As the economies in many countries start to bounce back due to successful vaccination programmes, there is a lot of discussion among lender about how best to determine both consumer and SME risk and treatment in the collections operation, given the interruption to standard data variables on which credit risk decisioning has been premised for some time. In the UK, for example, the recovery of billions of pounds’ worth of business interruption loans, the forecasted SME failure rate (circa 900k) and the need for both phoenix and new businesses to be funded is causing many credit grantors to doubt the effectiveness of historic data.
At the same time, advances in open banking, data streaming, microservices and real-time, event-triggered decisions suggests that we are more capable now than ever before of effectively leveraging the data we can access. Whilst the decision science capability has been raised, so has the regulatory framework insisting that our decisions are ethical, transparent and focussed on meeting the clients’ immediate and longer-term needs. Recent reviews in the UK suggest this regulatory scrutiny will only increase.
At FICO, we're continuing to work with many of our strategic clients to ensure they can access and leverage the differing sources of real-time information necessary to determine the best treatments. As ever, delivery routes are tailored via multiple communication channels to best suit their customers – especially those that may feel financially vulnerable.
Getting a Complete Picture
Analysis shows that as we start to approach a post-pandemic stage in some of the region’s markets, extra savings are already being used to help prop up household finances. At the same time, the continuing impact of furlough payments and salary protection schemes have again delayed many lenders' ability to fully understand the true impact of the pandemic on consumer finances.
But the ongoing extensions also offer a timely opportunity for banks and card issuers to ensure they continually interact with customers to better understand their genuine financial position — especially if household incomes take a hit later in the year. Anyone struggling, or knowing they may soon need help, are advised to contact their bank or card issuer to discuss their situation.
Tailored Treatments Drive Cash Flow
FICO has a proven track-record in delivering fast, smart and seamless treatment analytics and customer communications propositions. Recent engagement with two European clients helped them achieve double-digit improvements to their collections performance. In one instance, enhanced strategy and treatment insights enabled a bank to achieve:
• 19% reduction in outbound calls
• 13% uptick in cash collected
• 11% reduction in account roll rate
Our services continue to be in demand across the region, as lenders and debt collection agencies use our FICO Customer Communication Services for Collections and FICO Collections Optimization, as well as related FICO Advisors’ strategic consulting services for collections. To find out more, contact us.