The Consumer Financial Protection Bureau (CFPB) quietly published on its website additional frequently asked questions (FAQs) on the Debt Collection Rule (i.e. Regulation F) relating to electronic communications and communicating during unusual or inconvenient times or places.
The FAQ answers multiple questions, ranging from “is a debt collector required to honor a consumer’s request to opt out of electronic communications if the request does not conform to the debt collector’s opt-out instructions?” to “does an automatically generated electronic communication (such as a payment confirmation) sent at a time the debt collector knows or should know is inconvenient to the consumer, which is sent in response to a consumer action (such as a payment), meet the limited exception for responding to consumer-initiated contact?”
While many of the responses to the FAQs can be found in the Official Interpretation section of Regulation F, there are some points worth highlighting:
A consumer is not required to use the debt collector’s preferred or stated opt-out method. This means, for example, an email opt-out can come from a non-email channel, an SMS opt-out can from a non-SMS channel, etc.
A consumer does not need to use specific terms contained in a debt collector’s opt-out instructions in order for their opt out to be effective. For example, if the instructions tell a consumer to reply with “stop” to opt-out, and the consumer replies with “quit” instead of “stop,” the debt collector must still honor that opt-out.
Email addresses and mobile telephone numbers are not necessarily associated with a “place.” This means that the prohibition on communicating or attempting to communicate at unusual or inconvenient places does not prohibit a debt collector from communicating or attempting to communicate with a consumer through email or mobile phone. However, if the debt collector knows, or should know, that the consumer is at an unusual or inconvenient place, then the prohibition still kicks in.
What should creditors look for in their debt collection partners?
Creditors should check to see if their debt collection agencies train their staff and design their processes so that they promptly and effectively identify and process opt-out requests. Since opt-out requests can come in various forms and fashions, debt collectors need dynamic procedures to capture any and all opt-outs. Debt collection agencies also need processes and technologies to help them implement controls for inconvenient time and place restrictions – which may be a little tricky when applied to email and mobile phone numbers.
What is TrueAccord’s take?
At TrueAccord, our goal is to make the debt collection experience friendly and easy for consumers. That is why we engage consumers on their preferred communication channels and make it easy to opt-out of electronic communications. We take a broad approach to honoring a consumer’s opt-out request no matter how we get it or what specific words they use.
While the new FAQs clarified that the Debt Collection Rule does not require debt collectors to communicate electronically with consumers, we pose this question back:
If a consumer reaches out to you electronically, why wouldn’t you want to communicate with them on the channel they prefer?
August 14 is National Financial Awareness Day, making it an appropriate time to shine a spotlight on initiatives that can help improve consumer financial awareness in the collections space. Financial literacy is an essential life skill that benefits people throughout their lives, but is often overlooked when it comes to what happens if a payment is late or missed. Financial literacy during delinquency is just as important as planning for the future—and can even play a big part in financial future-planning.
Whether it’s taking out a loan, buying a house, saving for retirement or purchasing goods on a credit card,, people are constantly being asked to make decisions that affect their personal finances. As reported by the Milken Institute, only about 57% of the American population is considered financially literate. In order to address this gap, lenders are in a unique position to help provide customers with educational content that not only improves customers’ financial literacy but helps with their own retention and acquisition strategies by building and maintaining customer trust and loyalty. Providing consistent outreach—especially in early delinquency—will give customers more opportunities to engage, understand, and resolve debt.
Debt levels are on the rise again: according to the New York Federal Reserve, between the national student loan debt topping $1.6 trillion in 2022 and household credit card debt also climbing, we’re seeing the largest quarterly increase in 22 years at $860 billion. And individuals become more susceptible to going further into debt if they don’t have a solid foundational understanding of what happens when they first fall behind. Overall, lower levels of financial literacy end up contributing to increased rates of bankruptcy, defaults, and foreclosures.
As financial services leaders know, maintaining customer relationships—including accounts in early delinquency—is more profitable than writing off bad debt due to ongoing loan and credit losses, and then having to start the acquisition process for a new customer all over again. The Receivables Management Association International (RMAI), a non-profit trade association for businesses in the financial services industry, understands this gap and the need for increased literacy created a website with many useful literacy resources for consumers offering free education on topics like managing personal finance, money, and investing. By sharing tools like this or taking on an array of education initiatives and implementing financial literacy as a component of your debt recovery strategy, businesses can help their customers regain their financial health.
The financial landscape for both consumers and businesses is particularly uncertain right now. Many new fintechs and neobanks are experiencing their first delinquency surge and others soon to follow. This year, the challenges of managing delinquencies and navigating an uncertain economy will compound, making it imperative for companies to critically think about their strategy to collect from consumers in debt.
But from the perspective of a seasoned veteran of the financial services industry, what are we really seeing in consumer credit trends today? And what should businesses really be preparing for tomorrow?
We sat down with TrueAccord co-founder Ohad Samet to get his insights on what we’re seeing in consumer credit trends today, managing delinquencies, and how to navigate in this economy. Watch our interview or read the transcript below»»
What are we seeing in consumer credit trends today?
OHAD SAMET, TrueAccord co-founder: I think we all notice that we’re dealing with a lot of lagging indicators in terms of consumer capacity to pay. Of course, one leading indicator is demand for credit. But in terms of what consumers are able to do—meaning their sentiment—are they willing to pay? Are they able to pay? Do they have enough disposable income? So many of these numbers are trailing indicators.
However, consumer net worth is still high. Why is that? It’s because stocks in primary, the value of primary residences, is calculated in the net worth of consumers. And so if you believe there was a bubble or just a run up in prices because of a lot of demand and very low supply, then that would artificially inflate the net value or net assets of consumers, and we will only discover how consumers are faring realistically in a few months.
Even if from a trailing indicator perspective, meaning delinquencies, net worth and so on, we are not seeing a drop yet. We’re only seeing banks increase their loss reserves in anticipation for losses.
We are definitely seeing a change in consumer sentiment. It can be because they’re running out of money. It can be because of general sentiment in the market. Inflation is up, risk is up, consumers start saving more—but we are definitely seeing that. And that, to me, is a leading indicator that we all need to be aware of.
Debt recovery and collection look quite different in 2022 than it did ten, five, even just a year ago: new channels to reach consumers, larger data sets to analyze, complex regulations that can vary state by state, and so much more.
So when it comes to deciding the best way to engage consumers and effectively recover debt, has your strategy evolved to keep up? Machine learning, artificial intelligence, data science—these terms are thrown around a lot, and for good reason.
But how does it tactically improve the experience for both lenders and members?
Decoding Machine Learning for Debt Collection and Recovery
To help decipher real differences between a machine learning strategy versus the traditional call-and-collect, we have designed a highly visual guide to cut through the jargon and help you understand the basics of machine learning in collections. Decoding Machine Learning for Debt Recovery and Collection provides straightforward definitions, clear diagrams, and bottom line benefits make this eBook your at-a-glance guide to machine learning in debt collection.
From delivering a better experience in-line with what consumers expect from businesses to streamline communications, machine learning has gone from a “nice to have” to a “must have” for collection efforts.
Upgrade Debt Recovery & Collection With HeartBeat
Although this type of technology is a step in the right direction, it’s only one step forward—your debt collection strategy can go even further with TrueAccord’s patented decision engine, HeartBeat.
Integrating machine learning into your practice is certainly important—but how does this technology know what the best choice is to engage all of your delinquent accounts now and in the future?
Say hello to HeartBeat, our intelligent decision engine, and say goodbye to missed debt recovery opportunities left on the table by basic machine learning models. See exactly how HeartBeat upgrades your collection strategy in our new eBook, Upgrade Debt Recovery & Collection With HeartBeat—the more in-depth companion piece to our visual guide to machine learning (detailed above).
While HeartBeat utilizes machine learning in its decision-making process, it is not limited to it. This decision engine is continuously evaluated for performance, and adjusted to align with the current economic situation, changes in consumer behavior, and updates to compliance rules.
If you are switching from a more traditional outbound approach then a basic machine learning model can provide a short-term lift in recovery rates, but will hit a dead end when it comes to optimizing, adapting, and improving over time. HeartBeat is set up for the long game and recovers more because of it.
Discover how an intelligent, digital-first collection strategy drives overall improved performance, better member experience, and the more effective recovery of delinquent funds—without implementing more manual processes or adding headcount to your team.
As we wrap the second quarter and first half of 2022, we’re watching some key factors impacting consumers and the credit industry and making sense of what it might mean and how to prepare your business.
Key Factor 1: Inflation
Despite robust wage growth (average hourly earnings up 5.5% over last year), consumers are seeing those gains eroded by an 8.6% inflation rate in May, the highest in 40 years. The latest increase was driven by sharp year-over-year rises in the prices for energy (+34.6%), groceries (+11.9%) and shelter costs (+5.5%), an indicator of broad inflation pressures. In fact, rental prices across the nation hit a new record high—for the 15th month in a row, according to a recent Realtor.com report. Rents climbed 15.5% annually in May, to hit a median of $1,849 in the nation’s largest metropolitan areas.
As things get more expensive, cash flow gets trickier to manage. When consumers stretch their budgets to account for higher prices, cash previously used for discretionary spending and saving disappears. Case in point: U.S. inflation-adjusted consumer spending rose in April by the most in three months, while the personal savings rate dropped to 4.4%, the lowest since 2008 and down for the fourth straight month. This indicates that many consumers are spending more and saving less.
And what about the people who have been living paycheck to paycheck and haven’t been able to accumulate savings? According to a recent study, this group includes 70% of millennials, but also 51% of Gen X and 54% of baby boomers and seniors. While some consumers are able to dip into their savings at a time like this, for many others it means looking for new lines of credit, which could be challenging because of…
Key Factor 2: Interest Rate Hikes
After another rate hike in June, the federal interest rate sits at 1.5-1.75% with the central bank expected to deliver more 50+ basis point rate hikes this year. While the markets are pricing these into forecasts, consumers will feel them more acutely in a number of ways.
A hike in the federal interest rate prompts a jump in the Bank Prime Loan Rate (prime rate), the credit rate that banks offer to their most credit-worthy customers and off of which they base other forms of consumer credit like mortgages and consumer loans. This means that those looking to open a new line of credit – as a stopgap for insufficient cash flow or otherwise – will pay more for the capital required to make purchases, with unfavorable terms that could lead to even more problems down the road.
And we’re already seeing increased use of credit cards to deal with inflation. The Federal Reserve’s monthly credit report found that revolving credit jumped nearly 20% in April from the previous month to $1.103 trillion, breaking the pre-pandemic record. Credit card balances are also already up year over year, reaching $841 billion in the first quarter of 2022, and are expected to keep rising, according to a report from the Federal Reserve Bank of New York. For the estimated 55% of Americans who carry credit card debt month over month, paying off balances will get even more difficult for those not making minimum monthly payments. And opening a new credit card line may prove difficult – many lenders are or will be changing their strategies to stave off the looming threat of…
Key Factor 3: Rising Delinquencies
We all knew this was coming. Missed payments on certain loans are already on the rise. The Wall Street Journal reported that borrowers with credit scores below 620 (subprime) with car loans, personal loans or credit cards that are over 60 days late are “rising faster than normal.” And according to Experian’s Ascend Market Insights for June, there was an uptick in overall delinquency rates in May, with 30+ day past due accounts up 2.14% month over month, driven mostly by secured auto and mortgage loans.
The risk of delinquencies increases across the board of loan types when economic factors require consumers to stretch their dollars. When consumers spend more of their income on necessities, the surplus available for other expenses, like existing credit card or personal loan balances, dwindles, forcing consumers to prioritize payments. If your product or service is not essential to daily life, you may get pushed down the priority list and eventually dropped altogether as consumers try to make ends meet. And unfortunately for consumers, missing payments is also getting more expensive, especially on variable-rate products, and likely to compound an already financially sticky situation.
Key Factor 4: Regulatory and Compliance Guidelines
For those tasked with lending or recouping consumer loans, there are more regulatory considerations to keep in mind than before – debt collectors are under more scrutiny while lenders have similarly felt the regulatory squeeze with a number of new rulings in the past few months. Broadly, the Consumer Financial Protection Bureau (CFPB) invoked a legal provision to examine nonbank financial companies that pose risks to consumers in an effort to help protect consumers and level the playing field between banks and nonbanks, meaning if you’re offering any financial services to consumers, you may be under the microscope.
Notably for lenders, the CFPB published an advisory opinion affirming that the Equal Credit Opportunity Act (ECOA) bars lenders from discriminating against customers even after they have received a loan, not just during the application process. Further, if you’re a lender using complex algorithms or machine learning for underwriting, the federal anti-discrimination law requires you to explain to applicants the specific reasons for denying an application for credit or taking other adverse actions, and “the system said so” is not a valid excuse.
For collectors, the CFPB enacted Regulation F late last year, and since its effective date in November has logged 2,300+ complaints* around debt collection communication tactics, which it aims to regulate, causing debt collectors to rethink their contact strategies or face repercussions. The organization also issued an advisory opinion to reduce “junk fees” charged by debt collectors and took stands against a number of repeat offenders this quarter, underlining their intent to step up consumer protection.
What to do?
While we aren’t sounding the alarms just yet, it’s certainly looking like a risky market for lending amid a tightening economy and a bleak outlook on consumer finances (many are predicting when, not if, the next recession will happen, or maybe it’s already here). And don’t forget that student loan repayments are set to resume in Q3, adding even more financial responsibility back to many consumers’ budgets. If you’re a lender, you’re likely rethinking your underwriting strategy and starting to consider the very real possibility of what happens if/when your customers start defaulting. If you’re in charge of recovering debt, you may be readying for an uphill battle.
As you prepare for what’s to come in consumer lending and debt, there is an important reality to keep in mind: Your target customer has changed. Consumer motivation for, ability to acquire and feasibility of keeping up with payments for most types of loans is very different today than it was a year ago. And that customer’s profile changes again when they start missing payments due to financial stressors.
The best thing to do now is to ensure you have an effective collection strategy in place, preferably one that prioritizes customer experience to protect your brand, and necessarily takes compliance into account to protect your business. A technology-driven solution can not only help lenders handle an influx of delinquent accounts, but can help to preserve valuable relationships with customers as well. But not all tech is created equal – we took machine learning a step further and built HeartBeat, our patented decision engine, designed to reach every customer based on their unique situation so you won’t miss a single recovery opportunity. Learn more about how it works in our latest eBook.
*Data is from the Consumer Financial Protection Bureau’s Consumer Complaint Database, for the time period 11/30/21 – 6/24/22.
When it comes to engaging consumers in debt collection, behavioral science helps us to understand and respond to an individual’s situation, motivations, and contact preferences.
For example, we know that consumers don’t like being called by debt collectors. With that knowledge, behavioral science then helps us determine the optimal way to meet consumers where they are, contact them when they want by using their preferred channels, and lastly sending a message that resonates with them enough to engage.
It starts with a lot of engagement data. At TrueAccord, we’ve been collecting data about how consumers engage with us for nearly 10 years to determine the optimal ways to engage with consumers, and then use that data to generate a special collections experience just for them – from best time, best channel, and best language to engage that individual consumer.
Take content for example, each person is unique and different people respond differently to different communications. They are driven to action by different words and are convinced for different reasons. In writing content, it’s our goal to write content that responds to these individual needs.
There are 2 things we consider when writing content for collection communications: content type and content dimensions.
Content type is what we send based on a user’s actions. As an example, following up on a page view—if a consumer is viewing a payment plan, disputing a debt, or thinking about unsubscribing but drops off the page, we will try sending a follow up email or SMS with other plan options, information about the account, a description of how to unsubscribe or dispute for them to view. We will continue to try different content types until we find the right one that engages the consumer.
Content dimensions are more established behavioral science frameworks used to ensure that our communications vary in style and tone so that we are speaking to consumers in a unique way that will motivate them to engage. Everyone responds to different motivations so we use a variety of different frameworks until we find the one that connects with the individual
Each piece of content is tagged depending on the content type and dimensions so it can be easily used by HeartBeat, our powerful and intelligent patented-machine learning engine. Good content will lend itself well to automated, data-driven prioritization done by HeartBeat to present customers with the best possible content item at each given time.
How can technology personalize the debt collection experience?
By using technology and behavioral science to determine the best way to communicate with consumers, we are able to personalize each user’s unique experience. Our patented machine learning engine mentioned above, HeartBeat, allows us to do just that. HeartBeat collects engagement data and then, after analyzing multiple solutions, suggests the best possible treatment depending on the individual and their engagement. HeartBeat also uses a real-time feedback loop so the technology can adapt to a consumer’s engagement right as it happens.
Instead of relying on data like age and location, HeartBeat uses engagement data to personalize the communication process. The engagement data is collected every time a consumer engages in a certain way, whether it’s clicking on an email or SMS, visiting a webpage, and/or viewing payment plan options. Our system learns what motivates the consumer and responds with content or payment options that will resonate with them.
For example, if the consumer clicks on an email that uses likable content mentioning “short term cash flow,” our system may determine to send a friendly follow up email letting them know that they can set up a payment plan that starts on a later date when they’ll have the ability to make a payment. We know what motivates an individual may change from day to day depending on their circumstances, so we treat them based on their active engagement and behavior with our system rather than construct a specific profile for each consumer and treat them based on that basic account profile.
By combining behavioral science and machine learning, the best-possible payment options are offered to customers based on their debt situation, previous communication, and engagement data. Whether their actions show that they would benefit from a long-term payment plan, or if it shows that they’d prefer to pay in full, HeartBeat will suggest the best option for that customer. The power of using behavioral science and machine learning is anticipating the needs and preferences of our customers and using that to help them as seamlessly as possible.
Overall, there is no one way of communicating that will work for everyone across all situations, and tailoring communication and collection strategy to align with consumer preferences is better for both the consumer, lenders, and our business. That’s why building the bridge between machine learning and human behavior is essential.
When COVID hit in 2020, one Fortune 500 company needed to find an effective way to communicate and collect from the rising overdue accounts, with many of their customers falling into financial hardships. While the company had previously relied on old-school communication tactics like direct mail and an in-house call center to reach customers who had delinquent accounts, they knew a better solution was needed.
The company had already observed firsthand a rise in customers’ preference for digital communications between mobile apps and online bill pay options, making it clear that this was the best route to go. Rather than build from scratch in-house—which would’ve been costly and time-consuming—the company evaluated third-party options before choosing TrueAccord and implementing Retain, the client-labeled early-stage collections solution.
Once implemented and customized to fit the company’s needs, TrueAccord helped them collect over 63,000 payments to recover over $17 million.
Retain’s digital outreach strategy made a significant impact on customer engagement and resolution beyond just payments with improvements across their paid in full rate, overall collections rate, average amount collected daily, and more. And with the help of HeartBeat, TrueAccord’s powerful machine learning decision engine, they were able to observe behavior data and optimize digital touch points and engagement in real-time. In just a few weeks, this digital collections approach caused a major transformation that only continued to improve.
On May 23, 2022, the Consumer Financial Protection Bureau (CFPB), in partnership with the New York Attorney General, filed a proposed judgment against a debt collection enterprise with a history of deception and harassment to pay $4 million and be permanently banned from the debt collection industry.
This follows the September 2020 Federal Trade Commission (FTC) initiative “Operation Corrupt Collector” to protect consumers. The FTC, along with more than 50 federal and state law enforcement partners, focused on several predatory collection methods, including “phantom debt collection,” a practice where companies were trying to collect debts they cannot legally collect or that a consumer does not owe.
According to federal regulators in the 2022 case, the group of debt collectors in upstate New York went after their targets by calling friends, family and employers and orchestrating “smear campaigns” against people they claimed owed money—only one part of the predatory practices the debt collection ring employed.
Predatory Practices in Debt Collection
The collection industry has long been scrutinized for the methods used to engage and recover debts, but technology and social media have created new avenues for predatory practices to evolve. In addition to the smear campaigns, other illegal tactics to collect debt outlined in the CFPB lawsuit include:
Falsely claiming arrest and imprisonment
Lying about legal action
Inflating and misrepresenting debt amounts owed
Harassing people with repeated phone calls
Failing to provide legally mandated disclosures
Contacting to Collect Via Social Media
As of November 30, 2021, debt collectors can now contact consumers on social media. This change to the Fair Debt Collection Practices Act (FDCPA) did include specific rules for social media communications:
The message must be private
The debt collector must identify themself
The debt collector must provide a way for the consumer to opt-out of social media communications
In addition to these new rules under the FDCPA, collectors who abuse or harass consumers via social media violate the Dodd Frank Act’s prohibition against unfair deceptive abusive acts or practices (UDAAPs). The CFPB and FTC through Operation Collection Protection, also look to prosecute UDAAPs in their protection of consumers
Compassion Collects More (and Protects Against Penalties)
Although the majority of collectors do not go as far as committing “emotional terrorism,” as one social media smear campaign victim described in the 2022 lawsuit, finding the appropriate way to connect with today’s consumers to recover delinquent funds can seem nebulous—and nerve-racking with the potential for hefty penalties.
Even as communication channels expand and new regulations are handed down, best practices to engage with consumers remain the same: friendly, humane messages will empower and motivate customers to pay more effectively than aggressive outreach and threats. TrueAccord has proven that this compassionate approach works with more than 16 million customers served, 4.7 on Google reviews, A+ rating with the BBB, overwhelmingly positive customer feedback, and industry-leading recovery results.
Your Guide to Key Terms for Today’s Debt Recovery Strategy
Reaching consumers today requires a more sophisticated process than simply dialing the phone or sending a generic email, especially when it comes to debt recovery and collection. But reviewing potential strategies can often leave you lost in a sea full of acronyms and buzzwords. Between terms like AI, machine learning, and data science, it can be difficult to keep up with the different definitions—and understand how they impact your business and bottom line.
To help keep this word salad straight, we’ve compiled a glossary of helpful terms, definitions, and examples to help differentiate them:
Accounts per employee (APE), account to collector ratio (ACR): The number of delinquent accounts that can be serviced by an individual recovery agent – often used to measure cost effectiveness.
Artificial Intelligence (AI): AI is a blanket term describing a range of computer science capabilities designed to perform tasks typically associated with human beings. Machine learning (ML) is a subset of AI. Through AI, processes like debt collection can become more efficient by developing better outreach and deployment strategies.
Big Data: This term means larger, more complex data sets . Big data can save collectors a lot of time by using many variables for analytics-based customer segmentation, insert, insert..
Coverage: The percentage of users for whom organizations have digital contact information, such as email addresses or phone numbers.
Customer Retention Rate: Measures the total number of customers that a company keeps over time. It’s usually a percentage of a company’s current customers and their loyalty over that time frame.
Data Science: A cross-discipline combination of computer science, statistics, modeling, and AI that focuses on utilizing as much as it can from data-rich environments. Data science (which includes machine learning and AI) requires massive amounts of data from various sources (customer features such as debt information or engagement activity) in order to build the models to make intelligent business decisions.
Deep Learning (DL): A subset of machine learning. Deep learning controls many AI applications and services and improves automation, performing analytical tasks with human intervention.
Delinquency rate: The total dollars that are in delinquency (starting as soon as a borrower misses as a payment on a loan) as a percentage of total outstanding loans.
Deliverability: The percentage of digital messages that are actually reaching consumers (e.g., as opposed to ending up in email spam filters).
Digital engagement metrics: A range of KPIs that capture how effectively digital channels are reaching and engaging consumers.
Digital opt-in: The percentage of users who have indicated their preference to receive digital communications in a particular channel.
Efficiency: Measures a company’s ability to use its resources efficiently. These metrics or ratios are at times viewed as measures of management effectiveness.
Machine Learning (ML): Technology that uses algorithmic modeling techniques to observe patterns and trends, reassessing the best approach to achieve a goal, and adapting behavior accordingly. It continuously, automatically learns and improves at a massive scale as more data is observed. With the help of machine learning, companies can make sense of all their data and take on new approaches to debt collection processes from better customer experience to more efficient delinquent fund recovery.
Net loss rate: The total percentage of loan dollars that get charged off (written off as a loss).
Open rate, clickthrough rate: The percentage of users who are actually opening and clicking digital communications.
Predictive Analytics: Predicting outcomes is one specific application of machine learning. It allows companies to predict which accounts are more likely to pay sooner and allows them to better plan operations accordingly.
Promise to pay kept rate: The percentage of delinquent accounts that maintain a stated commitment to pay.
Promise to pay rate: The percentage of delinquent accounts that make a verbal or digital commitment to pay.
Right party contact rate: The rate at which a collections team is able to establish contact with the consumer associated with a delinquent account.
Roll rate: The percentage of delinquent dollars that “roll” from one delinquency bucket (e.g., 60 days past due) to the next (e.g., 90 days past due) over a given timeframe.
SMS: An acronym that stands for “Short Message Service” referring to text messages on cellular devices.
For more information on how to get started integrating innovative technologies into your debt recovery strategy, schedule a consultation today.
If transforming the way you reach customers to recover delinquent accounts isn’t on your radar in 2022, a year where projected delinquencies are expected to soar, you’re at risk.
Fortunately, we recently rounded up a panel of experts to share their insights and experiences taking those first steps away from outbound calling and toward better consumer communication in our webinar “What Labor Shortage, Wage Inflation, and Regulatory Restrictions Mean for Your Call Center”—available to watch on-demand now»
Heather Bentley, Citizens Bank | John Craven Sr, Cox Communication | Jennifer Masterson, PNC | Richelle Rocazella, TrueAccord
Below are some of the top questions, answers, and first-hand accounts from our discussion (plus some attendee poll results):
What percentage of contacting consumers is done via phone vs other channels?
Heather Bentley [HB]: Overall a little bit above 50%, but that includes outbound calling from live agents and interactive self-serve calls, which really is more the digital channel.
John Craven Sr [JC]: Live agent we’re at 0%. We do use a virtual agent, so I would say we use that virtual agent probably 40% to 45% of the time.
Jennifer Masterson [JM]: We’re close to 50/50. We will always be taking phone calls, but we are doing a lot more now in the digital space trying to contact people.
Richelle Rocazella [RR]: Less than 1% of our communication is via phone. And that is all inbound when we do engage with our customers. We will only make an attempt to reach a customer via phone if they have requested a call.
What does outbound calling versus an omnichannel strategy look like at your organization?
JM: An omnichannel strategy triggers customers to get them to self-serve and frees up our agents to talk to customers that need more help or more assistance. That’s really where the more valuable conversations happen.
HB: It’s really about putting the two pieces together [outbound and other channels], and trying to find the sweet spot of customer experience and collection effectiveness. Pulling those two things together – so if we find customers who are responding to a specific channel like text, but then if they go past the point we would normally see in delinquency, we can say, “Wait a minute, something’s different. Now we need to call this customer.”
JC: When you take a person that’s spending a good portion of their day making outbound calls, and you turn them into an inbound agent where they’re talking to a customer almost every time that the phone rings, the maximization of your employee’s time puts you into a completely different realm of being able to perform.
Was COVID or labor shortage and wage inflation a driving factor in the shift to a more digital approach and self-service approach?
JM: We started before COVID because consumer behavior was dictating it. It’s really hard to get someone to pick up the phone. The number of times that you actually connect to somebody live on dials is really low. That’s really what drove us to start going down the digital path. Now, I think there’s a ton of benefits to be gained from that, things like when COVID happened, this labor shortage. Once you have the channels in place, it becomes easier to ramp them up or down depending on what’s happening in the economy.
Once you have the channels in place, it becomes easier to ramp them up or down depending on what’s happening in the economy.
Jennifer Masterson, Executive Vice President, Retail Lending Solutions, PNC
How did you get started?
HB: We started individual channels at times with easy things like virtual messages, then interactive messaging and email and text, and then moved into two-way in those channels. And we’re still working so that you could have the same experience in that digital space that you’d have with an agent on the phone.
JC: In 2014 [Cox Communications] started texting customers and then we added email around 2017, but we didn’t have a digital platform at that time. We implemented a digital platform in early 2020, and fortunately we were able to go full omnichannel with integrated channels that we were able to roll out.
What are some of the challenges to building an omni-channel strategy?
RR: Making sure all channels are integrated to develop a full customer experience journey. Also ensuring service levels are maintained as more channels are added.
HB: If you’re not sequencing [the channels] and working them together, it can be like bombing your customers again. If you’re bombing them with calls and now you’re bombing with text and with email and it’s just, “Hey, we’ll just try everything.” You quickly desensitize your customers to your communications.
JC: We set up all the channels and then we went on a journey to bring them all in and orchestrate them so they were working together. If I can suggest anything to those that are using the phone strategy, if you’re ready to start your digital journey, start with a journey that is an orchestrated journey, instead of building out the channels and then trying to bring them all together. You’ll get so much further ahead and a quicker response to digital integration.
From a self-serve standpoint for debt collection and recovery, what are some of the compliance or regulatory challenges to keep in mind?
HB: As we move to digital channels, [regulators] move their focus to what happens in email and on your website and in text messages, because before their focus has been about calling over the last 10 years. So as an industry we have to stay ahead of that and think both like a customer and like a regulator. Be a bit conservative in some of your interpretations of how far and wide your communications go.
JC: From the risk side of things, if you’re moving from an analog or non-digital traditional approach to a digital approach, think how to digitize your compliance rules that may have some risk mitigation in it. Don’t create a new reality—make sure that you replicate what you have already in place to make sure you have safeguards.
JM: On the phone side you’re dealing with agents that have to remember to say things right. But coming out of COVID a lot of the banks and other financial institutions put hardship assistance online just as an example, and I think the regulators like that because everybody’s essentially getting the same experience. I think it’s easier to be in compliance and meet all the regulatory requirements in a channel like that, than it is with agents.
As an industry, we have think both like a customer and like a regulator.
Heather Bentley, Senior Vice President Head of Consumer Specialty Operations, Citizens Bank
What was the best way organizations should have prepared to meet the guidelines for the CFPB’s Regulation F to move to a more omnichannel approach?
RR: The best thing any organization could have done for Reg F would be to have a strong legal and compliance group that you work with. While it’s not something that drives revenue, it is a must in every organization.
Where would be an ideal place to start exploring or considering if you’re moving away from the outbound call center and looking to integrate more channels?
JC: Whatever your strategy is, you need to set yourself on a path making sure that your digital journey has a brain. Recognize that different profile customers react differently to different contact channels. As you use your omnichannel approach, having that brain mentality. Knowing what your customers’ preferences are and then leveraging those preferences will set you on a great path to performance.
JM: Every company is different in terms of what capabilities you have or don’t have. While texting and emailing made sense for PNC at first, maybe there’s another channel that a company can easily plug into. Start wherever you can because consumers don’t want to pick up the phone and call. Whether it’s the ideal option or not, give consumers another path and another option. Start somewhere and then build off of that in whatever way makes sense for your organization.
RR: For businesses in the early stages of adopting a more omnichannel approach for collections, email or text would be a good place to start.
Knowing what your customers’ preferences are and then leveraging those preferences will set you on a great path to performance.
John Craven Sr, Enterprise Center of Excellence Call Center Director, Cox Communication
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
