Category Archives: Collections & Recovery

Collections & Recovery What We Heard When UK Collectors Sat Down

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Feb082017

Last week I sat down with around 20 executives who manage collections for both lenders and debt collection agencies in the UK, to discuss what’s happening in the industry and how analytics — FICO’s specialty — can help. I will discuss my takeaways from this meeting in a separate post, but first I want to share some of the statements made during this meeting. If you ask me, the diversity of opinions in this group, and the participants’ clear desire to improve collections and customer relationships, show how much the industry is changing. This was not your father’s back-room chat on how to squeeze people for cash. This was a group of highly engaged professionals who understand regulations, customer needs and technology as well as anyone in the lending industry. Here are some quotes that should get anyone in the collections industry thinking. Regulation “The FCA is asking, ‘Are we... [Read More]

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Collections & Recovery How Thames Water Cut Bad Debt by 11% in a Year

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Feb072017

Think of collections and most people think of angry phone calls and repossessed cars and homes. But what happens when you provide an essential service you can’t switch off? That’s the case for Thames Water, the UK’s largest provider of water and wastewater services, which uses technology to increase results. Thames Water has reduced bad debt by 11% in the last 12 months by innovating its collections process using FICO® Debt Manager™ solution. For its achievement, Thames Water has been awarded the FICO Decisions Award for Debt Management. “The introduction of Debt Manager 9 has allowed us to design our treatment strategies from the bottom-up — rather than building strategies to the system limitations, we built them to the business and customer needs,” said Ross Betts, Thames Water’s collections system, strategy & segmentation manager. “This program has been hugely successful, not least because it managed to implement several ambitious goals... [Read More]

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Collections & Recovery Medical Collections Rates Highest for Consumers Aged 24-46

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Jan112017

Since medical costs often increase as we age, one might expect that the rate at which medical bills are unpaid and then sent to collections companies would also increase with age – at least until age 65 when US citizens qualify for Medicare. New FICO research shows that not this not the case. Looking at credit bureau data as of July 2016, medical collections reporting – both paid and unpaid collections greater than $99 – breaks down by age as follows: While the peak of this curve occurs at age 27, the rate of consumers with medical collections is uniformly high for ages 24 to 46. Over a quarter of consumers in that age range have at least one such collection showing on their bureau report. After age 46, we see the rate slowly drop, and as expected, it drops substantially after age 65. Part of the issue stems from... [Read More]

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Collections & Recovery FICO Survey: APAC Consumers Taking Longer To Pay Bills

Dec222016

It’s Christmas time again and apart from the jingling of bells it’s also a time for the juggling of bills. And apparently, that’s getting harder than ever in Asia Pacific. That was the firm message we got from our Asia Pacific collections managers when we polled them about what had been happening with their customer base over 2016. Three in five respondents from banks, telcos, and utilities revealed that their customers have taken longer time to pay their bills in the past year. The 60-days past-due segment has seen the highest growth according to 41 percent of respondents. 72 percent of collections managers also registered an increase in the number of first-time delinquents. This is in keeping with figures out earlier this year from Moody’s that reported household debt in Asia has grown at an average of 13.5 percent a year. Our survey, conducted last month at our FutureCollect event... [Read More]

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Collections & Recovery FICO Research: Student Loan Explosion Hurts Other Borrowing

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Oct202016

The student loan crisis in the US is getting much worse — student loan debt is over $1.3 trillion and is increasing by more than $2,700 per second. Lenders cannot ignore the impact of that debt on individual borrowing. Our latest research shows that: The number of US consumers aged 25-34 with student loan debt of at least $50,000 doubled from 2005 to 2015. During that same time, the average student loan debt across all age 25-34 consumers also doubled — by comparison, average credit card debt and mortgage debt for this population actually fell. While the number of consumers age 25-34 with student loans grew from 2005 to 2015 (from 27% of this population to 40%), there are fewer 25-34 year olds with mortgages or credit cards than 10 years ago.   In fact, our data shows that people with active student loans are far less likely to have... [Read More]

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Collections & Recovery Video: Protecting Drivers and Toyota with Optimization

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Aug232016

Ever wonder how Toyota Financial Services keeps 10,000 drivers from hurting their credit? When delinquencies spiked after the 2008 financial crisis, Toyota Financial Services realized it needed a markedly different approach to collections. As Jim Bander of Toyota Financial Services explains in the video below, the company turned to FICO prescriptive analytics and optimization, allowing it to become more flexible and scientific about collections decisions. Now, Toyota Financial Services can reach financially strapped customers sooner and have a conversation that makes a difference. The resulting benefits have been numerous, including helping many customers avoid repossession and stay in their cars, and preventing thousands from reaching a stage of delinquency that would affect their credit. For more information on this success story with Toyota Financial Services, read the following blog posts: Toyota Financial Drives “Data Science for Good” with FICO Analytics Toyota FS Wins InformationWeek “Best in Analytics” Award FICO Optimization Helps Toyota Keep... [Read More]

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Collections & Recovery Toyota Financial Drives “Data Science for Good” with FICO Analytics

Aug022016

An unabashed data geek, I’m fascinated by every facet of analytics and data science, including the growing movement to apply commercial data science techniques for social good. That’s not normally what people think about when the topic turns to debt collection. But using “data science for good” is exactly what Dr. Jim Bander did at Toyota Financial, implementing FICO Decision Management Suite to optimize the automotive lender’s practices, and keep more drivers in their cars and their credit history clean. “We have two core values here at Toyota: respect for people and continuous improvement,” Bander says. “Going into debt collections is a hard time for a lot of people, but our goal is to respect them throughout the process and to keep them as Toyota and Lexus drivers. We want them coming back as future customers.” Continuously improving decision models Toyota Financial began emphasizing collections after the 2008 financial crisis,... [Read More]

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Collections & Recovery Spotlight Your Success in the FICO Decisions Awards

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Jul142016

Is your company seeing great success using analytics and decision management? We’re looking for success stories for the 2016 FICO Decisions Awards. These awards honor our clients’ strategic wins, use of best practices and innovative deployments of technology. Awards will be presented in six categories: Analytic Excellence, Customer Onboarding and Management, Debt Management, Decision Management Innovation, Fraud Control and Regulatory Compliance. To judge the awards, we’ve lined up a stellar panel of independent judges: Dan Ariely, expert on human behavior, author of Predictably Irrational, and Duke University Professor of Behavioral Economics Jim Bander, national manager, Decision Science, Toyota Financial Services (2015 winner) Ken Elliott, global director of Analytics, Hewlett Packard Enterprise Bill Fearnley, Jr., research director, Compliance, Fraud and Risk Analytics, IDC – Financial Insights Petr Kapoun, retail risk director, Česká Spořitelna (2015 winner) Dr. Dalvinder Singh, editor, Financial Regulation International Nicole Sturgill, principal, Executive Advisor, CEB TowerGroup Nominations are... [Read More]

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Collections & Recovery Outsourced Collections – Get Your ROI and ROO

Jun162016

Did you know that almost half of all credit issuers – including banks, telecoms, government agencies, healthcare organizations and other credit issuers — place delinquent debt with third-party collection agencies? It’s easy to see why. Creditors often don’t have the capacity or time to devote to recovery activities. Collection agencies focus on effective data use, and are adept at analyzing, identifying and segmenting consumers as part of the recovery process. They’re focused on the compliance front as well, having faced more headlines and court decisions on this topic in 2015 than ever before, with no slow-down in sight. Larger participants are growing ever larger, and the focus is 24/7 on the consumer. We’re seeing the dynamics within the third-party space change from family-organized to corporately-owned. Mandated audit capabilities are driving collectors to communicate more skillfully in a consultative manner in a variety of channels. The times, they are a-changing. But... [Read More]

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Collections & Recovery In Debt Collection, A Is for Agility

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Jun082016

I could start out today by telling you all about Cabot Credit Management. About how they’re a market leader in debt purchasing, contingency collections, process outsourcing and litigation, supporting 600 users over five sites in the UK and India. Or how recent mergers – with Cabot Financial, Apex Credit Management and Marlin Financial Services – created a long list of complex challenges.  I could mention how growth was accelerating, with plans for additional acquisitions, using different currencies and languages. But forget all that. The theme today is one word:  Agility. Their challenge was how to retire an aging collections platform and become more efficient in their debt collection. How does one align the troops, when many of their staff members were new to this merged environment?  Or keep up with ongoing regulations and requirements from the Financial Conduct Authority?  Historical data and information was uneven and it was hard for... [Read More]

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