Inbound collections model can help banks reimagine how they think about collections, creating a better customer experience and generating long-term value.
Customer needs in the wake of the COVID-19 crisis
To successfully build an inbound collections campaign, banks need to show a higher level of understanding of their customers’ needs, across every channel. This means approaching customers in a compassionate way, seeking to understand their personal circumstances, particularly how affected they have been by the pandemic. In turn, this will provide banks with greater insight into real-time customer behavior in the marketplace – which will enable them to create better, more relevant solutions.
Greater understanding of their customer’s circumstances and behaviors will give banks the confidence to pre-approve treatment strategies where appropriate, thereby building a successful inbound collections process. Worst thing that can be done is not to engage with these customers, as loan losses will be compounded if they don’t.
The most effective assessment identifies customers by their willingness to pay against their ability to pay. For example, a customer who is more than 60 days overdue, but has a high willingness to repay their debt, could work with their bank to agree on a treatment strategy. This could be an extended payment holiday – which would prove the right outcome for both the customer and the bank.
The worst thing banks can do is not engage with these customers because loan losses will be compounded if they don’t.
Matching customers with the right solutions
The fundamental advantage of knowing customers better lies in the fact that banks can apply this knowledge to a set of pre-approved, personalized treatment strategies. These could take the form of extending payment holidays on credit card payments or mortgages or offering to readjust the terms of a mortgage, so the repayments are lower over a longer period of time. Banks that make better use of data to understand each customer’s situation will not only create a better, more personalized customer experience, but also maximize the potential of recovery returns. Peter Neufeld, EY EMEIA Financial services Digital Customer Experience Leader, said: “The opportunity to understand customers better is now. And the need to know customers’ potential to recover from the impact of the pandemic is immediate.”
In the past, banks’ outbound collections strategies have been costly and inefficient, with the success rate of these campaigns standing at roughly 5%. Instead of using a traditional approach – such as call centers’ mail with red headings, or collection officers contacting customers to get them to agree to a new debt treatment strategy – a pre-approved treatment strategy enables lenders to push out their options in advance, much like marketing offers. For example, the offer could be no mortgage repayments for six months, or a temporary reduction in the interest rate. This would reduce the payment, making the customer reach out proactively to accept it or another treatment solution.
By providing incentives for customers to call in and explore the bank’s pre-determined solutions at an early stage, there is an opportunity to understand and treat their debt challenges more efficiently.
Early intervention solutions, combined with a compassionate approach to customers in need, should result in a significantly higher rate of inbound calls.
The opportunity to understand customers better is now. And the need to know customers’ potential to recover from the impact of the pandemic is immediate.
Santrauka
Banks have an opportunity to offer customers personalized, pre-approved debt treatment strategies by remodeling their repayment collection operations now. This will help to minimize losses, benefiting both the bank and customer alike.
