By Morgan Nagle
Every New Year, millions of people resolve to lose weight, exercise more and pay down debt. According to the January 2014 Country Financial Security Index, 37 percent of US consumer survey participants expect their personal debt to decrease this year. One in five said they plan to reduce their debt by at least 10 percent. Only 11 percent expect it to increase.
These goals, like losing 10 pounds and doing cross-fit for an hour a day, are certainly admirable. But it’s February now. It’s not easy to turn down Valentine chocolates or take a brisk walk when it’s freezing cold. Debt, for many consumers, is a lot like that. Despite their best short-term intentions, it’s difficult to pay down balances or, at minimum, make consistent, timely payments.
The Debt Hangover is Getting Worse
This global phenomenon is what I call the “debt hangover,” and here’s why it matters to any company that gives credit, but especially to collections and recovery professionals: delinquency rates are actually expected to increase in 2014.
- In the US, credit card delinquencies are projected to rise from 1.51 percent in the fourth quarter of 2013 to 1.66 percent in the fourth quarter of 2014. That’s not surprising, since the average number of cards per US consumer is up to 2.19, from 1.96 in 2012, and 1.83 in 2011.
- As American consumers rev up their automobile purchases, delinquencies are accelerating too. The national auto loan delinquency rate is projected to rise to 1.19 percent by the end of 2014 from an estimated 1.10 percent at year-end 2013.
- In the UK, personal debt is “wreaking havoc with mental health” as UK households are “pushed over the edge” by personal debt reaching a record £1.4 trillion – almost the same amount as Britain’s economic output. UK consumer debt has tripled since 1993 and now stands at £158 billion.
Speech Analytics for Collections
Debt collection is a highly regulated business with high employee turnover. It’s impossible to monitor every call. Yet every word counts, since US consumer complaints under the Telephone Consumer Protection Act (TCPA) are on the rise. In the UK, new regulations being considered by the UK Financial Conduct Authority (FCA) will drive up collection costs and hurt collection rates.
Using speech analytics debt collectors are enabling their agents to work effectively, using the correct language to not only comply with a multitude of regulations, but also to achieve the best business outcomes.
Regardless of your industry, if your business is looking to improve the operations of your call center speech analytics may be the answer. Through speech analytics businesses are discovering issue root causes, developing recommendations and creating coaching initiatives to address the problems.
Many debt management agencies are using speech analytics software to improve performance and compliance at their call centers. For example, a one of our clients, a leading debt recovery company, is using speech analytics software to reduce exposure to violations of the Fair Debt Collection Protection Act (FDCPA) while improving collector performance. The speech analytics solution revealed that 60 percent of the time, agents failed to follow the company’s “ask for payment” process, resulting in reduced collection performance and increased callbacks.
Other findings included discovering that agents were neglecting to first ask for full payment, and instead immediately offering 50 percent settlement, leaving over $800,000 uncollected.
All in all, the speech analytics software allowed the debt collection company to identify more than $200,000 in potential FDCPA violations. The company also projected that it saved millions of dollars in fines and legal fees, and estimated that it will increase annual collections by more than $2.4 million.
Speech analytics uses speech recognition technology to conduct voice analysis, to understand exactly what collectors and call center workers are doing and how they are speaking with customers on the phone. Speech analytics allows businesses to analyze and monitor 100 percent of the interactions between collectors and debtors, arming these organizations with critical information to:
- Improve debt recovery rates and increase portfolio performance.
- Reduce compliance and risk exposure.
- Evaluate and improve collector performance.
While there is no “hair of the dog” remedy for consumers’ debt hangover, speech analytics software is making a measurable impact on the worldwide collection and recovery marketplace. It is changing the face of the modern day call center.
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