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Taking C&R One Step at a Time

As part of our collections and recovery webinar series, we’ve been polling C&R professionals about their top impediments to improving collections performance (something I’ve blogged about before). During our recent Gaining Speed to Market with Best Practice Collections Automation webinar, we asked participants what was stopping them from implementing capabilities such as advanced analytics and optimization. 75% said it was budget.

I can’t say I’m surprised about the results. After all, many of us in the C&R space at FICO were collectors or lenders in previous lives. We “get” the financial and operational limitations that banks face when it comes to C&R, particularly when requesting funding to update infrastructure and analytic capabilities.

So how do you enhance C&R capabilities without a substantial level of investment—in other words, by moving a few steps at a time? Here are some ideas to consider:

•    Think Big, Act Small. Determine both short- and long-term goals that could help you gain traction. Particularly if you have legacy systems, “rip and replace” may seem like the only alternative—and you will likely be challenged to develop ROI for a new solution. Instead, consider what you can do in the short term (e.g., fine tune your channel strategies or improve agent negotiation skills) and then build initiatives around those. Most organizations typically seek outside help for these efforts, and the comparatively minimal cost is a fraction of what it would take to implement new systems.

•    Get a Handle on Negation. Operational negation is a term that consultants like to use, but it really just means making decisions that negate the value of decisions implemented in another area of the organization. For example, negation occurs when you make an upsell offer to a customer while you’re sending a harsh letter for being consistently late with payments (due to job loss, for example). While many banks are aware this happens, most aren’t aware how endemic the practice is throughout their businesses. Enhancing C&R performance requires taking an unbiased look across your organization and deciding what practices are holding you back.

•    Demand More from Consultants. There is often value in looking outside your business to help define, validate and implement key initiatives. But beware—many consultants who claim to “know the collections business” encourage one-size-fits-all approaches that may not align with your needs. Make sure whoever you choose brings a deep track record in helping companies like you—and unlike you—be successful in assessing and deploying better C&R strategies. Finding a truly balanced external point of view isn’t easy, so do your homework, and make sure your expectations are stated and understood upfront.

This list is by no means all inclusive, and if you have suggestions of your own, I encourage you to share them on the blog. I’m interested to hear your feedback on what has worked—and what hasn’t—in terms of evolving your C&R capabilities.

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