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Recession Readiness Checklist

Published: February 4, 2020 by Tischa Agnessi

Do you have 20/20 vision when it comes to the readiness of your organization?

How financially healthy are your customers today? They are likely facing some challenges and difficult choices. Based on a study by the Center for Financial Services Innovation (CFSI), almost half of the US adult population – that’s 112.5 million – say they do not have enough savings to cover at least three months of living expenses. With debt rising and a possible recession on the horizon, it’s crucial to have a solid strategy in place for your organization.

Here are three easy steps to help you prepare:

Anticipate the recession before it arrives

Gathering a complete view of your customers can be difficult if you have multiple systems, which can result in subjective, costly and inefficient processes. If you don’t have a full picture of your customers, it’s hard to understand their risk, behavior and ability to pay and to determine the most effective treatment decisions. Having the right data is only the first step. Using analytics to make sense of the data helps you better understand your customers at an individual level, which will increase recovery rates and improve the customer experience. Analytics can provide early-warning indicators that identify customers most likely to miss payments, predict future behavior, and deliver the best treatment option based on a customer’s specific situation or behavior. With a deeper understanding of at-risk customers, you can apply more targeted interventions that are specific to each customer, so you can be confident your collections process is individualized, efficient and fair. The result? A cost-effective, compliant process focused on retaining valuable customers and reducing losses.

What to look for:
✔ Know when customers are experiencing negative credit events
✔ View consumer credit trends that may not yet be visible on your own account base
✔ Watch for payment stress – understand the actual payment consumers are making. Is it changing?
✔ See individual trends and take action – are your customers sliding down to a lower score band?
✔ Understand how your client-base is performing within your own portfolio and with other organizations

Take immediate and impactful actions around risk mitigation and staffing

Every interaction with consumers needs optimizing, from target marketing through to collections and recovery. Organizations that proactively modernize their business to scale and increase effectiveness before the next economic downturn may avoid struggling to address rising delinquencies when the economy corrects itself. This may improve portfolio performance and collection capabilities — significantly increasing recoveries, containing costs and sustaining returns. Identify underperforming products and inefficient processes by staff. Consider reassessing the data used and the manual processes required for making decisions. Optimize product pricing and areas where organizations or staff could automate the decision processes.

Areas to focus:
✔ Identity theft protection and account takeover awareness
✔ Improve underwriting strategy and automation
✔ Maximize profitability — drive spend, optimize approvals, line assignment and pricing
✔ Evaluate collection risk strategies and operational efficiencies

Design and deploy a strategy to be organizationally and technologically ready for change

Communication is key in debt recovery. Failing to contact customers via their preferred channel can cause frustration and reduce the likelihood of recovery. Your customers are looking for a convenient and discreet way to negotiate or repay debt, and if you aren’t providing one, you’re incurring higher collections costs and lower recovery rates. With developments in the digital world, consumer interactions have changed. Most people prefer to communicate via mobile or online, with little to no human interaction. Behavioral analytics help to automate and decide the next best action, so you contact the right customer at the right time through the right channel. In addition, offering a convenient, discreet way to negotiate or repay debt can result in customers who are more engaged and more likely to pay. Online and self-service portals along with AI-powered chatbots use the latest technology to provide a safe and customer-centric experience, creating less time-consuming interactions and higher customer satisfaction. Your digital collections process is more convenient and less stressful for consumers and more profitable and compliant for you.

Visualize the future…
✔ Superior customer service is embraced at the end of the customer life cycle as it is in the beginning
✔ Leverage data, analytics, software, and industry expertise to drive an automated collections process with fewer manual interventions
✔ Meet the growing expectation for digital consumer self-service by providing the ability to proactively negotiate and manage debt through preferred contact channels
✔ When economy and market conditions change for the worst, have the right data, analytics, software in place and be prepared to implement relevant collections strategies to remain competitive in the market

Don’t wait until the next recession hits. Our collaborative approach to problem solving ensures you have the right solution in place to solve your most complex problems and are ready for market changes. The combination of our data, analytics, fraud tools, decisioning software and consulting services will help you proactively manage your portfolio to minimize the flow of accounts into collections and modernize your collections and recovery processes.

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