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Innovations in collections analytics

At a recent collections and recovery webinar that I co-presented, I polled attendees to find out what area they felt could be improved to drive the biggest C&R gains. An overwhelming 50% said it was technology. Process also emerged as a key theme, coming in second at 18.2%.

These results are quite telling because, even though it was an informal poll, the group included all levels of C&R professionals from across eight countries. And when I meet with clients or attend industry events, the feedback I get is very similar.

So how are clients driving these sought-after improvements in C&R technology and process? Here are three of the most promising areas of innovation:

  • Mobile communications. Using interactive SMS and mobile services in collections has been show to greatly increase contact rates and speed of repayment. As Daniel Melo shared previously on this blog, 40% of borrowers who commit to mobile collections payments make them within the first 30 minutes, and 77% pay within two days. And of course, the mobile channel is significantly less expensive than the traditional call center.
  • Optimizing loan workouts. The choice of if and when to offer a loan settlement is still an inexact science, and current practices, like rank-ordering by risk, often don’t lead to the best results. To improve performance, our clients have begun using advanced analytics to examine customer behaviors and balance portfolio resources and constraints—with results that include up to 10%+ improvement in net present value (NPV).
  • Optimizing agency management. Let’s face it, external collections agencies prioritize based on commissions and likelihood to pay, which means your accounts may take a back seat to those of your competitors. Instead, our clients are optimizing account placement based on agency performance and other key factors. This approach results in improvements like 10-20% increases in liquidation rates, and allows clients to set appropriate incentives to make agencies compete for their business.

My FICO colleagues and I have been sharing these types of C&R best practices and innovations with clients worldwide in our latest C&R webinar series. I invite you to sign up for the next webinar: Gaining Speed to Market with Best Practice Collections Automation. It will be held on April 18 for clients in the Americas, and there will be two sessions on May 10 for clients in Europe and Asia Pacific (the latter presented by fellow blogger Paul Swyny).

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