TSYS Collections Industry Briefing

Transcription

1 TSYS Collections Industry Briefing Beyond a Collection of Systems: Deploying a Comprehensive Collections System JULIE AUSTIN AND VYTAS KISIELIUS Executive Summary: A collection of systems is not as effective or efficient as a unified collections system Integration and synchronization are the industry s key needs not another piece but a way to make the pieces operate as one unified strategy Placing the strategist at the center, rather than the collections agent, enables the collections system to optimize collections while improving compliance, performance, cost and provability The customer experience will markedly improve by managing the dialogue across all touch points, offers and treatments from a comprehensive, unified collections system

2 As millions of individuals abandon their landlines by porting them to wireless services, it makes the ability to call for debt collection a dicey situation. The Collections Quandary, Inside ARM, July 15, 2009 Managing collections operations has become increasingly challenging as the need to maintain control and accountability for an array of customer contact options has created unprecedented levels of complexity. In addition to managing the traditional callcenter-based agent channel and sending regular letters to customers, today s collections executive must contend with a twenty-four-by-seven consumer expectation. Furthermore, they oversee an expanding range of contact methods and analytic models that offer efficiency and effectiveness gains with no way to execute reliably on more sophisticated models. The problem is, instead of a unified collections system, most collections shops contend with a collection of systems, that are illsuited for today s challenges. These multiple systems aren t the solution; they are the problem. With all these different systems employed to accomplish each task within collections, it s no wonder that integration efforts have become as expensive as the systems themselves. One collections executive recently stated that he has identified a multi-million-dollar gain that is made theoretically possible by utilizing a more detailed modeling of their debtor portfolio, but the reality of executing consistently and within regulatory compliance guidelines has kept this from being implemented. The most frustrating aspect is that the aforementioned modeling could work, but it cannot be deployed affordably at this point. The question we should be asking is how did we arrive at this point? It certainly wasn t anyone s intent, but it s easy to see how we have evolved to our current situation: first by installing new contact methods and tools as they became available; then assigning responsibilities according to the needs and potential benefits of each of the new tools; and finally trying to create backend integrations without upending the existing infrastructure. According to the chief systems architect of a major global bank, despite what we say, any system integrated after-the-fact is a patchwork at best and, at worst, fails to act on an integrated basis in any meaningful way. Five of the top seven financial institutions are actively working towards resolving this problem today by seeking to tie together all of their contact and treatment options into a single dialogue with their customers. The inherent characteristics of various contact methods make this challenging. For example, web-based collections contacts can happen at any time of the day or night but must reliably inform the outbound dialing strategy to avoid duplicate phone attempts during calling hours. Such coordination is expensive, unreliable at best and non-compliant at worst. In an age of emboldened regulators and plaintiffs lawyers, the safe bet for some shops has been to keep on the straight and narrow. In short, do what we ve always done. This approach has cost us the efficiency gains that new contact channels including self-service touches through web, , text and other smart-phonecentric applications can bring. It has also cost us effectiveness gains that are a result of allowing customers to pay us using the method of their choice as well as by paying using pre-arranged installments managed through selfservice applications. Most importantly, it has cost us the opportunity to reduce the reputational risk inherent in continuing to increase call intensity in a hostile, regulatory-intense environment while, at the same time, costing us the opportunity to improve the customer s 2

3 Effectively managing contact channels matters What exactly do we mean when we talk about the collections system? In the majority of instances when referring to collections systems, we are talking about the inventory management system that holds our delinquent account inventory. This is the software our collectors use to review and notate accounts, book both current and future payments and promises, maintain queues of pending accounts for distribution to agents and other destinations and generate and review reports of agent productivity. The collection operation encompasses many facets but typically it is composed of disparate services as shown below: WWW LETTER SERVICE ACCOUNTING SYSTEM STRATEGY ENGINE COLLECTIONS INVENTORY DIALER(S) IVR/VRU SMS TEXT REPORTING/ MIS AGENTS 3

4 Do your collectors have a cockpit view of the customer dialogue? experience of collections so that it can be a positive retention-building experience instead of a demeaning and frustrating relationship-killer. With the increasing array of solutions in collections, the challenge becomes incorporating the disparate pieces into a comprehensive strategy, says John Gillard, Chief Operating Officer of Credit Card Operations at UMB Bank. Individually we have access to great tools, but unless they are assimilated and the data can be used as part of our overall strategy - the value decreases significantly. The current-day collection of systems situation and its costs and limitations are not particularly anyone s fault. It does, however, set the stage by asking the most pivotal question how should we move toward a comprehensive collections system ensuring that we are taking advantage of all available information and technological tools to drive greater effectiveness (i.e., increased collections) while maximizing the efficiency benefits that the technology can deliver (i.e., reduced cost)? This white paper aims to answer that question by providing an overview of the necessary components involved in a comprehensive collections system, followed by the key dynamics of melding those components into a cohesive whole that is greater than the sum of its parts and ending with a brief discussion of the benefits gained by leaving behind the collections of systems and reaching the promised land of a unified, comprehensive collections system. What is the unified collections system? The unified collections system is actually comprised of a multitude of subsystems and inventory management. These subsystems include collector management and monitoring / incentivizing, automated dialer management, manual outbound dialing, inbound customer contacts (usually through an automated PBX with or without an inbound IVR), workflow and form management, outbound IVR, and text messaging (increasingly two-way but today mainly outbound), a web-based collections portal, payment capture including automated payment gateways, skip-tracing processes, external data augmentation and score application processes, legal account follow-up methods, analytic and risk models and a vast array of reporting systems covering each of the above. In addition to these internal collections systems and processes, we have vendors and other external sources, including enterprise-wide accounting systems, credit bureaus, analytic engines, scoring databases, bankruptcy scrubs, supplemental data providers and outsourced agents and collections agencies with all of their measurement, reconcilement and monitoring/ control challenges. And, finally, we have the people systems, which include collectors, managers, dialer operators, strategists, analytic teams, finance, HR, compliance and legal. This multitude of disparate systems comprise today s comprehensive collections system that is charged with coordinating all the tasks, communicating with and ultimately collecting pastdue (and charged-off) amounts from our customers. With such a disconnected and multiplayer set of solutions in place, we lose the efficiency and effectiveness each separate system promised to deliver because of a lack of coherency. We spend millions of dollars on technology that has great capabilities only to limit the benefit by forcing a fit into a conglomeration 4

5 of uncoordinated and sometimes overlapping solutions. This is a prime example of the whole becoming less than the sum of its parts. Many subsystems have their own decision engines and analytical capabilities, resulting in text messaging strategies configured separately from our dialing strategies, which are in turn separate from our letter strategies. All require effort, which can be duplicative or worse, completely uncoordinated. Couple this with the difficulty of tracking the results from these separate strategies, based on disparate files and databases that can be normalized only with great effort and care, and you find that what was designed to save money can actually increase the cost of operating. For example: Client A begins texting a population based on their age and risk scores. They see that they are getting more payments after this texting campaign so they continue to text this same population over time. They are missing the fact that the payment effectiveness increase comes from 20 percent of the target audience, and the other 80 percent is not only wasted texting efforts and cost but is also driving a further wedge between them and their customer as they continue to text someone who does not respond and does not appreciate this intrusion (remember, one man s diligence in following up can become another man s harassment!). Furthermore, they continue to dial this population because they are high risk and the dialer strategy is set to dial high risk accounts. No one is getting fired for over-penetrating these days, but failing to make the collection number has been the downfall of many collections executives. When in doubt, keep dialing the file is often the norm. Because the dialer strategy cannot dynamically see the results of the texting strategy, Client A continues to apply their most expensive resources on an account that may already be responsive to one of their least expensive contact methods. This is surely the definition of ineffectiveness and inefficiency. How do we create the collections system we need? Resolving this is not about purchasing another collections system. Articles, advertisements and partners talking about the features and benefits of their collections systems rarely, if ever, speak about their place in the comprehensive collections system and its challenges/ opportunities. This is for good reason the bottom line being that we don t have, don t need and don t want another component for the collection of systems. Instead, we want a single, unified and strategy-driven system that can effectively manage everything we need to accomplish while allowing us to be intentional and cost effective. The industry needs to be synchronized. Our specialized and highly effective subsystems should ideally work together seamlessly and efficiently. Collections operations executives require a solution that weaves together the excellent and effective subsystems into a cohesive and unified approach for deciding about each customer and executing on that decision with the right offer, treatment (including queues and channel touches) and communication. You require a synchronized dialogue with your customers that leverages the strengths of the various subsystem-based tasks and makes the whole much greater than the sum of its parts. Imagine trying to fly a plane successfully to its destination if the controls were all located in different sections of the aircraft, operated by different people under a common leader but without an awareness of whether the parts were or weren t working together. In the same regard, how can a collector 5

6 Individually we have access to great tools, but unless they are assimilated and the data can be used as part of our overall strategy - the value decreases significantly. be expected to execute the right talk off without an awareness of all the elements within the collections strategy and prior contacts/attempts across all channel touches with the customer? Characteristics of the comprehensive collections system include: An interchangeable set of resolution options per customer, both in terms of the offers that can be presented and the method in which they are presented Consistency of offers and treatments across contact methods from a single decisioning point capable of batch and real-time operation An integrated mechanism to capture behaviors and other customer inputs needed to adjust the engagement model on the fly in a single dialogue with the customer Comprehensive control and visibility, from a single dataset or data view, in the hands of the collections strategist A unified dataset for analytical modeling and optimization of the offers and treatments deployed, including test/control support and management at the individual account/ team/portfolio/product level to allow for incremental innovation Locked-down control, accountability and monitoring for compliance purposes, covering the entire dialogue per customer from initiation of contacts through cure (and covering repeat episodes of delinquency by the same customer) A reporting lens capable of customerlevel, agent/team/center-level and portfolio-level views of the entire contact, content, offer and treatment during the dialogue A collector desktop providing visibility to the entire (collector and self-service) dialogue to date in order to increase effectiveness of the talk off Ultimately, a customer-wide (versus product- or account-level) view allowing the dialogue to proceed only once per customer despite potentially having to cover several different products and delinquent balances, terms and interest rates or fees 6

7 Conclusion The collections efficiency gains we seek can ultimately only be realized by synchronizing the various components within the collection of systems we currently tolerate into a single customer dialogue driven by a comprehensive, unified collections system. This approach allows us to accurately reconfigure the contact methods we deploy, align the cost of interactions per customer with the benefit of gaining that customer s payment and maximize the productivity of our resources. Mail costs, dialer and IVR minutes and, most importantly, agent and outside agency costs can be balanced against properlydeployed self-service alternatives to achieve the highest yield per dollar spent. This also allows us to increase the effectiveness of our efforts, by capturing increased payments from non-contact populations who can now access our selfservice options as well as by increasing participation in extended-term payment programs that yield higher payouts than one-off payments and promises. Finally, this gives us the ability to deliver a superior customer experience through the proper balancing of contact options and the management of compliant yet individualized collections strategies. A recent study conducted by Mercator Research shows that 25 percent of financial institutions customers prefer to interact online and this trend will only continue to grow. Synchronizing the customer dialogue through a unified collections system is imperative, but not easy. It requires determination on the part of collections executives to move beyond the way we ve historically done it and toward a vision of the way we have to do it if we re going to thrive in the new consumer-driven world. This is achieved by putting the customer first, unifying the decision and execution phases to create one overall conversation that is coordinated across the board and giving strategists the tools needed to deploy a customer-service-like approach while maximizing collections yields. 7

8 ABOUT THE AUTHORS Julie Austin, Director of TSYS Collections & Recovery Product Development, is responsible for the strategic direction and integration of all TSYS collections products and services. The TSYS Collections and Recovery System has a comprehensive suite of collections solutions geared to help clients improve their enterprise collections performance through increased efficiency and effectiveness as well as capacity management through outsourcing. Vytas Kisielius serves as CEO of the Collections Marketing Center (CMC), a pioneering adaptive collections services company that deploys completely synchronized collections offers, contacts, and treatments. CMC s managed services solution is helping a rapidly growing number of top lenders across credit card, real estate, student, and installment loan products to manage their charged off, delinquent, and predelinquent portfolio operations. ABOUT TSYS TSYS (NYSE: TSS) is reshaping a new era in digital commerce, connecting consumers, merchants, financial institutions, businesses and governments. Through unmatched customer service and industry insight, TSYS creates a better experience for buyers and sellers, supporting cross-border payments in more than 85 countries. Offering merchant payment-acceptance solutions as well as services in credit, debit, prepaid, mobile, chip, healthcare, installments, money transfer and more, TSYS makes it possible for those in the global marketplace to conduct safe and secure electronic transactions with trust and convenience. TSYS headquarters are located in Columbus, Georgia, with local offices spread across the Americas, EMEA and Asia-Pacific. TSYS provides services to more than half of the top 20 international banks. commonwealth of africa asia-pacific independent states europe +44 (0) india & south asia japan middle east +971 (4) north & central america, mexico & the caribbean south america Total System Services, Inc. All rights reserved worldwide. Total System Services, Inc., and TSYS are federally registered service marks of Total System Services, Inc., in the United States. Total System Services, Inc., and its affiliates own a number of service marks that are registered in the United States and in other countries. All other products and company names are trademarks of their respective companies. (09/11)