Forward-looking companies are rethinking and reinventing their default management systems, services and strategies in the face of changing technology and customer behaviour, as well as other market forces, including the pandemic, economic uncertainty and increased regulation. This requires transitioning to new digitally-driven platforms that transform communication with customers who are experiencing financial hardship.
In this blog, I share some key recommendations for organizations seeking to build more modern default management capabilities.
Recommendation #1: Invest in a digital, omni-channel service model supported by artificial intelligence to communicate with at-risk customers.
Digital transformation is having a radical impact on default management, replacing traditional customer channels such as call centers with websites and mobile apps. The proliferation of smart phones, text messaging, advanced caller ID and speech-to-text / text-to-speech also is having a major impact on how organizations connect with customers, as well as artificial intelligence (AI).
The capabilities of virtual agents driven by AI are evolving at an exponential pace. AI virtual agents can work with customers in many of the same ways as live agents, connecting to a company’s default management system and accessing the same data, functionality and features as a live agent.
Leading companies are investing in these new technologies to better connect and communicate with at-risk customers and those who already have defaulted. The most effective default management strategies incorporate as many digital, AI-driven communications channels as possible to reach customers in the best way, at the best time, and with the intent of helping versus pressuring the customer.
Recommendation #2: Implement a holistic, integrated data management strategy driven by advanced data analytics to better understand your customers and their default risk factors.
Advanced analytics is driving many transformation opportunities in default management such as identifying at-risk customers before they default and recommending mitigation plans, as well as reaching out to customers, not to collect, but to offer help.
For a customer facing money difficulties, a collector can share financial hardship programs to support the customer. In other words, it can take a proactive and “kinder, gentler” approach with the customer. Many companies, however, are not yet doing this because they lack strong data management and data analytic capabilities to better understand what customers are experiencing and need.
A key challenge is the lack of aggregated data sources within an organization. Most internal data sources reside in silos. Machine learning and artificial intelligence models are only as good as the information they are able to consume, and partial, disparate data yields non-optimal decision points around customer risk. Implementing a holistic, integrated data management strategy is vital to taking full advantage of advanced data analytics.
Recommendation #3: Evaluate your current default management capabilities and develop a modernization roadmap to achieve the benefits of digitization and data.
Traditional default management platforms typically collect account information, group accounts that are similar, and assign those groups to collectors for handling through nightly batch processing. This effort often begins when a customer’s account becomes past due.
Today, however, this approach fails to drive competitive advantage. Circumstances affecting a customer’s ability to pay can arise at any time, despite the customer’s ongoing willingness to pay. Rich data and real-time processing can provide a complete and accurate view of each customer account 24/7. With this view, risk factors for default can be identified in advance and preventative measures taken.
A modern default management system enables collectors to identify these changing circumstances through customer-specific data and proactively reach out with support when the risk of default increases. Transitioning to such a system requires the help of the right technology partner, along with an effective modernization roadmap.
Modernizing default management requires the pursuit of technology advances that transform traditional processes into dynamic customer journeys driven by intelligent analytics. CGI’s latest Voice of Our Clients research, based on face-to-face interviews with finance executives across the globe, highlights the need for finance organizations to accelerate their digitization to meet unprecedented customer demand and improve the end-to-end customer experience.
A partner with the right business knowledge, data expertise and digital technologies can help collectors move forward into the future of default management with confidence and success. CGI has more than four decades of experience in default management, along with a broad suite of modern default management solutions.
Learn more about our recommendations for future-proofing your default management capabilities in our paper, The future of default management. In addition, feel free to reach out to me for further discussion on this topic.