Keeping up with the competition

Recently I was asked "if I am doing everything that I can think of and still not beating the competition what should I do?" This person had made a lot of improvements to their company and had, for a short period, been doing well. But the competition had reacted and they were once again falling behind. My, rather abrupt, answer was "think harder or give up" which entered us into a broader discussion.

Unfortunately, after having made a series of process improvements, this person was now back to doing business as usual - and this was the problem. Henry Ford once said, “If you always do what you’ve always done, you’ll always get what you’ve always got.” Nowadays the pace of change is so rapid that there are few instances where this remains the case - those who don’t continually innovate and streamline end up falling behind and struggling to survive.

A good example of this is AA Insurance; a decade ago it had a large network of retail premises, offered good quality competitive insurance and continued for a number of years building on this model. However, when Direct Line saw an opportunity to change the way insurance was bought, reduced overheads and therefore premiums, it took great market share and AA Insurance started to struggle.

AA insurance is still here today thanks, in my opinion, to the great visionary work of Mark Wood who came in and made a number of hard, radical decisions which looked to the future instead of reflecting on the past. He was not popular with everyone, good leaders rarely are, but he did turn the insurance arm of AA around.

Going back to the original question I was asked - the person I was helping was well intentioned, very good at delivering change, but was lacking the understanding of what was possible and the ideas to get there. Their real question was how do I go about identifying opportunities for improvement? This is far easier to address. To do this you should look at your own operation with a critical eye and assess if it is it better than last month?

Questions you should be asking are:

• Am I really making best use of all the resources I have available to me?
• What are my current constraints and can they be eliminated?
• If I were to start from scratch what would I do differently?

A regular review of what is happening externally in your market is also key:

• How is my performance compared to the market? The earlier you can identify any gaps and trends the better you can assess and react to them.
• What are my competitors doing? What are they investing in, what capabilities are they building? If they are investing they are expecting a return and you are likely to see your comparative performance change in the future if you do not invest too.

Continual improvement is now a part of all business. Building this into the company culture and making time to capture and assess a broad array of information and data at regular intervals is now what distinguishes the great performers. The best performers tend to use the broadest range of data available from a multitude of sources including:

• Good quality internal MI
• Regulator reported information
• Publicly available data sources
• Industry and sector  shows and conferences
• Industry press
• Benchmarking studies
• Networking with peers

Investing time and resources to gather and review this information to drive change in your business is key.




By Nick Georgiades, Director - Advisory Services, TDX Group.

What’s it like working in a fast growing company?

When I was asked to write a blog entry, I thought for a long time about what credit management areas and topics I felt passionate about and then it became apparent, the thing that I can write most about with ease and confidence is working at TDX and what it’s like working in a fast growing company. 

I’ve worked here for nearly 7 years now and throughout that time whenever anyone outside of the company has asked me what I do, I’ve always responded with a similar answer….I work for a young, exciting Financial Services company based in Nottingham. I don’t very often talk about my individual role to people, because for me, working at TDX is more about feeling part of a group, feeling part of something unique and dynamic and ultimately feeling like you can make a difference to the success of the business. 

When I joined back in 2006 as a Junior Business Analyst there were probably around 30 colleagues, there are now in excess of 300. Back then we only had a few clients based in the UK, we now have a client portfolio across a wide range of industry sectors and have a strong market presence in Europe, South America and Australia. The growth in such a short space of time has been incredible and what’s amazing is that the trend is continuing. As we continue to invest in new products, new ideas, new ways of working our opportunity to grow keeps on expanding. I’ve never been bored working at TDX and looking at the upcoming plans it’s fairly safe to say that I won’t be anytime soon. 

Some of the highlights for me so far whilst working at TDX have been: 

Rolling out new technology to  our clients

• Identifying a genuine business problem and working with the whole IT team, as well as our clients and suppliers, to deliver something innovative which drives a tremendous amount of value within the recoveries process

Migrating with a major telecommunications company onto our recoveries management service

• Having the opportunity to work with such a large organisation and deliver an important project, as well as helping build the start of a long term partnership

Going live with PLATO

• Seeing our former system  (which the team I joined in 2006 was responsible for) evolve into the largest debt management and placement platform in the UK, PLATO

Working to roll  PLATO out to market and on-board blue chip clients in the UK, Europe and Australia 

• Being part of a young, enthusiastic team whose willingness to go the extra mile has helped deliver a host of significant projects and implementations over the years

Some of the people I have worked with at TDX are just plain and simply amazing in terms of how much they are able to get through and their desire to deliver excellence

Having a role you enjoy, but which also challenges you, is a rarity for many people, but I’m happy to be able to say I do have that here. Feeling like you can make a difference to a business is a powerful motivator for many, and perhaps one of the main reasons TDX has bucked the downwards economic trend. Long may it continue. 

By Antony Dear, Head of PLATO, TDX Group

The Future of Payments Part Three: Pointing Towards the Future

Each week I give my 12 year old daughter her school dinner-money and she quips "I’m going to load-up my finger". Her school is one of many now using the technology which means when a student pays for a meal, they place their finger on a scanner that brings up their name, class and the balance of their account.

This makes me wonder whether the same technology will ever be used in the high street, in supermarkets or even online. It’s a concept that has been trialled before, and some trials continue to this day, but largely this technology has slipped away from mainstream attention as the payment industry has focused more recently on mobile, near field communication (NFC) or other contactless payment methods.

Past challenges with biometric systems have been concerns regarding security and privacy. In fact most systems don’t use the actual fingerprint to identify the user, but create a template of the fingerprint - a set of numbers measuring specific features of the print - making it impossible to reconstitute the original fingerprint. Nevertheless concerns do exist about the interoperability of fingerprint systems and the severity of the consequences of the loss of one’s fingerprint template. 　

Interestingly there are rumours that Apple, having acquired a company specialising in this technology last year, could be about to incorporate fingerprint sensors into one of its next iPhone releases. The vision and forward-thinking of one or two large organisations or retailers is all it will take for biometric systems to leap back into the mainstream.

When it comes to making payments (of any kind, including those relating to debt), fingerprint systems could eradicate the need for identification and verification steps, or having to remember numerous log-in details, making both physical and even online transactions and payments even easier. It could be the ultimate ‘single sign-on’ and could create some interesting debate around the passing of personal data between organisations, for example in the debt industry, between creditor and debt collection agency.

I believe Plato said "nothing is more certain than change" and this is certainly true in the world of payments. Combined with the growing use of online wallets such as PayPal, all payment-taking organisations, and of course that includes the debt industry, will need to constantly rethink the methods and channels through which they take payments.

And I fully expect in the next few years my daughter will turn to me and say witheringly: "Dad, did you really carry around a wallet stuffed with payment and loyalty cards? You should have used one of these instead!" wagging her ‘powered’ finger at me.


By Carlos Osorio - Director, e-collections and payment services,
TDX Group

Breaking News…the UK is not an island (when it comes to debt!)

This came as a big shock to me after my 37 year residency, but in the same way as no man is an island, I am slowly coming to believe that no country is either!

My wife, who is a solicitor, has said on a number of occasions when I have been trying to persuade her that moving to a new country for a new challenge would be a good idea, "Every country is different with different rules and laws and I would have to totally retrain if I wanted to be a lawyer anywhere other than the UK."  After a bit of research I have come to realise that this is the truth and not just an excuse not to move!

However, as I have engaged with creditors, DCAs and debt purchasers in the UK, Australia, South Africa, the US, Colombia, Spain, Italy and Scandinavia it has become clear to me that this immutable fact for lawyers is not as immutable for the global debt industry, where creditors all across the world are facing the same debt recovery challenges and frustrations:

 

"We want to be able to segment our portfolio to ensure that the right debt gets to the right strategy and the right supplier at the right price.”

 

“We want to be able to utilise a broader panel of suppliers to benefit from diverse strengths.”

 

“We want to be able to change the mix of debt sale and debt recovery based on prevailing market conditions.”

 

“We want to be able to create a truly competitive environment for our DCAs where we can change the flow of debt to them based on performance quickly and easily.”

 

“We want to be able to differentiate the treatment of won’t pays from can’t pays.”

This desire to work with best practice and improve the returns on debt and treat customers fairly is normally not achievable because:

• The analytical resource to determine these answers are all being utilised on the higher profile acquisition, customer management and collections areas;
• The system that is being used for debt recovery is a badly thought through bolt-on to the collections system and is not flexible enough or functionality rich enough to do what you want it to do; and  
• Even if the right system and analytical resource could be found, getting IT to prioritise and implement such a system is almost impossible because of larger opportunity items in the higher profile areas.

“We need to know where our debts are at all times.”

Especially with the more manual debt sale processes, files are often cut by analyst and sent via encrypted email to purchasers, but the creditor’s ability to track where the accounts have gone after this initial transaction and who now possesses them is typically non-existent.

“We need visibility of the actions of third parties, be they DCAs or debt purchasers.”

This visibility is often limited or even non-existent because of the inability to capture and interrogate non-standard data from third parties and now regulators are putting increasing pressure on creditors to either fix this or stop using third parties altogether.

So whilst the UK may physically be an island, it appears to me that the debt market is pretty much universal at the highest level. Whilst there are a number of local differences driven by culture, regulation and politics, the main debt recovery challenges are global constants.  The good news is that if there are global challenges then there must be global solutions – you just need to know where to look!


By Garry Evans, Director of International Partnerships, TDX Group

A post script: US debt buyers eye 'attractive' UK market

On 25 January, I posted on this blog that I thought US debt buyers were ‘eyeing’ the UK market. My view became even more resolute in March after attending the 17th National Collections and Credit Risk conference in New Orleans, so it was with no great surprise that I noted the news yesterday that Cabot had been bought by American private equity investment fund, JC Flowers. This deal means, as predicted, there is now a UK-based purchaser set to benefit from the funding advantage of its new US parent. I believe this will be the first step in an increased internationalisation of US debt purchasers as their domestic market becomes increasingly challenging. This, in turn, is going to significantly impact pricing over here in the UK. Watch this space.

By Stuart Bungay, Managing Director - Strategy, Marketing and International, TDX Group.

5 Tips to get the most out of your Management Information

It’s Monday morning. Your report has lots of data and charts, but is there only one number you look at? Then your Management Information (MI) is not doing its job.

In a data-driven industry MI should be the first indicator for opportunities and the first warning sign of threats to your business. Whether through highlighting exceptional performance in certain segments, or accentuating operational inefficiencies, MI should be giving the Management team the Information they need to steer the business in the right direction and spark up the right conversations, not just provide an unrelated set of numbers.

Here at TDX we, as Analytical Consultants, have reviewed MI capabilities within multiple sectors. Often it is simply a set of numbers and chart which don’t provide the full story -  is the line on chart 4 going the right way? What does it mean? How does it correlate? MI should answer these questions by being:

1. Accurate – it goes without saying, but MI is worthless if it’s not accurate. Discrepancies between MI and data are not uncommon, but I have seen massive amounts of time focused on chasing red herrings in MI. When MI looks wrong it’s usually one of three issues: bad data, incorrect analysis or a poor assumption. Data should be swept often for erroneous entries, looking for outliers will keep your MI in good order. Incorrect analysis may not seem wrong until someone points it out, so keeping an active communication between MI developers, analysts and end users is essential to maintain quality. Sometimes the assumption being made by the end user is misguided and a widely held belief within an organisation can be disproved with accurate data.
MI should drive assumptions within the business, not be driven by them.

2. Relevant – Your analyst team loves making charts. Not all of them are needed. I don’t think I have been in an MI review without someone saying ‘just skip that one’ about a chart with nothing on, or showing a figure that doesn’t make sense. MI should show you what you need to know, if you are asking for the same piece of information on a regular basis, then it should be part of your MI. If you never look at it, or it’s known to be a flawed metric, it shouldn’t be there.
Keeping your MI focused is crucial, with the ability to drill down for those who really need to understand a specific area.

3. Accessible – How easy is it to access your MI? Is it stored centrally? Can you access it out of the office? With today’s technology it has become more commonplace for MI to be hosted online, even using mobile apps to display your company’s MI. By removing it from simply being a spread sheet on the shared drive, to being able to access it when and where you need it, can transform an ignored report into a powerful management tool.
MI shouldn’t be a secret, and needs to be available to those who can use it to enhance the day to day performance of the business.

4. Refreshable – it may be obvious, but MI needs to be kept up to date, sometimes even directly linked to a live system. If you can stop problems as close to the point of origin as possible you can save a lot of headaches later on, especially for operational managers and colleagues. Having daily MI can be a real benefit in the debt industry.
Seeing the performance of a campaign right away can enable focus to be shifted to maximise returns or minimise losses.

5. Maintained – Ideally, MI should be reviewed every 6-12 months and questions asked such as: have the business goals changed? Is performance viewed differently? Is overall cash now more important than liquidation rates?  MI can become stagnant and irrelevant if left to run in the background as an after-thought. It is often the case that analysis projects that start as a one off piece of work become relied upon , in preference to the automated MI, this can create real bottlenecks to your analysis resource, with analysts replicating work rather than investigating new opportunities.
Take the time to review your MI metrics and you can free up resource in the long run for your analyst team to deliver real insight.

By considering these 5 general principles, you can transform a humdrum MI report into a powerful and reliable tool. Take time to develop your MI and keep it in good order, and it will quickly become your first port of call for answering questions and assessing business performance. So, next time you look at MI, think about if it is delivering, if not, maybe it’s time to rethink those tired old tables and charts.

By Stephen Hallam, Value Analyst, TDX

The hidden value in consumers who don’t pay - one man’s trash is another man’s treasure

When it comes to collections and recoveries we see the full range of reactions - from those who actively engage, right through to those who never make a payment. To date, much has been made of maximising the returns from consumers who do pay, but what about reaching out to those who currently do not? The short answer is that, for a creditor working in isolation, these consumers represent a significant challenge and cost for which no return is generated. So what opportunities do exist for a creditor determined to make more of their non-paying consumers?

They key is to seek a greater understanding of the individual and why they’re not paying.

1. Understanding customer behaviour 
By accessing additional data sources creditors can begin to more effectively split ‘won’t pay’ from ‘might pay’.  Simple examples such as insolvency suppressions are already widely used in our industry, but many more sources of profiling data are readily available but less widely used.  For instance, how many creditors are able to look at first placement DCA activity when recycling their consumers on to a second placement or indeed how the consumer has behaved in recoveries for other creditors?  I would suggest that consumers who paid or, in some circumstances, even just engaged with a DCA or another creditor are much more likely to pay at the next DCA placement than those who did not.

2. Reaching out by email
Often the root cause of non-payment is inability to contact the consumer using the data currently held by the creditor.  Telephone and address appends are widely used in our industry and their benefits are well proven.  In my view, the emerging opportunity is email contact data.  So often a consumer in financial difficulty will see significant changes in their personal circumstances which will result in changes to addresses and telephone numbers, but an email address, which is usually free to maintain will often stay with the consumer and, with the right execution capability, represents a genuine opportunity for creditors to re-engage consumers who have previously been non payers.

3. Breathing life into a portfolio
Just because a consumer isn’t paying you, it doesn’t necessarily mean that they aren’t paying someone else – or that they are not able to pay.  With the emergence of data sources dedicated to sharing information about consumers who are in arrears, it is increasingly possible gain a fuller picture of their financial circumstances and to differentiate between those in genuine financial difficulty, and those who are paying elsewhere due to a prioritisation decision.  This presents an excellent opportunity to proactively target those who genuinely can pay. This can prove an extremely effective tool on later stage portfolios that would otherwise be extremely expensive and unwieldy to work.  Going one step further and considering the debt purchase market, this can also present an interesting opportunity to sell specific accounts to another organisation which may have reason to value them at a premium as compared to the in-house valuation.

Organisations that implement even just one of these activities may find that they can radically improve performance on what otherwise appeared to be a portfolio ready for write-off. That being said, it is still important to know when it’s time to call it quits. As technology and data improves, the point at which the effort required to pursue payment outstrips the benefit has changed. However, as unpalatable as it may be, that point does still exist. Depending on internal capabilities, access to technology and specialist suppliers, this point will be different for each organisation. It’s time to take a fresh look at all the options available with an open mind – and you, too, may find that you can mine gold from what otherwise appeared to be trash while enhancing your understanding and therefore treatment of those who are in genuine financial distress.


By Elliot Jackson, Director of HeliX, TDX Group