The COVID-19 crisis has rapidly changed the way individuals and businesses operate around the world, and with no clear end to the pandemic in sight, it’s unclear when, or how quickly, the economy will start to recover. To better understand the effect this uncertainty has had on debt collection, we analyzed data from over 12 million consumers of major banks, issuers, eCommerce companies, and direct lenders.
In our upcoming report, Consumer Debt in the Age of COVID-19, we use this data to review consumer repayment trends, the role of stimulus checks in that process, and what debt collection companies will need to do to adapt.
Here’s what you can expect from the report:
Pre-coronavirus payment insights. In order to provide a benchmark for new or rapidly changing consumer behavior, we reviewed common pre-pandemic payment trends, like payment surges during tax season.
COVID, CARES, and consumer concerns. We tracked consumer behaviors around engagement and payments throughout the crisis—from the onset to the declaration of a national emergency, passing of the CARES Act, distribution of stimulus checks, and beyond. Consumers were clearly concerned early in the crisis—engagement with debt was down 40% year over year in mid-March—but when stimulus checks provided an infusion of cash, consumers overwhelmingly chose to use it to pay their debts.
Click through rates plummeted in March as the crisis worsened, only to reach a record high post-stimulus.
What’s next for debt collection? As the crisis continues and consumer payments are slowing, debt collectors must adapt to survive. Based on the payment and engagement trends outlined in the report, we share four key steps debt collection companies can take to best serve consumers in the “new normal.”
If you’re interested in reading the full report, fill out the form below to get notified when it goes live.
In the wake of the COVID-19 pandemic, a recession is looming, and consumer debt is on the rise. In order to prepare for the wave of consumers unable to pay money owed, companies need to decide how to manage their past-due accounts.
Debt sales play a unique role in the collections industry, as choosing between selling to a debt buyer and placing accounts with a third-party debt collector can make or break a brand. Here’s what you should know about selling your debt portfolios and how you can recover late payments before you decide to sell.
What is a debt buyer?
A debt buyer is a company that purchases debt from lenders for a fraction of the full value of those accounts. The value of a portfolio is evaluated based on several factors including the age of the debt and the volume of accounts. All debt buyers are not created equally, as some may also own fully functional debt collection agencies.
Once a business sells its past-due accounts to a debt buyer, the debt buyer can:
Sell the accounts to other debt buyers
Send it to debt collection agencies
Collect on the accounts themselves (if they are a licensed debt collection agency)
Selling your debt to a debt buyer
Pros of selling your debts
The most common reason that a company may choose to sell off debts to a debt buyer is that it can provide a quick influx of cash. Some consumer accounts may go unpaid for years, and older debts can be difficult to collect on. For smaller businesses, selling past-due accounts to a debt buyer can be especially helpful, as every late payment can feel like a larger detriment.
Cons of selling your debts
Once the sale of debt is complete the debt is now owed to the debt buyer. Many consumers may not be aware of this transition, and the new owner—whether a new third-party agency working on behalf of the debt buyer or the debt buyer themselves—now represents a new business’s brand to the consumer. This puts pressure on businesses to choose a reputable debt buyer that will handle their accounts and consumers with care.
Compliance concerns
This change in account management can have legal and compliance implications if the debt buyer violates any collections laws. The Office of the Comptroller of the Currency (OCC) holds lenders accountable for compliance violations of third-party vendors.
While some debt buyers are extremely clear in detailing their compliance adherence, there is not a guarantee the buyer that acquires your accounts will be the last person to own it. This potential compliance risk should be paramount when deciding on any new vendor. Lenders should be especially cautious when deciding on a potential debt buyer.
Brand risk
New vendors, operating under their own standards, bring additional risk to your brand reputation when they begin to manage your consumers’ accounts. As mentioned before, consumers may not separate the debt buyer from the debt they owe. Maintaining your business’ brand reputation, even in collections, should be a key part of any business decision.
Original creditors forfeit control over the methods of communication with their consumers when the sale of debt is complete. If a business does not choose wisely when selling its debt portfolio, the business is risking negative brand experiences that can potentially dissuade consumers from working with or buying from the company again in the future.
Short-term gains
While selling your debt can offer money for your business faster than a long-term debt collection strategy, it also means losing potential revenue later. Debt buyers pay for portfolios at a fraction of their total value, and if you’re able to build a consistent, long-term strategy you can recover closer more of the value owed.
Hiring a debt collection agency
Pros of hiring a debt collection agency
Debt collection agencies, especially digital-first debt collection agencies, offer longer-term liquidation solutions for lenders. Debt collectors are able to work in conjunction with your existing consumer experience process and can strategize with you to meet collection goals. While some debt buyers have dedicated debt collection teams, third-party debt collectors remain a more active part of your own consumer life cycle.
In addition, as the debt collection industry slowly begins to digitize, more powerful debt collection solutions are becoming available. Digital debt collection tools offer improved regulatory compliance, a better consumer experience, and improved liquidation rates relative to traditional call-and-collect debt collection strategies.
Cons of hiring a debt collection agency
Working with a debt collection agency is still another vendor to add to a growing list. Debt is a regular piece of the consumer lifecycle, however, and all lenders should have a collection solution on hand. Some companies choose to build full in-house collections teams, but proper training can still be both time consuming and resource-intensive.
What solution works best for you?
Selling your debts may offer some immediate relief, and there are many companies that offer excellent service and care. Regardless of which debt vendor you decide to use, be wary of potential bad actors and do your research to understand the best fit.
In an ideal world, consumers would be able to pay their bills in a timely manner, and lenders would not have any debts to collect on. Unfortunately, unexpected hardships and changes in income can put even the most financially-literate consumer in a difficult situation. Debt is a necessary part of any business, and it’s imperative that businesses choose the right option for themselves and their consumers.
Do you still have questions before you make your choice? Talk to our team today. We can answer your questions.
Due to regulatory concerns and a general wariness of adopting new technologies, the debt collection industry has historically been slow to change. As companies across other financial industries continue to make it easier for consumers to access their own finances, that resistance may finally be waning.
Point of Sale finance companies like Affirm and Afterpay are making it simple for consumers to pay for more expensive goods in installments. Digital payment platforms make sending and receiving money quick and easy. Banks with decades (or even centuries) of history have quickly accessible apps that give consumers immediate access to their accounts. Debt collection can’t miss out on this digital revolution.
Fintech startups have started jumping into the collections and recoveries fray. These disruptors are providing improved consumer and client experiences, greater flexibility, and increased recovery rates. Here are four major ways that technology-driven companies are redefining the collections industry.
Embracing modern communication preferences
Traditional debt collection agencies primarily contact consumers over the phone. According to Hiya’s State of the Phone Call 2019 report, only 48% of incoming calls are answered, and that number plummets to 26% if the caller is unidentified. Communication methods have dramatically diversified in the years since the FDCPA was passed in 1977.
Digital channels provide less obtrusive ways to engage with consumers. A technology-driven, omnichannel approach provides more options for a consumer that’s already plugged in. Even something as simple as having an active social media presence supports existing teams and improves brand awareness.
Analyzing and improving consumer engagement
By transitioning to digital communication channels, innovative debt collection companies have a clear picture of each interaction a consumer has with their service. By applying artificial intelligence and machine learning to consumer engagement data, like email open rates or website browsing behavior, communications can then be optimized over time.
Multi-armed bandit algorithms help expand this optimization process beyond simple A/B testing and offer consumers the message that best suits their needs. If, for example, a consumer opened an email and clicked on a link inside, but did not respond to the following three emails they received, the algorithm can determine a new, unique message to send that fits this pattern of engagement.
These messages can also be optimized at a more granular level. By testing batches of messages with small changes in diction or different sized buttons, machine learning engines like TrueAccord’s Heartbeat can create the perfect message for each individual consumer.
Building scalable systems
Digital debt collection solutions have a significantly smaller physical footprint than their traditional counterparts. Newer tech solutions can be integrated into existing debt collection strategies, and full digital debt collection agencies can scale without requiring the same staffing or training of traditional collections teams.
By building code-driven compliance solutions into the software, fintech debt collection solutions can easily scale to securely service thousands of accounts. Automated communication tools mean that the majority of consumers can resolve their debt without having to speak directly to an agent.
Another key, scalable advantage that technology-driven financial services offer is the ability to send emails to a large number of users. Properly scaling an email outreach strategy requires careful planning and testing. Traditional debt collection agencies can struggle to compete with the same email volume as dedicated technology companies that have laid the groundwork for email services in advance.
Personalizing payment plans
Customized communications go a long way when growing consumer engagement, but helping them build payment plans that work for them is the ultimate end goal. Fintech companies in collections enable flexible payment plans that improve retention and decrease breakage rates. Consumers can adjust payment dates to coincide with their paydays, extend payment plan durations, or even request unique hardship relief options — all without ever talking to a human agent.
If a consumer sets up a payment plan and unexpectedly loses their job, it is not uncommon for them to call a debt collector and simply cancel a payment plan. If given more flexibility, they may be able to afford a smaller monthly payment as they get back on their feet. Since the process is self-directed, consumers are empowered to take control of their own finances. Technology-focused companies can focus on encouraging that through their products and services.
Fintech debt collection startups continue to evolve and support consumers and creditors alike with new technology. Providing consumers with a personalized and customizable experience brings the debt collection industry in line with other financial services and makes paying off debt easy.
TrueAccord’s Chief Compliance Officer and General Counsel, Tim Collins, joins host Joann Needleman, Practice Leader & Member at Clark Hill PLC to discuss the evolving world of debt collection.
The inaugural episode of the podcast includes discussions around:
The digitization of debt collection practices
How industry practices are adapting to the COVID-19 pandemic
The need for companies to adopt these changes before it’s too late.
New products in debt collection seek to solve decades-old problems with traditional collection strategies. Products and services seek to improve the collections process and aim to improve contact rates, liquidation rates, brand perception, and ease of access.
When you combine agile product development with its application in collections, you’ll see new solutions to old problems. I recently spoke with Parker Lyons, TrueAccord’s Product Director, about his personal product philosophy, how he and his team are approaching product development, and the challenges faced by new product offerings in the space.
Parker Lyons, Product Director
Hi Parker! Thanks for joining me. I wanted to kick us off with an introduction. You’re fairly new to the collections industry. Can you walk me through what brought you to product development in debt collection?
Sure! When I finished college I started out in advertising for consumer packaged goods. I was living in Colorado at the time, so I was working on some ads for Coors Light and Polaris snowmobiles. I spent a few more years in advertising, but I ended up taking an interest in energy and renewables. I saw companies in the space with really impactful missions and the growth potential, so I went to school to get my Master’s [Degree] in Environmental Studies.
I ended up making my way out to California and started in solar. I met some people at Spruce Finance who are now working at TrueAccord, and had the chance to see the work TrueAccord is doing. I always had a very “Tony Soprano” view of debt collectors, but TrueAccord is something different. It’s a different type of mission, and we’re really helping people get back on their feet.
We’re happy to have you! How do you translate your product experience over from such a different industry?
Most recently I was with a company called BlueWave Solar that was a community solar business. Our product allowed consumers to subscribe to a percentage of a solar farm and apply the savings generated from that farm to their utility bill.
So we really were a servicing company. We had clients who were big banks and energy companies whose assets might differ from debt collectors managing portfolios, but the goal was the same: they wanted to keep accounts and cash flow moving.
And as you’ve started to consider meeting that goal for clients in debt collection, what are some things you’ve learned about the industry? Do you see consistent issues that you think need to be addressed?
Traditional debt collection platforms are using reliable systems. Call-and-collect methods have worked for a long time, but performance is waning and people aren’t picking up the phone anymore. A lot of the appeal though is that it’s a relatively simple model to get moving. You hire agents, you train them, and they start calling.
On the other side of that, we see some resistance to new technology, and I think that people are worried about it being too complex. So that falls on us. We have to meet clients where they are and focus on making integration easy. We have to maintain simplicity even though machine learning and digital tools can be very complex.
How do you go about making your product more easily digestible then? Where do you start when you’re trying to solve that problem?
It starts with knowing your user. Who are they? What’s their problem? You have to have a deep understanding of what makes them tick and their pain points because you then have to ask yourself “How do we solve that problem for them in a way that no one else can, or cheaper than someone else can?” In product management, we say that you’re responsible for creating a product that is valuable, usable, feasible, and viable. With those things in mind, you can turn your potential client’s issues into your value proposition and the capabilities of your company.
In product management, we say that you’re responsible for creating a product that is valuable, usable, feasible, and viable. With those things in mind, you can turn your potential client’s issues into your value proposition and the capabilities of your company.
As an example, we’re expanding with TrueAccord Retain, our product for first-party pre-charge-off solutions. We’ve scaled our capabilities with artificial intelligence and machine learning in late-stage collections, and early-stage is a natural extension of our growth and service value. In the age of COVID though, we’re seeing an increasing need for early-stage.
The major pain point we’ve seen is that it’s expensive to spin up and scale massive call centers quickly. We have a proven tech stack that can address the need to start quickly. Now it’s a matter of evaluating and understanding the unique challenges of collecting early-stage debts.
Are there projects outside of Retain that we’re currently working on that you’re allowed to share?
Our team is constantly asking “How do we bake all of our learnings into best practices?” One of our biggest projects right now is improving our own internal efficiencies. Everything that we’ve built so far has worked, but we need to—with higher account volume and higher growth rates—automate more of our own processes and move away from manual practices.
Another important piece of that is ensuring that processes are thoroughly documented. These growing pains are expected when an organization is growing quickly, and the more we grow, the more diverse our client base will get. We have to build on a foundation now that can accommodate that diversity consistently.
I’m also reflecting on what we know about our current users. We have to figure out the changes we hope to deliver for existing and future clients. Building a clear roadmap for that is huge which is why we’re working so closely on improving our internal organization. Improving our internal planning directly improves our product offering and client performance.
That’s really exciting to hear. I know how much the startup world prides itself on its ability to pivot quickly, but creating a more defined system makes that system scalable. We’re all incredibly excited to see what comes next!
Compliance regulations in the debt collection industry are built to protect consumers in debt from potentially predatory practices and ensure an equitable collections experience. For debt collection agencies, this often requires building out entire departments dedicated to keeping the agency in line with ever-changing debt collection laws and regulations. These teams are committed to reducing risk wherever possible.
One risk that is built into traditional debt collection practices is the potential for human error in a contact center environment. Digital debt collection platforms, however, offer code-driven compliance solutions that range from supporting existing agents to operating largely without the need for agent intervention.
Digital compliance solutions
Agent support
Operations managers throughout the collections industry cite high turnover rates in contact centers as a major challenge. While the exact number changes drastically depending on who you ask, contact centers may see annual agent turnover rates as high as 100%, but properly training contact center agents takes time (at TrueAccord our training process spans a full six weeks). High turnover in a space that requires thorough training means that newer agents may make mistakes when navigating important and complex regulations.
Some of this concern can be alleviated through the introduction of a curated content management system that provides prompts. These systems can be built with pre-written responses that adhere to compliance guidelines that improve agent compliance performance. While this may help to reduce the risk, the consumer experience is less than ideal.
Code-driven digital-first debt collection
Digital-first debt collection agencies and other debt collection software tools provide systems that allow for close control over what actions are taken and what messages are sent to consumers. These messages are carefully crafted by a dedicated content team, reviewed by a team of legal and compliance experts, and are easily accessible for auditing purposes. They are also then managed by the digital system once they are implemented.
Most importantly, these messages are then integrated into a digital, consumer-driven payment experience. More advanced systems use artificial intelligence and machine learning to customize a unique customer experience that is optimized for engagement and liquidation.
Compliant content creation
Pre-approved consumer-facing content
Building a digital debt collection system starts with creating compliant and adaptable content. Every email, text message, and landing page in a digital ecosystem is created by a team of dedicated content writers who draft and experiment with different approaches to encourage customer engagement. The guidelines used to draft these messages are shaped by collections laws, policies, and regulations.
Teams can also draft content that meets the needs of individual clients with specific brand considerations. Once the content is drafted, it is processed and reviewed by a team of compliance experts prior to being added to a content repository that the digital system can draw from.
Scalable compliance review process
The next step is to have a team of legal and compliance experts from within the debt collection agency review the content to ensure its adherence to the same regulations. Based on the client’s preferred level of involvement and resources, such a review process may also include a compliance team within the client’s organization. This process lays the foundation for compliant communication down the line.
Easily audited communication history
The content auditing process comes further down the line, but it is important to build that foundation early for the same reason stated above. Traditional call-and-collect debt collection agencies may record voice calls and even provide automated transcriptions of these calls. Unfortunately, these processes are not perfect because auditing activities can only review sample cases. Digital systems are able to accommodate a full audit-specific interface.
At TrueAccord, 96% of consumers resolve their accounts without communicating with an agent, so the vast majority of communications that exist are entirely automated and recorded. Compliance staff can easily search for individual accounts to review and evaluate all collections activity across multiple channels. Digital systems overall offer improved data retention and tracking to provide a clear picture of performance.
Because the system saves this data, it’s easy to investigate how it responded to a particular message, as well as why it made a specific decision. When these communications are controlled by code, decisions are easy to trace and replicate.
How do these steps lay the foundation for a scalable digital compliance system?
Once content is in place, and there is an established process for reviewing it, digital debt collection platforms can connect to consumers. At TrueAccord, our machine learning engine, Heartbeat, is able to draw from our content library and improve communications with a consumer over time. Digital systems reach out to consumers when and how they prefer and these communication decisions are driven by data, not by individual agent decisions or potential biases.
Digital systems reach out to consumers when and how they prefer and these communication decisions are driven by data, not by individual agent decisions or potential biases.
Digital debt collection systems rooted in machine learning are dynamic. The content they choose to use for an individual consumer is determined not only by historical data but how a consumer responded (or did not respond) to previous communications. Every single message in the system is vetted to meet compliance standards, and the review process is always ongoing to maintain those same standards.
At any point in the customer lifecycle, a consumer can opt-out of communications by replying to a text message or by clicking a link in an email that lets them easily unsubscribe from future communications using that channel. Each email and payment page also provides a link for consumers to request debt verification via a few simple online steps.
Coded compliance continues to scale
As the system scales and communicates with more consumers in this way, it’s able to continually enforce compliance without needing to be retrained because it is built to be compliant from the ground up. Built-in compliance checkers can prevent the use of contact methods that the consumer has unsubscribed from or ensure they do not receive a payment offer that the creditor has not approved.
Any compliance updates—such as new rules from the Consumer Financial Protection Bureau’s proposed rules—can be implemented securely and quickly at a company-wide scale rather than retraining on an agent by agent basis.
An improved, more secure consumer experience
Collections regulations and laws are largely driven by a need to protect consumers from bad actors in the industry. Digital debt collection empowers consumers to manage their accounts at their own pace and communicate using their preferred communication channels.
By evaluating content before it is ever sent and programming a platform that delivers unambiguous content you can reduce confusion and improve the user experience. Clear, compliant messaging enables consumers to resolve their accounts through self-service without added support. This leads to a dramatic reduction in consumer complaints, and in TrueAccord’s case, many positive online reviews.
A code-driven future for debt collection
Code-driven compliance offers predictable, pre-approved, and consistent collections methods. Coupling digital platforms with machine learning creates a system that improves over time and optimizes for a better user experience, guided by consumer preferences and shaped by compliance guidelines. This minimizes the need for agents to manage an account from start to finish and instead allows them to focus on more complex customer cases.
New technology is often seen as a risky investment, but digital debt collection systems offer more compliance security and more transparency—for consumers and creditors—than traditional debt collection agencies. Digital debt collection solutions not only evolve to meet consumer needs, but they can also continually adapt to changing regulations and quickly meet compliance requirements.
Do you want to see the power of a code-driven compliance platform in action? Reach out to our team today to see what this looks like at TrueAccord.
Traditional call and collect debt collection agencies may see up to 5,000 accounts managed by each agent on their team. Increasing that number to 80,000 accounts per agent not only requires the support of powerful machine learning technology but an extensive training program. Cassie Cox, TrueAccord’s Director of Operations, discusses how her prior experience in collections and a unique training program has enabled our team to manage multiple communication channels and support a customer-focused experience.
Cassie Cox, TrueAccord’s Direct of Operations
How has your experience in debt collection shaped your approach to managing operations today?
I’ve been in collections for 25 years. I started my career on the phones as a debt collector myself, and I worked my way up to a supervisor position and eventually a department manager. I just kept going from there. I’ve had the opportunity to work across the country—North Dakota, Oregon, Virginia, and now Kansas—and in several roles where I was responsible for the agent experience.
Consumers’ expectations have changed significantly. I remember when having an IVR (interactive voice response system) manage call flows was an annoyance to people. Customer experience scores would plummet because of them. Someone would call in and want to speak with an agent, not a computer.
Today, no one wants to talk to an agent anymore. If someone has to pick up their phone, hearing an IVR is their best-case scenario. You have to meet your customers’ needs from tomorrow, today, and improving the overall customer experience with your company starts with having the right infrastructure in place. You need to ask the right questions:
How are consumers trying to engage with you?
What tools do your agents need?
How do you develop those tools?
What processes do you build?
What controls are in place to maintain consistency?
All of this helps to make sure that the customer experience comes to life in the way that you design it and doesn’t go off the rails. You can use these guidelines to train new hires and manage new process deployment in the future, and you can manage this by building a quality knowledge management system.
Speaking of processes: as I understand it, our agent training process is pretty extensive. Can you walk me through what training looks like and why that’s the case?
The key differentiator for our training process is really that our agents are working closely with TrueAccord’s technology. Agents in a traditional call center are regularly managing payments and routine account questions. When 96% of our consumers are managing their accounts through self-service, the consumers that do email or call us truly need help.
Machine learning technology drives TrueAccord’s consumer experience. If you want to learn more about the role of machine learning in debt collection, you can read more here.
This means that our call types are typically more challenging, and we need to rely on more complex problem-solving skills. So our goal with our training is to create a team of elite problem solvers.
Agents also have their own technology to learn and manage. We have our own CRM that helps automate scripts and disclosures that prompt agents so they don’t have to memorize a unique playbook for every client. If, for example, a creditor has a unique out-of-statute disclosure, that information can be built into our system, so we make sure that our team sees it when they need it.
These processes are fairly standard in the collections space, but they still require training. The biggest reason that our program is a full six weeks is that our agents are managing multi-channel communications. I’ve worked with larger companies where you have one team dedicated to email, one for inbound calls, and another for outbound calls. Our agents are managing all of our channels at once.
“I’ve worked with larger companies where you have one team dedicated to email, one for inbound calls, and another for outbound calls. Our agents are managing all of our channels at once.”
A new hiring class will spend two weeks in a classroom setting designed to teach Collections 101. This ten-day period is meant to go over subjects like the differences between first party and third party collections, defining pre-charge off versus post charge off debt, and who our clients are. Reviewing collections laws and regulations is also a foundational part of the education process, and then we finish off by walking through our communication channels and TrueAccord’s systems.
The next week, these agents begin to manage inbound email communications. Once they feel comfortable with email, we have another week of phone training before they spend the fifth week managing calls. Then, in the last week of their on-the-job training, they are working both email and phone communications.
I’ve seen other companies with training programs that last anywhere from two to four weeks, and it’s great to have people ramped up quickly, but you also have to balance that with high attrition rates and error rates.
Our training team is also incorporating a comprehensive suicide-prevention training into our agent onboarding process as well as for our current staff. A surge in unemployment and growing anxieties about financial stability and personal health due to the pandemic have contributed to an increase in consumers that are in need of more than simple financial assistance. Our agents experienced this surge first hand, and we want to equip them to successfully navigate these difficult conversations. This includes being able to deescalate potential life-threatening situations and referring to resources like the National Suicide Prevention Hotline (1-800-273-8255).
Even here at TrueAccord, the process has improved over time, and we continue to improve our training methods because we want to set people up for success.
Some improvements and changes have been expedited recently. You recently hosted a webinar with Tim Collins [TrueAccord’s Chief Compliance Officer and General Counsel] about shifting agents to a work-from-home environment that has generally gone very well. The COVID-19 pandemic has made a huge impact on work standards and practices, but are there other challenges we’re working to address at the moment?
If we’re talking about larger-scale challenges, it’s important for us to continue improving our training and helping our agents navigate conversations and negotiations with consumers, but that need has also been amplified by COVID-19. The pandemic sent the nation and the world into crisis mode, and for us, that meant that when a consumer reached out and said they had been impacted and they couldn’t pay, we would tell them “It’s okay, we understand.”
TrueAccord has also worked directly with many of our clients to implement a hardship program to offer further assistance to consumers directly impacted by COVID-19.
Unfortunately, whether they’ve been impacted or not, their debt still exists. Now we’re working on guiding them through the process and focusing on “It’s okay. We understand. Let’s work with you to get through this.” It’s easy to hear someone’s concerns and say “you don’t have to pay right now,” but we can do more than that for them by discussing their options.
Thank you Cassie for sharing some insight into our training process and for your continued dedication to creating a positive consumer experience with our team. Building a system that supports and educates consumers leads to long-term financial success, and our agents are a core part of that.
Are you looking for a new type of collections solution? Talk to our team today to see how our machine learning engine and our expert agents can improve your recovery rates.
TrueAccord is bringing together industry experts to continue the collections revolution. Today, we’re joined by Mike Walsh, TrueAccord’s Vice President of Enterprise Sales. With over twenty years of experience in the collections industry, Mike has been an active part of the evolution of collection practices and standards. His more recent work has been focused on helping drive technological and customer-focused change, and we discuss what those changes look like for collectors and consumers alike.
Mike Walsh, TrueAccord’s Vice President of Enterprise Sales
What can you tell us about your background in collections?
I got started in the industry in 1996, right out of college. Everyone’s dream is to go into collections and sales, right? I started in a position primarily handling client servicing. Even back then I saw that people have a negative view of the industry, but my experience has been really positive. I’ve met a lot of great people in collections and continue to build great relationships.
This really is a relationship-oriented business. The industry is based on trust, and I learned early on that your reputation is really what you’re selling. Whether you’re in client services or on the phone with consumers, you have to constantly build a reputable brand.
I’m thankful that I have been able to work on teams where I really believed in the product and the people. Your reputation and your company’s reputation are directly tied together, and it’s great to feel confident in both.
You were directly involved in the collections process for many years and more recently, you’ve turned to working with companies that aim to optimize and customize others’ collections processes. Can you talk a bit about how you feel your experience working in collections management has shaped your perspective on these newer tools and services?
More than anything else I’ve seen customers change. It’s gotten more and more difficult to reach consumers over the phone; people just aren’t answering phone calls anymore. It’s part of what I call the “Amazoning of America”—consumers don’t call in to order a product or a service, they pull it up on their phone, press a button, and they’re done.
Understanding how we as an industry help the customer in light of these changes is tough. Adjusting to these needs efficiently in an effort to provide a better user experience has always been my focus. Giving people the ability to choose is more important now than ever. You hate to tell someone “oh, we don’t do that” when they request a specific way of doing business with you.
In order to adapt to this changing customer, I always keep my eyes open for new tools with enhanced efficiencies and use that to help guide my professional pursuits. If a product or service benefits the customer, that benefit will trickle up to the client. This is how I found VoApps, and it’s part of why I joined TrueAccord. Both companies focus on how to improve the customer experience in a way that is less intrusive to the consumer.
Even social media channels can provide another way for consumers to find you. The more flexibility that your team can offer, the easier it is for the customer.
Every consumer-facing industry is looking for ways to be less intrusive, and, as a consumer myself, I totally understand. That evolution important to me. I have a special needs son, so my time is very valuable. If someone is calling me it had better be important, and if it isn’t, my first thought is “why didn’t you just text me this?”
Going off of that: it’s clear that you see the value in emerging technologies and changing behaviors in the industry. What are some patterns that you’ve seen develop in your career that have driven these changes, and why is now the time for these new approaches to collecting?
The development of customer-focused and customer supported technologies drive changes in the industry. When I was on the phones in the 1990s working as a collector we had “hot contact times” from 6 pm to 8 pm—the best time to reach people. Then the rise in cell phones made contact centers completely rethink how they were getting in touch with people. The evening “hot contact times” didn’t exist anymore when people started carrying their phones in their pockets.
Right now there is a need to provide a collections experience focused on customer service. People rate everything. Consumers are reviewing restaurants as if they’re big-screen TVs, and they want to share that information—and share it quickly. If you’re aware of this, you can harness it. You can build your company around consumer choice and those choices, in turn, will support your brand.
In debt collection, that means developing your product based on your consumer’s needs and experimenting to determine what consumers prefer and what they do not. Consider how they want to connect and when? How do they like to do business? Then build more of what they prefer.
Did that at all impact your decision to join TrueAccord?
I couldn’t fathom that a collection agency had a positive Google Review rating until I first saw TrueAccord’s 4.8 out of 5 stars. It helps illustrate the importance of building a platform based on meeting consumers’ needs and making sure that they associate your brand with a positive experience.
What do you think comes next for the collections space?
I’ve always been a big believer in the power of behavior science and machine learning. It doesn’t surprise me that its application to the collection industry, especially by a company focused firmly on a customer-focused approach, is disrupting one of the oldest industries in the world. The big reason I’m here is to help the team bring this customer-focused future to the rest of the industry.
TrueAccord’s Director of Service Operations, Cassie Cox, and our General Counsel & Chief Compliance Officer, Tim Collins, hosted a webinar on May 13th, 2020 to talk through collections continuity in light of the COVID-19 crisis. The team discussed adjusting to regulatory changes, how to effectively manage a work-from-home approach in collections, and what the future of the industry may look like.
How are federal and state regulations changing?
Federal-level regulatory updates
The pandemic has prompted the US federal government to examine how it can work to aid Americans in need. Following the CARES Act, the House has proposed a new, $3 trillion relief package, and we are likely to see other potential stimulus packages discussed as the Senate proposes their own stimulus plan. Major industry organizations like insideARM and the ACA International are watching these unfold closely, as should we all.
The Consumer Financial Protection Bureau’s activity has not slowed during the pandemic, and they are on track to meet their examination goals this year. Remote auditing processes are in place and buzzing. They may not be in your offices, but the CFPB’s teams are still actively working to ensure the industry remains compliant.
State-level regulatory updates
Several states, including Massachusetts and New Jersey, are pursuing legislation that directly impacts the ability of collectors to reach consumers. Massachusetts’ Attorney General recently enacted an emergency law that outright banned collections efforts.
This was fought by the ACA, and the law was declared too broad and in violation of First Amendment rights, but the changing playing field does not end there. New Jersey has worked to pass similar legislation which has now been narrowed to primarily impact medical debt collection practices.
There will also likely be a heightened focus on state budgets and an increase in understanding how to bolster state economies.
As of this writing, forty-seven US states are either reopening or partially reopening by lifting shelter-in-place orders. Twenty of these state legislatures are now back in session and may begin to make other changes that collectors should keep an eye on. There will also likely be a heightened focus on state budgets and an increase in understanding how to bolster state economies.
One major change that seems to be for the better is the newfound flexibility for collection agencies and other companies to allow employees to work from home. This behavior is being echoed by Rhode Island’s new “stay healthy” order which has started the reopening process but is strongly encouraging employees to work from home when possible. Collections is beginning to adapt to the changing need, and TrueAccord was able to adapt quickly.
How is collections operations changing?
Maintaining control and information security in a work-from-home environment
TrueAccord’s team began to prepare for potential risk to our operations in early March by reviewing and updating our practices, policies, and procedures to make sure all of our teams could effectively work from home.
Here are some of the standards we established as we transitioned 80% of our agents to work from home full-time:
Replicate an effective office space
Agents must have a private area in their home and commit to working their shift uninterrupted.
Agents must have a minimum internet speed of 50Mb/s in order to maintain high sound quality on calls.
Enhance work from home agent information security
Agents do not take payments over the phone. All payments are received via IVR or guided through our secure payment portal.
Agents are not permitted to have cell phones near their workplace.
Agents are monitored by their supervisors via webcam with at least two random checks throughout the day.
Calls are randomly monitored by supervisors to ensure continued commitment to exceptional customer service and quality.
These were only made possible by bringing on new technologies and building processes before we dove in headfirst. We also made sure that all of our agents fully understood these new practices in advance, and they signed off on the policies ahead of time. The 20% of our team members that are still in-office (at safe distances) continue to meet the same standards as the other agents.
The remaining 20% either opted to not work from home due to a lack of interest or they were not permitted due to their homes not meeting security requirements (e.g. not having a private space, not having a fast enough internet speed, etc.).
Managing agent performance standards remotely
Call centers are filled with high-energy individuals that are driven by their wins. Maintaining the same hum and energy of an office space without sharing the same space is difficult, and we’ve taken steps to keep our agents excited about their work.
Meet (virtually) Face to face
A robust virtual management system has been put in place to keep building our team’s connectivity. The webcams we provided to our agents not only help with security monitoring but also increase our ability to build team morale. All of our agents are dialed into (and muted on) a Google Hangout or Zoom meeting throughout the day so that at any point they can turn and see their teammates working hard.
This practice has also extended to our new management strategy. All of our contact center team meetings are required to be on camera so that we get face time with each other. These meetings include small group meetings, individual coaching sessions, and any other 1:1 meetings as well.
Encourage conversation
Look for opportunities to create additional team touchpoints. Our current structure includes:
Weekly coaching sessions
Weekly team meetings
Random, weekly 15-minute huddles
We also have a wide range of Slack channels in place for sharing anything from anecdotes to best practices. In an office environment, it’s easy for folks to look over their shoulder and share tips and tricks, and those conversations drive positive change. Slack (and other work chat tools) also provide ways to circulate urgent updates with ease.
Keep the excitement up
We’ve increased our budget for intra-day chachkes, small giveaways, and rewards. Our in-office management style was largely visual: performance trend boards, goal setting boards, and team-based competitions were huge drivers for us. Now, we’re turning to setting up more contests. In this environment, a $10 gift card can get almost as much traction as a $50 card. It’s the thrill of the win, not necessarily the prize itself. Keep the energy up!
Monitor issues closely
The first two weeks of the work-from-home experiment were an amazing honeymoon period. There were three, consecutive days of perfect attendance in our contact center. Typical efficiency metrics like production volume per hour and average handle time have remained consistent. Keeping the same levels of performance is another story entirely, and close performance management is critical to making work-from-home, well, work.
We continue to track month to date metrics and just as closely monitor individual daily performance. Though many of our agents had no issue moving to a home environment, just as with any contact center, the bottom 10% of our group semi-frequently underperforms. It’s more essential now to keep a careful eye on red flags and correct underlying issues immediately.
The biggest concern was properly tracking things like call or work avoidance or time card manipulation. Thankfully, with all of our systems are aligned and our supervisors actively checking on their teams, the only instance we found was caught immediately.
Terminating a remote employee
Unfortunately, this is a necessary part of any operations manager’s role. In a work-from-home world, we still want to make it as direct an experience as possible. The full investigation, conclusion, and termination conversation should all be conducted via video conference.
Beyond the human aspect of termination, there are data and security considerations that should be tested ahead of time. Your team should understand how and when data should be cleared from a remote employee’s computer, and systems should be in place for the employee to either drop off or otherwise return their gear. Remember to accommodate for the possibility of lost assets. Some folks, even under contract, may not return your stuff.
What is coming next?
Changes in the office
The COVID-19 pandemic prompted a lot of changes to the way companies operate in general. While it continues to unfold, we are likely to see more change. That said “Right now, maintaining [business continuity] means not changing anything,” said Cox.
As shelter-in-place rules begin to lift, and we see some employees return to their offices, we will see physical changes:
New desk layouts
A possible return to cubicles or dividers and a shift away from open-plan offices
New air filtration standards for enclosed spaces
Changes in the industry
While the US economy recovers, we expect to see a massive wave of customers that are unable to pay their bills. Unemployment rates will continue to drive payments from slightly overdue to collections, and debt collection agencies and internal recovery teams are likely to struggle to meet the account volume.
“Collections has long been driven by human capital,” said Collins in discussing the need for contact center agents. “Technology will have to step in and fill a new, higher demand.” He went on to add that alongside the increase in volume, we expect a change in collections mentality. In order to overcome the disparity between payment deadlines and consumers unable to meet them, there will be a rise in customizable payment plans, hardship plans, and digital, self-service tools.
Crises drive rapid evolution and change. Many business practices and technologies that were slowly gaining traction in a pre-COVID-19 world are now fast-tracked. Working from home is a must at the moment, and the collections industry has to embrace that. Moving forward, we’re likely to see new innovators that are reinventing an aging industry, and it’s time for collections to adapt.
The age of digital communication has led to a dramatic shift in the way companies do business and in the way that people communicate generally. The collections industry is not exempt from this change. On April 22, TrueAccord’s CEO, Ohad Samet, spoke on how TrueAccord is pioneering a radical transformation for consumers and collectors alike, especially in the wake of the COVID-19 pandemic. This is a summary of the webinar.
Attempting to reach consumers in debt is becoming increasingly challenging. Reaching these same consumers during a rapidly evolving recession, when tens of millions of people in the US are filing for unemployment, is only making it more difficult. Beyond this, social distancing practices are limiting the ability of traditional call-and-collect based agencies.
There has been some progress made on improving work-from-home opportunities in collections, but 78% of TrueAccord’s clients are experiencing severe disruption of their 1st- and 3rd-party call center operations. This includes some collections partners shutting down entirely.
High agent turnover rates are a common issue for collections agencies due to the difficult nature of the work. Agencies typically expect turnover rates of more than 70%, and these numbers are climbing in the midst of the pandemic. All of these factors have largely left the collections industry in a holding pattern as we wait and see what changes may come, but what else can we do today to make change?
Finding the solution today
TrueAccord is focused on building sustainable, consumer experience-focused collections systems and tools. Our machine learning algorithm, Heartbeat, is a patented, scalable, tool that personalizes the collections experience with empathy-driven content for consumers. The multi-armed bandit algorithm learns from customer interaction and optimizes based on these behaviors.
Multi-armed bandit algorithms go beyond traditional decision trees or A/B testing. They optimize and learn as they grow!
What’s the difference between machine learning optimization and demographic segmentation?
Demographic segmentation is dividing a group of individuals based on demographic information such as age, gender, race, marital status, etc. when deploying a process or function. Machine learning optimization is teaching a computer model to evaluate the choices individuals make to improve a process or function. For example, in the credit and collections space, debt collectors typically approach customers during tax season to discuss using any tax refund to pay existing debts.
Our Heartbeat system learned that consumers do not like these suggestions—consumers who received content without the phrase “tax refund” paid their debt during tax season (likely with their tax refund) more than those consumers who received content with the words “tax refund.”
Samet explained, millions of consumers have completed payments and established payment plans using TrueAccord’s platform (through Heartbeat). The options employed by Heartbeat are based on its historical data learned through continued experimentation without access to an individual’s demographic information. Based on the millions of users that came before them, we can depend on Heartbeat to function as a complete virtual agent with built-in years of experience.
Customizable communication offers a personalized experience
While email is TrueAccord’s primary communication channel, Heartbeat is a multi-channel solution that includes but is not limited to, SMS (with consent), push notifications (with an opt-in), and a self-serve interactive platform. Other digital services segment channels to test with different audiences, or may specialize in one, requiring creditors to work with separate vendors. TrueAccord uses a multi-channel approach to reach consumers how they prefer.
In fact, more than 95% of users on our platform resolve their accounts without ever communicating directly with an agent. 80% of the consumers that do reach out to our team are able to resolve their accounts via email. Our dedicated team of agents is available to speak on the phone, but our digital tools allow each agent to service more than 80,000 accounts (and that number continues to grow). Some agencies are gradually scaling digital strategies, they still account for less than 30% of their overall operations.
In fact, more than 95% of users on our platform resolve their accounts without ever communicating directly with an agent.
While Heartbeat operates as the frontline of our digital strategy, TrueAccord’s phone number is always readily available. We firmly believe in using only one phone number, (866) 611-2731. This creates brand familiarity, drives engagement, and is consumer friendly. 97% of consumers ignore calls from unknown numbers because many companies buy phone numbers in all area codes. Their goal is to appear as if they are calling from the same area code as the consumer.
TrueAccord does not want to trick the consumer into answering an unknown call. We want to make it easy for consumers to search for our number online, do their own research about TrueAccord, and respond on their time. When consumers do reach out to our team, TrueAccord agents are trained to focus on customer care and on helping consumers to build the right financial plan to meet their needs.
Combining this approach to customer care with our machine learning algorithms allow us to expand our offerings to include new tools like a detailed self-service portal for payment plan adjustments. Consumers can customize payment plans that work for them, and this has led to a spike in plan creation and higher successful plan completion rates.
TrueAccord doesn’t want to pressure consumers to make payment amounts they cannot afford and make deadlines they can’t meet. Instead, we enable the consumer to fully personalize the repayment experience into a plan that meets the consumer’s ability and time frame. “We sell the experience of being debt free.” Samet says.
A different approach to collections
Traditional call-and-collect agencies are built on foundations similar to telemarketing: high agent turnover rates result from low-base, high-commission pay rates. These collectors are incentivized to collect and meet call minimums and payment quotas that lead to a rapid rise in complaints toward the end of pay periods as deadlines loom.
Machine learning algorithms don’t have the same stresses. The bounds of payment plans are defined by clients in advance. Heartbeat leans on historical customer data, consumer engagement behavior, and chooses content to inform consumers about the stress free experience of repaying debt using customizable on-line repayment tools. If the customer has any questions, they can always check in with our team by phone or email!
Changing the industry
TrueAccord’s changes are continuing beyond our technology. Our leadership team works directly with the Consumer Financial Protection Bureau (CFPB) to understand evolving best practices and remain at the forefront of regulatory change. Members of our legal team also work with the Receivables Management Association (RMAi), the Consumer Relation Consortium, and Association of Credit and Collection Professionals ACA International boards to keep up with trends in collections.
These experiences all point in a similar direction: legislators want to see fewer phone calls, more reliance on technology, and more consumer choice in the collections space. Building compliance adherence into TrueAccord’s system drives brings these changes together in one place.
How does TrueAccord fit into existing collections strategies?
TrueAccord is able to service at any stage in the debt cycle (early, late, warehoused, etc.), across segments, with competitive results. Our platform is built to accommodate your team’s needs, and we recognize that not every collections agency works perfectly in every segment.
We can easily increase or decrease the use of specific channels and optimize in whichever segments you see fit. While larger placement volumes provide more data and by extension clearer automated decision making, we fit into your strategy at any stage.
Pre-charge off
The same tech that supports TrueAccord’s post-charge-off product also offers new advantages and easy onboarding within a few short weeks for early stage delinquencies. Heartbeat can supplement your existing call center strategy. We’re also equipped to provide different levels of service in different phases.
This can be a small change to your normal business practices: uploading a traditional “dialer file” to our system. We can email payment reminder content driving your customers to your existing teams, tools, and webpages, while maintaining your branding. This can also involve full outsourcing through the use of our online self-service individualized payment portal as well as use of digital channels to drive engagement.
The next steps
We continue to scale and develop new tools for consumers to self-identify their current financial needs and provide new ways to work with them to adjust payment plans. We know that demanding payments isn’t nearly as effective as empowering consumers, and finding the right middle ground helps all parties involved.
Getting started with TrueAccord is easy with inbound file receipt or APIs and standardized, out-of-the-box reporting. It can be as simple as a .CSV upload to our secure dashboard or as complex as a long-term integration period designed to align our systems, policies, and procedures to your own.
Ready to join the future of debt collection? Do you still have questions about how TrueAccord can help your team? Get in touch with us today!
TrueAccord is a machine-learning and Al-driven 3rd-party debt collection company that is reinventing debt collection. We make debt collection empathetic and customer-focused and deliver a great user experience.
Our digital-first approach to debt collection creates a cycle of collections growth:
1. Improve the perception of the industry
2. Provide a personalized experience
3. Build brand equity and collect
