Wednesday, 4 September 2013

US market trends – is the world spinning slower?

My daughter returned home from school this week to inform me that the moon is causing the earth to spin slower, although the lengthening of the day by 2 milliseconds every century does not feel like too much of a cause for concern!

This did cause me to draw a parallel to the Receivables Management sector which has been spinning faster and faster over the past 10 years driven by developments in technology and a focus on low cost fast spinning dialler sophistication, low cost focus on pure contact ratios, and low cost off shoring. Our world however, is now also being impacted by wider forces and starting to ’spin slower’ with the onslaught of regulations and sensitivity on how customers are treated.

While no creditor is completely immune to the implications of new regulations coming from the CFPB, FTC, or other regulatory bodies, perhaps for the first time the challenges faced within the US are being better handled by others who have not been so dialler reliant. Are there lessons to be learned globally from less dialler intensive environments?  Are there new technologies being deployed globally to sustain liquidation rates and enhance the customer experience? Will these new technologies result in far superior insights and better customer experiences?

Answers to these questions can be taken from markets and sectors which have remained customer-centric, rather than focussing on creating the most effective one-size-fits-all approach. These markets utilise niche strategies and suppliers to manage accounts at a granular segment level rather than at the wider portfolio level. They utilise technology to ensure disputes and complaints are responded to in a timely manner and they have controls in place to manage any exceptions to the process.  An additional benefit to this customer-centric approach is that it not only improves adherence to regulatory guidelines but also underlying portfolio performance.

In summary, creditors with a generic approach to collections will carry on being heavily influenced by external regulatory factors and will continue to be required to make difficult decisions which damage performance in favour of adhering to increased regulation. Those with a customer-centric approach, however, will continue to ’spin at a steady rate’ as a result of being well placed to deal with the external regulatory factors.

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