One Collector's Challenge May Be Another's Opportunity

One could argue that collections is going through a paradigm shift. Over the past decade, technological, social and economic changes have had a profound impact on C&R operations. While the effects vary across countries and regions, all organizations need to adapt to one or more of these developments:

• Ubiquity of mobile phones
• Increasing competition in the race for payment share
• Complex, changing regulations
• Impact of social media
• Evolution of consumer attitudes toward debt
• Rising consumer use of the internet for financial transactions

These changes aren’t necessarily positive or negative—often they’re both. Take the growth of mobile and prepaid phones, and the disappearance of residential land lines. It's a trend that poses many challenges for collectors. Mobile phone users can easily evade contact by diverting calls to voicemail or swapping out their phone’s SIM card to get a new number. Telecom companies regularly recycle numbers to new customers. Creditors must, therefore, be more careful to verify right-party contact and maintain accurate contact information.

On the other hand, the ubiquity of mobile phones also offers opportunities for more effective collections. Many people have their phones with them nearly round-the-clock, increasing the likelihood of contact. Because mobile phones are personal rather than household communications devices, the odds of a right-party contact also increase. And recipients of well-targeted mobile communications are more inclined to take a payment action “in the moment”—something which I've blogged about before.