Wednesday, 22 March 2017

Beware the headlines: are pensioners really better off? (The perils of thinking you can ever know enough)

Last month there were some interesting reports about the state of the finances of those in retirement. On the face of it, they looked contradictory.

One Monday in February, working families learned that in spite of their hard graft to make ends meet, those in retirement were better off than they were: “Pensioner households are now £20 a week better off than working age households, but were £70 a week worse off in 2001.”

On the same day, the BBC’s deconstruction of this same report highlighted that pensioners are better off *only* when you have accounted for housing costs. It went some way to making the headlines more palatable; it makes perfect sense that those who are of working age have high housing costs so in net terms are not doing quite so well as those who, having grafted for so long, now have low (or no) housing costs.

But, by Friday of the same week, we learned the burden of debt (debt which, surely, will just never get paid off) is growing for those in old age: “One in four people planning to retire this year will still have a mortgage or other debts to pay off and will typically owe about £24,000.”
Looking at the data we hold at TDX Group on the demographics of those entering personal insolvency (those in the most desperate financial troubles) I found out:

More pensioners are finding themselves in financial difficulty.
Since 2010, pensioners have continued to only be a small proportion of those entering personal insolvency – but it has doubled from 3% in 2010 to 6% in 2016. I’m no statistician – but that feels significant to me.

Pensioners’ income isn’t growing – they are just exposed to less economic volatility than those of working age.
Looking at the income levels of this same group – it’s not that their income has outstripped those in work – it’s just dropped less. For those pensioners entering personal insolvency compared to those who are in work – their income has been relatively static, dropping by c£50 (3.4%) from 2010 to 2016, compared to a drop of c£300 (13.4%)  in those under the age of retirement.


Pensioners in financial difficulty owe more than those of working age.
Pensioners entering insolvency have more unsecured debt than those of working age – and the difference is growing. In 2014  and 2015, there was only about £1000 difference between the amount owed by these two groups; in 2016 it was £5000.
And I’m sure that if you dig into another layer of data and information you could come up with another set of statements that could be just as complementary or contradictory.
Looking at all the headlines and our own data at TDX Group, I’m left with two overriding feelings. Firstly, it feels wrong that pensioners (who have fewer options to get themselves out of financial difficulty than those of us of working age) are increasingly finding themselves struggling with debt. Then, thinking more broadly, my overall conclusion is that it just goes to show how careful you have to be to understand someone’s financial circumstances in the round. Getting this holistic view has been a perennial problem for our industry and one that we just haven’t cracked yet. In theory, this is overcome by gathering Income and Expenditure information – but because I&Es are conducted and held by individual companies, as a process it can be repetitive and painful for consumers. And at what point does all this information get pieced back together so those of us involved in this industry can take responsibility for proactive responsible customer management, taking supportive action before individuals (no matter what age) run into financial difficulty so they’re not left with unmanageable debt in their old age?
By Kirsty Macpherson, Head of Marketing, TDX Group

Thursday, 9 March 2017

Can voice recognition technology really help in the traditional world of debt collection?

Nowadays most of us are used to voice assistants, such as Apple’s Siri, Microsoft’s Cortana or Google’s Assistant in our handsets. And I doubt that many people, at least here in the UK, managed to avoid Amazon’s home solution Echo, with the integrated assistant ‘Alexa’ in the lead up to Christmas.

With these applications becoming more commonplace, many people in the tech industry are talking about voice becoming the next big user interface. The smartphone screen was the last big development before voice, arguably the tablet could be squeezed in between, but for me the concept is the same in that it’s a second portable screen.

Voice recognition is a different type of medium and has led to tech giants, such as Google and Amazon, investing heavily in research and development around voice recognition as they clearly believe in the platform’s viability.

But how could this new platform impact our industry?

You might well argue that it won’t impact our industry, after all how much did smartphones really change the way we collect overdue debt? It is true that we as an industry haven’t done much to embrace innovation in the smartphone space but it has had quite a large impact indirectly.

Without the smartphone e-collections (collections through digital means e-mails, online portals, web chat etc.) would likely have remained a much less effective channel. The smartphone brought with it constant connectivity which means consumers can be reached at times most convenient to them. It also means payments can be made anywhere.  In my opinion, without the smartphone, ‘self-serve’ portals would not be nearly as widespread as they are today.

But I digress, after all this blog is about voice and not the second screen. The truth is that the biggest benefits to collections through voice are already being implemented across the world through the use of speech/voice analytics. This technology uses software to transcribe full phone calls with ease and pick up key themes and words. It can also identify tones and trends from voices and an array of other data. Voice recognition is already helping our industry in core areas, such as compliance and call center management, and with further investment the usefulness and power of it will grow further.

The data that speech analytics provides opens up a whole new world of opportunities, enabling us to generate analysis to drive deeper customer insights, and ultimately improve performance and the customer experience. Could we find the perfect call structure? Can we leverage real-time information to prompt our agents to handle each situation more effectively? Can we recognise which agents are the best at handling certain types of calls? Can we find ways to reduce churn and improve the overall customer experience by optimising interaction? The answer is probably yes, at least to a certain degree, and the key is in the data capture this new technology facilitates.

As a data driven company, this is the part of the technology mix we feel really excited about. Speech analytics are already quite widely adopted further up in the customer lifecycle and are now starting to gain traction in our sector. Although still in its infancy, we are seeing more organisations including a number of our current suppliers adopting this new technology for the sole purpose of improving their collections operations. Compliance is the obvious first step where the technology is put to use today, but as it matures and the data is turned into insight the focus will shift towards optimising performance. This is another example of where compliance was initially seen to be a hindrance but is now helping to improve performance.

Although I believe speech analytics is the voice technology which will have the largest impact on our industry, there are a number of other ways in which voice as a platform can improve how we operate in collections, for example:

• Pre-collections: Payment reminders through new voice devices, e.g. Alexa’s calendar function reminding you that your credit card bill is due;
• Identification and Verification: Using personal voice recognition to verify someone’s identity, for example HSBC is implementing this for their telephone banking services through ‘Voice ID’;
• Artificial Calling: Leveraging voice recognition together with advances in artificial intelligence to perform collections, with the data from speech analytics providing the base for this.

Some of these solutions are currently far from reality and it remains to be seen how impactful they will really be, but I believe that voice can become a great asset helping our industry operate more efficiently and fairly for all parties. It might take some time to get there but done correctly voice could bring significant rewards to the companies who invest in this emerging technology.

Tommy Mortberg is Solution Designer at TDX Group.