivity, efficiency, and success rates.

Incentive schemes that reward efficiency, both on a group and personal level.  

Data that can help inform collection department staffing efforts, with metrics like account-to-collector ratios and personnel shift records. 

What upgrades will your business make to technology systems this year to remain competitive? Share with us in the comment section below.

See the Effects of a Next-Generation Solution Firsthand

Mauritius Commercial Bank knew it needed to bring its collections and recovery operations into the modern era. Read this case study about how they implemented a sophisticated collections solution and improved performance.