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    Collections Lending | 2 min read

    Navigating Debt Collections Over the Next Decade

    When it comes to debt collections, consistent communication with your borrowers is critical. While lenders navigate their way through the current pandemic—finding the balance between the critical need for delinquency management while being supportive and empathetic to account holders and creative solutions that focus on digital engagement are key.

    I’m a communications guy through and through, with 25 years helping organizations create powerful communication strategies. I get a lot of questions about digital transformation. Today, I’m thrilled to be a guest contributor. I’ll share four insights I’ve learned about the recent digital transformation with SWBC’s readers.

    Leveraging digital consumer engagement in collections is more important than ever

    Many experts and economic pundits are forecasting a dramatic increase in delinquencies in the coming year. About 1.9 million vehicles were repossessed in 2019. In the early stages of the pandemic, most states enacted moratoriums on repossessions and most lenders offered deferral programs to help borrowers through the first several months. Those deferral programs have expired in most areas of the country. According to Black Book, “Our survey of lenders and automotive recovery companies suggest that the volume of repossessed vehicles will at least double in the next six months. We expect that there will be substantial challenges at every step of the process as recovery, transportation, and disposal are not fully recovered.”

    The pool of consumers experiencing past-due debt for the first time will swell considerably. A practical way to respond to the convergence of the economic and public health crises is to increase digital, omnichannel communication with borrowers. Give borrowers the opportunity to respond to communications regarding past-due payments via their preferred channel.

    Related Reading: Top 5 Reasons to Include Texting in Your Collections Efforts

    Digital communication proved its value for debt collectors in the early pandemic days.

    In my role, I’ve seen the difference between organizations using digital communication and those struggling without it. When the quarantine began earlier this year, intelligent, automated omnichannel communications allowed businesses to remain open 24/7 to serve their customers at a time that was convenient for them. Through digital communication, these organizations could scale up to handle never-before-seen call volumes, rapidly changing rules, workflows, and scripts in dynamic situations.

    That’s only the beginning, though…

    The combination of digital communication and advanced analytics will keep you in business for the next 10 years.

    Consumer demand for personalized experiences continues to increase. In order to remain competitive and continue to serve their account holders, many institutions will have to invest in improving their communication intelligence. This can be achieved by leveraging:

    • Predictive scores

    • Lifecycle decisioning analytics

    • Risk-based segmentation

    • Machine learning insights

    • And, mathematical optimization

    Analyzing this level of data and implementing accordingly can help your institution create a more satisfying consumer experience, supporting higher resolution rates. Automated two-way consumer dialogue across email, text, mobile apps, IVR, and web becomes more powerful when driven by analytics-based strategies.

    Omnichannel implementation can be faster than you think.

    The development and implementation process for financial institutions can be an arduous process—no matter the product, so believe me, I understand why organizations can be hesitant to consider new technology investments. However, when it comes to implementing omnichannel communication services, in terms of time-to-value, it can be one of the fastest, most powerful solutions to implement. There is a high return on investment ratios, and it typically takes four to eight weeks for voice and email implementation, with text features taking slightly longer.

    Navigating through the challenges of the pandemic has been interesting, to say the least. While no one can predict exactly what lies ahead, lenders can prepare for the rough waters of increased delinquency and repossession activity by seriously considering the benefit of a digital transformation that includes omnichannel communications.

    Click here to learn more about our omnichannel solution

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    Collections Lending

    Michael Magaard

    Vice President for Customer Communication Services at FICO and overseeing the North American market, Michael helps organizations navigate their way in the digital world. He is the conduit for executing omnichannel communications in a variety of industries, including banks and credit unions, auto, retail, healthcare and government.

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