William Kinnelly Online Resources Lee Narwold Royal Bank of Scotland Virtual Collection Agent A New Channel for Delinquent Payments NACHA Payments 2008 May 20th, 2008 1
The Cutting Edge of Debt Collection Debt Collection Technology Today s Credit Climate What is the Virtual Collection Agent TM (VCA)? Best Practices: Promotion & the Experience Curve RBS Results 2
History of Technology in Debt Collection 3
Today s Credit Climate 4
Current Credit Climate ORCC Study December 2007 survey of U.S households shows: 43% report more difficulty meeting financial obligations than 12 months prior 25% report at least one delinquent account of 30+ days 98% would pay mortgage first Majority prefer the Web channel for curing delinquency 5
Current Credit Climate October 2007 ORCC Study What Bills are Least Likely to Get Paid? 6
Current Credit Climate ORCC Study December 2007 survey of U.S billers shows: Billers are bracing for a tough year 84% expect higher collections costs in 2008 Spending traditionally focused on working harder & faster: staffing increases, more letters, etc. Only 8% are providing consumers with the ability to cure their delinquent accounts online 7
Current Credit Climate October 2007 ORCC Study Communicating with Delinquent Accountholders 8
VCA Augments Existing Collection Efforts Debtor Preference Over 80% of debtors prefer the Web channel over a live agent to cure delinquencies 1 Over 40% of VCA site visitors had not been contacted by phone (RPC) in over 180 days, if ever 2 Debtor Convenience Over 20% of VCA site users visit outside of the normal calling window 2 1 out of every 5 site visits occurs over the weekend 2 Reduces Operational Costs Frees live agents to work accounts requiring personal attention 1 FiSite survey (2004) 2 Online Resources Champion Challenger study (rev. 2007) 9
VCA Champion Challenger Results Number of payments Payment amounts Increases payments Collect More For Less Reduces charge offs 10% Lowers cumulative flow rates Reduces cost to collect Fewer calls and letters Automate pay program apps 10
4 out of 5 4 out of 5 U.S. households have Internet access 4 out of 5 debtors prefer to cure their delinquency through the web 4 out of 5 billers anticipate higher collections costs (and losses) this year Only 8% of billers are providing their customers with an online self curing option 11
What is The Virtual Collection Agent TM? 12
What is the Virtual Collection Agent? Enables debtors to self cure online 24x7 VCA consists of these applications Branded debtor facing site(s) Client Workbench allows creditor/agency to self manage Payment processing Multi site capability Define a site for each lending product or portfolio Different collection strategies, content, experience per site Distinguish employee access and functions by site 13
VCA: Client Workbench Putting You in Control Strategy Manager Define criteria used to evaluate accounts for payment programs Use known account data or info gathered during debtor session Champion challenger, multiple strategies, agility Site Manager Messaging, branding, look/feel Control features, business rules, and debtor experience per site Account Manager Support callers use of web Agent desktop Continuous debtor experience across channels Access Manager, Report Manager 14
Strategy Manager 15
Site Manager 16
Account Manager 17
VCA: Debtor facing Site Self curing Account specific offers negotiated Debtors can apply for payment programs Promises to Pay Update Contact Information Educational Material Schedule Advisor Appointment Offer Reject Survey 18
VCA: Debtor facing Site 19
VCA: Debtor facing Site 20
Promotion Best Practices & The Experience Curve 21
Promotion Best Practices Light Promotion Additional option in a print medium All Touchpoints Every debtor touchpoint offers the web alternative Special campaigns Financial Advisory tone Integrated Customer experience is seamless, but different, between current and delinquent state 22
Promotion Effect of Promotion on Penetration Rates 20% 16% 12% 18% 8% 4% 0% 2% 3% Light Promotion All Touch Points Integration 23
Promotion Effect of Promotion on Loss Avoidance 16% 14% 12% 15% 10% 8% 12% 6% 4% 2% 5% 0% Light Promotion All Touchpoints Integration 24
The Experience Curve: VCA in Use (same store) Metric 1Q07 1Q08 Improvement Penetration Rate 6.2% 7.7% 24% Payment Rate 38.0% 47.5% 25% Liquidation Rate 18bp 24bp 33% Payment $ $29mm $47mm 39% Offer Acceptance Rate 15.7% 28.5% 82% 25
RBS National Bank PayAssist The Virtual Collection Agent 26
PayAssist 27
PayAssist 28
PayAssist Addressing the Challenges Scalable without additional investments in labor or equipment Increased number and average dollar amount of collections improves roll rates and reduces charge off losses Content management and rules engine guarantee quality control of interactions with debtors through branded look and feel Stress free electronic collections channel is more inviting to debtors Can be used as a low cost post charge off tool before sending debt to more expensive agencies 29
Comparison with Alternative Collection Methods Human Collection Agent IVR (Inbound & Outbound) Simple Online Payment Site PayAssist the Virtual Collection Agent TM Cost Efficiency Moderate High High High Scalability Low High High High Reliability Moderate High High High Adaptability High Moderate Low High Consistency Moderate High High High Versatility High Moderate Low High Debtor Comfort Level Moderate Moderate High High 30
PayAssist in Action within RBS NB Results The Control group comprised 20% of the total delinquent portfolio and PayAssist was not in anyway promoted to the Control group. The Test group comprised the remaining 80% delinquent portfolio who received PayAssist statement inserts, letters, collection talk off, VRU messaging, etc. Group Account C/O Rate Balance C/O Rate Account Bankrupt Rate Balance Bankrupt Rate Control 2.88% 5.20% 0.33% 0.72% Test 2.79% 4.60% 0.30% 0.54% Pro active marketing of PayAssist to delinquent accounts is critical to the success 31
Sample Statement Insert Front 32
Sample Statement Insert Back 33
Success Factors Market the daylights out of it Agent talk off Statement inserts and messages VRU scripting Ensure consistency with other delivery channels Real time update of master file for promises/payments Develop proper test and control prior to launch Needs to be user friendly and inviting 34
Additional Publications Visit orcc.com/card/research_report.asp for Payment Delinquencies Spanning All Industries A Survey of U.S. Consumers and the Companies They Pay Virtual Collection Agent Benchmark Study Virtual Collection Agent Champion Challenger Report 35
William Kinnelly Online Resources bkinnelly@orcc.com Thank You Lee Narwold Royal Bank of Scotland lee.narwold@rbsnb.com 36