Almost exactly a year ago I published an article titled, If you don’t like change, you’re going to like irrelevance a lot less. Today, with the hindsight of the current pandemic, the premise couldn’t be more true.
The collection industry has a lot of legacy processes and technology. There is bureaucracy, and there is resistance to change – especially due to regulation and fear of lawsuits. Yet, the world has changed in many ways right around the industry. Those who wish to be around in ten years need to get about doing things differently. In spite of the pain. Some are already ahead of you. A few debt collectors and technology companies are doing things differently. Yes, with compliance in mind -- but differently, nonetheless. And they have not been sued out of existence, nor have they experienced soaring complaints.
What should collection agencies be thinking about?
What do I see as the bottom line of their different approach? It puts the consumer at the center of their focus -- not the creditor client. Do you have to satisfy the client? Of course. But this is generally not where the innovation comes from. Creditors’ representatives are by nature going to be conservative. They are not business owners. They report to someone who has given them targets to hit, and therefore you have targets to hit. It's not their job to think about your business and what it will look like in 3, 5, or 10 years.
So, are you designing your business around the consumer or the client? Here's a hint: When you go to your home page what do you see? Is there a small link at the top that says “Did we send you a letter?” or are options for consumers front and center, with a small link for potential new clients at the top? Further, are you optimizing your consumer interface for mobile interaction or just desktop...are you optimizing for consumer experience at all?
What should lenders and creditors be thinking about?
Ironically, creditors are indeed where innovation is happening -- but at the point of lending or credit initiation, not after charge-off. This fact should allow for a good deal of innovation in the first party servicing space, where vendors are working on the creditor’s system. However, once charged-off and in the world of the third party space, it seems creditors move accounts into a no man’s land of legacy systems that are inaccessible to the consumer and receive little attention in the form of technology development or maintenance.
Creditors that believe charged-off customers are still potential future customers who have simply hit a bad patch should revisit this process. It's not doing you any favors in the department of your relationship with those consumers.
At the iA Innovation Council, we engage in discussions about what’s coming. We get you thinking about the future, so you can begin to imagine how to get there from here; what are the real barriers, and what are the real opportunities? If you only talk about this with those you see every day, you will limit your view of the big picture. I dare you to join us.