It’s the end of the quarter and, as always, we at TrueAccord are looking at consumer debt trends that will impact our industry and beyond. The four key trends we’re studying are: resumed foreclosure activity, extensive medical bills, the end of child tax credits and historically high inflation. Add these all together and the financial outlook for consumers, especially those in debt, is scary. But there are silver linings, as well. For one, the consumer credit market is looking strong with signs of expansion, specifically,  originations for credit cards and personal loans are increasing. Second, the fintech industry continues to grow and evolve to meet the changing needs of consumers, offering more opportunities for financial inclusion and innovative customer experiences. The Downside Look, coming out of a pandemic and into a tumultuous international economic situation, we don’t expect it to be easy. But some definitely feel it more than others. For many families, government stimulus through child tax credits (which ended in December) was helpful in covering the gaps in income from pandemic losses, but it wasn’t enough to prepare them to take on new expenses and restart all the financial obligations that were temporarily on hold. In fact, a recent report from the Columbia University Center on Poverty & Social Policy found that 3.7 million U.S. children were plunged back into poverty by the end of January when child tax credits expired, indicating that the stimulus was making a significant financial difference for many families. In January, the foreclosure proceedings that were paused under the CARES Act resumed after an 18-month hiatus. In January alone this amounted to 56,000 foreclosure starts, up 29% from the month prior. But that doesn’t tell the whole story: 964,464 mortgages are still seriously delinquent and not in forbearance, with 49% in loss mitigation plans. Even more concerning, of those 474,071 borrowers in loss mitigation, 72% just aren’t paying. The average American household is now paying an additional $276 per month on expenses thanks to record-high inflation. And don’t forget pandemic-related medical expenses from Covid-19 testing and treatment. A recent survey found that 56% of Americans, with or without insurance, owe health-related debt, and almost one in six people with medical bills aren’t paying them off. And it’s not just medical bills. According to Experian’s latest Ascend Market Insights, February marked the 9th month in a row with increasing 30+ delinquency rates on a unit basis across debt types. Their data shows that 30+ day past due accounts showed a 7.59% increase month over month with notable delinquency increases in first mortgages, second mortgage, auto leases and unsecured personal loans. Additionally, month over month views of roll rates show 0.91% of consumer accounts were rolling into higher stages of delinquency in February 2022. This indicator has now returned to the same level as the start of the pandemic in March 2020.  While student loan payments are still paused through May, the day is quickly approaching when many will see their financial obligations increase yet again, compounding the burden and financial pressure on consumers. The Upside In spite of the challenging economic landscape, the good news is that consumers now have more options when it comes to lending and personal finance, and they’re taking advantage of them. Higher costs of living and, for some, sustained unemployment (partially influenced by the Great Resignation) are driving consumers to look for new lines of credit to manage expenses. According to TransUnion, originations for personal loans are expected to continue rising in 2022 to both non-prime and prime and above consumers, reaching pre-pandemic origination volumes last seen in 2019, while credit card origination and balances will hold steady near pre-pandemic levels. And lenders are happy to lend. Between extra cash on hand from government stimulus, pauses on many financial obligations and new cash flow budgeting options like BNPL taking the payments industry by storm, consumers actually did a pretty good job managing their finances in regard to repaying debts during the pandemic. Delinquencies were at record lows, causing lenders to become more comfortable serving subprime segments that were performing well. As a result, originations for credit cards and personal loans have returned to pre-pandemic levels and have been holding fairly constant over the last two quarters. This bodes well for financial inclusion and the bevy of fintechs looking to get in on the action. From eCommerce and retail to banking and money transfers, every sector features a fintech company that’s innovating digitally to provide more people with better financial access and positive customer experiences. A recent report by Plaid includes key findings about what consumers want from their financial services: 1) apps and services that work when and how they want and that make it easier to manage money, 2) interoperability, with apps and services providing connected experiences, regardless of the providers, and 3) services that not only help them save money but achieve better financial outcomes. And guess what? Fintech companies are delivering. According to research from Bloomberg, fintech companies now originate 38% of U.S. unsecured personal loans, with a large presence in the mortgage and auto loan categories. Boiling This All Down Remember when stimulus money was flowing, consumers weren’t spending as much (because what was there to do?) and instead taking the opportunity to pay off loans and debt and save at record rates? Those times are gone and signs show that consumers are looking to use more credit and take on new loans in response to economic pressures. Unfortunately, a rise in originations will inevitably lead to a rise in delinquencies, especially in a challenging and unpredictable economy. Knowing what comes next, now is the time to start thinking about pre-default and keeping consumers on track with payments and out of collection. For lenders, this means engaging delinquent customers early on when the first signs of slippage occur, and how you do that is important. Consumers today expect a seamless, personalized experience in every financial transaction, and the right recovery operations can continue to deliver that all the way through the customer journey when you have the right strategy in place. If you don’t know where to start in building a strategy, our Recovery & Collection Starter Kit is a good place.

TrueAccord is an intelligent, digital-first collection and recovery company that uses the industry’s only adaptive intelligence: a patented machine learning engine, powered by engagement data from over 16 million consumer journeys, that dynamically personalizes every facet of the consumer experience in real-time. Our team takes innovation seriously and works tirelessly to provide product and service features that deliver outstanding results for clients and customers. Here’s what’s new from TrueAccord. Feature Update: Web Chat Tax season is upon us and in the debt collection industry that means consumers have access to refunds. According to the National Retail Federation, of the 59% of consumers who are expecting a tax refund this year, 33% plan to spend their refund on paying down debt. For this reason, mid-February through May is considered the most productive time of the year for debt collection with many consumers receiving tax refund money and opting to use this extra cash to catch up on their finances. During tax season, it is important to manage the large volume of inbound requests while also maintaining the quality of customer interactions.  As a digital-first company, TrueAccord invests heavily in strategic communication with consumers where and when they want it and doesn’t rely on a large call center operation. With an expected increase in inbound communications during tax season, the TrueAccord team determined that a digital-first live chat feature would align with customer contact preferences and enable better customer service during peak times.   To solve for this, TrueAccord launched a custom web chat interface in advance of tax season, which is visible to customers as a chat “bubble” on the consumer-facing web pages. The solution offers myriad benefits to both customers and customer service agents including reducing call volume, improving agent capacity to handle multiple consumers, assisting in managing tax season volume and providing a consumer-friendly self-service option for most commonly asked questions. The result? We’ll monitor and analyze how the new web chat feature performs during this year’s tax season, but consumer surveys have shown that web chat is preferred by 41% of consumers over phone, email and social media support, so we anticipate high customer utilization. The expected outcomes of web chat implementation for tax season are: Improved user experience by offering a preferred method of communicationReduced in in-bound call volume Increased accounts closed rateManaged tax season volume and Improved quality service levels across all operations communication channels with self service options for most commonly asked questions and inquiries now via web chat

Delinquencies are a predictable reality for any business that handles payments, but the most efficient and effective way to recover delinquent funds isn’t always as predictable. A recovery team could theoretically chase down every last delinquent dollar. But it would soon reach the point at which the operational cost of the effort – and the associated legal and reputational risk – would cut into profitability. With so many factors involved, it can be difficult to even know where to start… The planning process should start with an in-depth understanding of what makes a world-class recovery strategy in today’s digital-first age, a look at the big picture for your specific industry all the way down to your detailed metrics, and KPIs that should be steering your strategy. Consumers expect a seamless, personalized experience in every financial transaction, and your recovery operations can continue to deliver that all the way through the customer journey when you have the right strategy in place. There is no one-size-fits-all when it comes to debt recovery and collection, but getting started doesn’t have to be daunting when you have the right resources to get you going.   Beyond Best Practices and into Actionable Tactics  Go beyond general best practices and start plugging in your own data with the tools inside our new Recovery & Collection Starter Kit. We have assembled guides, calculators, cheat sheets, and more to provide the frameworks and metrics for your organization to get started architecting the right recovery strategy for the long run.  Each starter kit includes: World-Class Recovery Guide — pick your industry edition!Manage delinquencies without sacrificing consumer experienceBalance performance with operation metrics and consumer-focused KPIsCompare, contrast, and evaluate in-house vs partner collection strategiesCheat Sheet: Top KPIs for Your Recovery Operations Differences between traditional debt collection metrics, digital engagement tracking, operational KPIs, and moreNew consumer-centric KPIs for today’s most effective recovery strategy How to calculate profitability of a collection operation using operational metricsInteractive Recovery & Collection CalculatorEnter your business's KPIs to measure the profitability of your recoveryDiscover opportunities to improve the reach, resolution funnel, and cost effectiveness of your recovery operationScenario plan how much in additional revenue and cost savings the shift to an intelligent, digital strategy can drive for your businessChoosing a Recovery Partner: Top 6 Questions to AskDetailed questions on communication, technology, risks, and moreWhy each question matters for both profitability and consumer-experience Based on each question, what to look for in a potential partner’s responses  Download your Recovery & Collection Starter Kit now>> These tools will teach you how to maximize profitability by efficiently recovering money lent to customers or members—while simultaneously maintaining consumer loyalty. Now is the time for businesses across verticals to embrace a disruptive, obsessively consumer-centric mindset for recovery and collection, and experience the results of this new approach. 

Most Americans are in enough credit card debt, they would do anything to go back in time and change the outcome of their financial situation, according to new research. A survey of 2,000 general population Americans examined how they tackle their financial hurdles and found the average person owes $3,083 to credit card debt.  Many respondents shared their financial regrets over the years, from not setting up a retirement plan when they were younger (51%), to not paying close attention to their credit score (43%) and buying goods that were too cheap (41%). Three-quarters (76%) have made an average of five financial decisions they regret in the past five years. And those who are eager to get out of debt (76%) have already planned their “debt free” celebrations once they finished paying all their dues.  Conducted by OnePoll and commissioned by TrueAccord, a digital debt collection company, the study revealed 77% of respondents have lost an average of nine hours of sleep per week due to their financial woes. When they’re in a financial crisis, 63% of people will turn to someone they trust — with half turning to their parents, 48% to their best friend and 46% to their primary bank.  Overall, 87% of people credit their financial “wins” to the people who had given them advice, while seven in 10 (71%) said they’ve learned from others’ financial mistakes. “There are close to 80 million Americans with past due debt and most want to pay it off and move on with their lives. But that is exceedingly difficult, especially in a debt collection system that treats consumers poorly and is more interested in process than simplifying debt repayment,” said Ohad Samet, founder of TrueAccord. “What we see more and more are consumers in debt who want to pay off their balances but are met with challenges of communicating with collectors, financial literacy and budget considerations that create roadblocks to being debt-free.” For many Americans, recovering from financial regrets starts with their credit score. The average person doesn’t understand the importance of their credit score until they’re 28 years old, but believe it’s better to start building a credit at 25 years old. Over four in five (84%) said maintaining a good credit score is important to them, with nearly as many (81%) saying it’s even more important than their social lives. https://www.youtube.com/embed/E2qshqslyxw Respondents also recalled the feelings they have when they see their credit card statements and when they’re about to make a payment. When seeing their statements, 31% said they feel confident and 24% feel fear.  On the other hand, people feel satisfaction (36%) and happiness (22%) when making a payment. While 38% don’t plan on taking out any kind of loans in 2022, many are already making plans for loans in the year ahead — including credit card loans (34%), personal loans (33%) and mortgages (30%).  “For those who are able to repay their balances, there may still be a longer-lasting impact to their credit score that can be difficult to remedy and further inhibit financial stability,” added Samet. “People will continue to borrow money when they need it, but what’s important is that they are informed on loan or credit terms and have a financial plan in place to ensure they’re making smart spending and repayment decisions. At the end of the day, though, getting into collections is often the result of trauma — loss of work, a healthcare crisis, and so on — many of them unexpected.” TOP 10 FINANCIAL REGRETS AMERICANS HAVE Not starting a retirement plan while I’m young 51%Not paying attention to my credit score 43%Buying cheap goods 41%Defaulting on payments and ending up in debt collection 41%Overspending on credit cards that I can’t afford to repay 38%Buying a car without knowing what’s involved 37%Letting student debt accumulate 36%Getting locked into fixed interest rates 29%Not investing money while I’m young 26%Not buying a home/property while I’m young 25%

Measuring the success of a recovery strategy goes beyond just the dollars and cents recovered. Yes, the goal of a recovery operation is to maximize profitability by efficiently recovering money lent to consumers, but other key factors — like consumer experience and retention — are also important in evaluating the success of your business.   A recovery team could theoretically chase down every last delinquent dollar, but doing so is often not worth the  operational cost of the effort, and the associated legal and reputational risk can cut into profitability.  In this blog post, we’ll share the most important key performance indicators (KPIs) for collections and recovery — and how you can use them to create a seamless, scalable, and world-class recovery practice.  Meet the Metrics  Whether looking at portfolio performance, operational profitability, or consumer experience, different KPIs play a role in measuring the success of a recovery strategy. Collectively, these metrics make up the “language” of recovery and collection — helping organizations understand the fundamentals of their operation. Here are a few of the most integral metrics to know: Accounts per Employee (APE) or Accounts to Creditor Ratio (ACR): the number of delinquent accounts that can be serviced by an individual recovery agent  Net Loss Rate or Net Charge Off Rate: measures the total percent of dollars loaned that ended up getting written off as a loss Delinquency Rate: total dollars that are in delinquency (starting as soon as a borrower misses a payment on a loan) as a percentage of total outstanding loans - often an early warning sign on the total volume of delinquent debt Promise to Pay Rate: the percentage of delinquent accounts that make a verbal or digital commitment to pay Promise to Pay Kept Rate: the percentage of delinquent accounts that maintain a stated commitment to pay Roll Rate: the percentage of delinquent dollars that “roll” from one delinquency bucket to the next over a given period of time - provides visibility into the velocity with which debts are heading into charge off Profitability of a Collections Operation Formula: R x ResF x E  R [Reach]: percentage of consumers in delinquency can you actually reach  ResF [Resolution Funnel]: how effectively you can convert initial contact with a consumer into a commitment to pay – and ultimately, a payment promise kept (see Promise to Pay Rate and Promise to Pay Kept Rate)  E [Efficiency]: calculation of what the “unit economics” of your collection are and how much it costs, on average, for every account that you rehabilitate The following diagram highlights the relationship between these core operational metrics of a recovery strategy and portfolio-level outcomes. In the hyper-competitive financial services space, consumer experience is a source of competitive advantage. That’s why it stands to reason that alongside the “traditional” metrics we see above, forward-looking fintechs and lending organizations should include KPIs that measure the value of consumer experiences: Net Promoter Score (NPS): how likely a consumer is to recommend a given brand after an experience with a brand’s collection organization Customer Retention Rate: how likely a consumer is to be reacquired by a given brand after his or her delinquent account is rehabilitated How to Make the Most Out of These Metrics So you have traditional metrics and consumer-focused KPIs, but how do you use it all? Managing performance with operational and consumer-centric metrics requires understanding the economics of recovery. Successful organizations will use the data to measure trends against the company’s own historical data, evaluate partners and strategies, and understand the big picture. Understand the Big Picture Visualize the relationship between operational metrics and portfolio-level outcomes. Conduct scenario planning exercises (e.g., “if we were able to improve the reach of our efforts by 25% through digital outreach, we would be able to reduce our net loss rate by 750 basis points”). Measure Trends Longitudinally Benchmark against a company’s own historical data as the collection team rolls out new strategies and tactics (e.g., “we boosted our promise to pay kept rate by 350 basis points relative to the previous vintage with pre-payment date reminders”) Evaluate Partners Assess potential collection vendors against a standard slate of metrics and KPIs (e.g., “of the three vendors that we evaluated for our collections, which one led to the greatest reduction in roll rate?”) Moving Towards World-Class Recovery  Understanding collection KPIs and how to use them is a critical part of creating an effective recovery strategy — learn about all the components of a successful collection operation in our new ebook, the Guide to World-Class Recovery. Available for download now, this ebook provides the tools and frameworks to ensure that you’re architecting the right recovery strategy for your company for the long run.  Download the Guide to World-Class Recovery»

PORTLAND, Ore., (February 7, 2022) - Sila Inc., a fintech software platform that provides payment infrastructure as a service, today announced that it partnered with TrueAccord, the leading debt collection company offering intelligent, digital-first collection and recovery solutions, to make it easier for Sila’s customers to use TrueAccord’s products and services. How to deal with delinquent and defaulted accounts is a key element that fintechs need to have in place as part of their overall management of funds. Using a patented machine learning engine and engagement data from millions of customers, TrueAccord delivers a personalized, self-serve experience that drives consumer engagement and industry-leading results. Meeting consumer preference for digital-first services and to cut through the noise and empower customer self-service and inbound communication, TrueAccord uses a range of channels including email, SMS, voicemail drop, and more. Since its inception, Sila has been laser-focused on providing industry-leading API solutions. As importantly, Sila has been steadily growing its partner network to augment its offering by anticipating additional functionality that Sila customers will need to successfully build their businesses. With the recent addition of TrueAccord, Sila is on path to have agreements with over 40 specialist service providers signed by the end of this quarter. “Sila is proud to welcome TrueAccord as a partner. We know that our customers will benefit from this key addition to our partner network and from a closer relationship between our two organizations,” said Shamir Karkal, CEO and co-founder, Sila Inc. “Like many of our fintech customers, TrueAccord was founded by an individual who had a sub-optimal experience with a traditional financial institution and decided to do something about it. That’s a mindset that is very close to our own because we started Sila around the idea to provide payment services that allow entrepreneurs to build the new financial world they have in mind.” “We have worked with more than 16 million consumers on their journey to pay off their debts, and we use that data and feedback to understand how and when to best engage consumers to facilitate repayment. By allowing consumers to create flexible payment plans and by offering modern, digital-first communication channels, we are changing the landscape of debt collection from hostile and harassing to empathetic and helpful,” said Mark Ravanesi, CEO of TrueAccord Corp. “We are looking forward to bringing to bear our significant expertise for the benefit of Sila’s customers and consumers.” About Sila Sila is a fintech software platform that provides payment infrastructure as a service, a business-critical element for all companies that need to integrate with the US banking system and blockchain quickly, securely, and in compliance with applicable US regulation. Sila offers Banking, Digital Wallet & ACH Payments APIs for Software Teams. The firm was recognized as a ‘2021 best place to work in financial technology’. Sila is headquartered in Portland, Oregon. For more information go to www.silamoney.com About TrueAccord TrueAccord is the intelligent, digital-first collection and recovery company that leaders across industries trust to drive breakthrough results while delivering a superior consumer experience. TrueAccord pioneered the industry’s only adaptive intelligence: a patented machine learning engine, powered by engagement data from over 16 million consumer journeys, that dynamically personalizes every facet of the consumer experience – from channel to message to plan type and more – in real-time. Combined with code-based compliance and a self-serve digital experience, TrueAccord delivers liquidation and recovery rates 50-80% higher than industry benchmarks. The TrueAccord product suite includes Retain, an early-stage recovery solution, and Recover, a full-service debt collection platform.To learn more, go to http://www.trueaccord.com.

With digital lending via neobanks and fintechs on the rise, consumers have more options than ever for obtaining loans. There are a lot of considerations for these digital financial providers when building their business models, but one important and often-overlooked strategy is recovery for delinquent accounts. We sat down with TrueAccord’s Chief Growth Officer, Sheila Monroe, who has held numerous executive-level positions at TrueAccord on top of a multi-decade career in collections, to learn more about the economics of collections and what new lending players should look for when considering a collections solution. What are the economics of collections metrics for delinquent accounts? There are a number of metrics to pay close attention to in the management of delinquent accounts. These can be separated into two main categories, portfolio metrics and operational metrics.  Portfolio metrics address the health of the entire portfolio or a defined segment of a portfolio (a certain vintage or a certain risk group or even a particular product). For a U.S.-based lender following GAAP accounting, the lender’s net loss rate (or net charge off rate) is the ultimate metric. It tells investors and management what percent of the portfolio is lost as a result of non-payment, which is a key metric in the overall health of the business. Private equity and venture capital firms, along with companies who invest in a lender’s receivables, will be most interested in a predictable loss rate in line with investment objectives. Operational metrics are also important in managing delinquency and losses. Operationally, lenders should understand how well consumers follow through on payment plans or promises by monitoring a promise kept rate as well as what percent of payments cover the total payment due to cure the account. For measuring efficiency, lenders look at the ratio of delinquent accounts per collection employee, often referred to as accounts per employee (APE) or accounts to collector ratio (ACR), as well metrics like promises and dollars collected per paid hour of operations. Many also look at the cost to collect a dollar or the cost per delinquent account.  What are credit loss provisions and why are they important to financial providers? Lending institutions will inevitably have loans that go into default, and this is planned for in their financial modeling. For lenders, even the largest international banks, loan losses are the largest expense line in the budget so it’s important to prepare for those losses. When money is loaned, whether in a 30-year mortgage, a 5-year car loan, or a revolving credit card, some of those accounts will go past due, and some will fail to pay long enough that they get charged off as bad debt (credit loss), and it can take years to see that happen.  But when account balances do get charged off as bad debt, the lender must have enough money “reserved” to absorb those losses and still be able to operate. So any lending company with investors will need to have a reserve for losses that shows up in their balance sheet. Depending on market conditions and actual loss rates, these reserves can be adjusted upward or downward periodically to ensure what is commonly referred to in financial services as “safety and soundness”. This is even more important if a lender takes consumer deposits to fund any of their lending.  What is a roll rate in debt collections? The roll rate is the sum of account balances that moves from being in one stage of delinquency to the next. For example, if 500 accounts with balances totalling $600,000 are one month past due (often called bucket 1 or one down), and the next month there are 150 accounts with balances totalling $125,000 that are 2 months past due, there was a 20.8% roll rate from buckets 1-2. Roll rates can also be calculated based on number of accounts, but that metric is rarely used in a performance analysis.  How do lenders and debt collectors use roll rates? Roll rates are primarily used to forecast future charge-off levels, to develop sophisticated risk scoring models to be used in underwriting or collection strategy, and to evaluate the effectiveness of a collection strategy or process. The collection process is designed to effectively intervene when consumers miss payments and to encourage and enable them to get back on track quickly. The longer loans and credit cards go unpaid, the more they accumulate late fees and finance charges and become much more difficult to get back to good standing.  What are “good” roll rate ranges in debt collections? This can be tricky to determine because portfolio objectives and type of debt come into play. For example, some products might be aimed at riskier customers, those with thin or no credit profiles, or those who have lower credit scores and it would be disadvantageous to compare those roll rates to those of a prime product. It’s important to understand the objectives of a lending product when evaluating performance. Depending on their objectives, some lenders target high-risk customers and have high credit losses, padded by high fees, while others target prime borrowers and enjoy low losses.   If a lender has been in business long enough, they can benchmark roll rates against prior years, but need to account for any changes to underwriting and macro economic conditions. For example, banks can compare delinquency and charge off rates to other banks or look at performance by vintage, meaning how are all the accounts that were opened during a specific period of time performing. Peer benchmarking can be difficult for Fintech and other young lenders who often don’t have a base of publicly traded competitors who must report these key metrics in shareholder reports, but there are some consortium groups that can help (Auriemma Roundtable Group). Roll rates are early indicators of collection effectiveness and often require more than a glance to understand if they are good. Often looking at connected roll rates or flow rates is more telling. For example, a high roll rate one month may be the product of a short billing month, while looking at a broader metric like debts that rolled from current to 3 months or those that went from 4 months to charge-off, might be a more telling indicator.   What are “good” ranges of cost to collect? Generally, collection costs include the cost of collection staff wages and fringe benefits, software licensing, management overhead (for quality monitoring, training, supervision, workforce management and others), communication costs (letter and postage, telephony, SMS and other costs), equipment, supplies, scrubs and skip tracing information, and premises (leases and maintenance). If the collection function is completely outsourced, a lot of these costs will be wrapped into the cost per hour or cost per FTE being charged. I’ve seen costs on a per account basis range anywhere from $4.50 to more than $16 for unsecured consumer debt, depending on the strategy, the type of portfolio, and the location of the operation.   As a lender, it’s important to know what you are optimizing for. Spending more to keep losses low may seem like a no brainer, but there is a point of diminishing returns and, worse, a point in which more collection activity drives disproportionate costs in the forms of complaints, litigation, customer attrition and reputational damage. It may make sense for your business to manage delinquency and charge off levels near your industry’s benchmark or even higher, but put more thought into customer retention and how to get them using your product again once their finances have stabilized.   Why should a company that’s new to lending have a collections partner? New lenders go into business to lend money. They start with a target audience and product market fit, and tailor underwriting to their growth aspirations and customer value proposition. That is absolutely what any new lender should focus on. But often lenders are either naive about the impact of losses (maybe they think their underwriting will be so good they don’t need to think about collections), or they don’t have a full appreciation of how managing losses and taking advantage of recoveries will enable them to lend more money and retain more of those hard-earned customers. Having a trusted collection partner can allow the lender to focus on what they do best while reaping the benefits of sound practices to manage delinquency.   How do you measure success? Ultimately, it will be a combination of your lending strategy (did you lend to the right people) and your collection strategy (how well can you get customers back on track after missing a payment) that will influence portfolio metrics. But none of these metrics will drive outstanding performance in isolation. To be effective, it’s important to understand a lender’s reach into the delinquent customer base. What percent of customers are actually engaging with the collection effort? A calling strategy results in about 2% of phone calls reaching a “right party” (the person responsible for paying) and about 1.5% resulting in a payment.  More lenders should look at engagement metrics - what percent of their delinquent customers actually engaged with some form of communication. In a purely digital strategy it is easy to measure email open and click rates, and SMS engagement rates as strong top of the funnel indicators. For Fintech we see a 46% email open rate and 2.5% click rate, with SMS delivering click rates between 25-32%. This is substantially higher engagement than what can be achieved in a calling environment and is better received by consumers.  What should a digital lending company consider when choosing a collections partner? Companies new to lending are originating loans, and therefore the entire customer relationship, online. Their customers had a digital experience to begin the relationship and they will expect a digital experience throughout their relationship with the lender. With that in mind, some things a digital lender should consider when choosing a collections partner include: Does the collection company primarily communicate with my customers in their channel(s) of choice? Many collection companies will say they use email, but it is often not the primary mode of communication and can amount to less than 10% of an otherwise heavy, offensive phone calling strategy. Are customer communications personalized when it comes to the channel being used, the time of day the communication occurs, the content and tone of the message or do they segment broad groups of customers for a one size fits all treatment strategy? Does the collection company leverage any machine learning that could augment what I already know about my customers based on my internal data alone?What process does the collection company have for continuous improvement enabled by a strong champion/challenger testing capability? How much execution risk does my collection partner expose me to? Operations that rely on more collection agents will carry more risk exposure. Poor agent attendance or high attrition will impact expected coverage. Poor quality or agent errors across a varied labor pool will impact collection results and pose compliance risks. Cultural bias or unneutralized accents of offshore agents have been shown to result in lower contacts and lower average commitments than more expensive on-shore agents.If you are outsourcing to an agent-intensive provider, make sure you understand what drives the agent incentive plan. Agents interested in making incentives don’t always have your customers’ best interests in mind.

Collections-as-a-Service offering is seamlessly integrated to service customer debt accounts while delivering consumer-friendly, digital-first experiences LENEXA, Kan., Jan. 5, 2022 -- TrueAccord Corporation, a debt collection company offering ML-powered digital recovery solutions, today announced a partnership with Synapse as an expansion of its Collections-as-a-Service offering. The partnership will bring the best-in-class collection and recovery capabilities of TrueAccord to Synapse’s fintech partners and customer base, integrating collections into the customer-centric fintech ecosystem. Given the rapid growth in fintech lending and banking-as-a-service (BaaS) and the steady rise in delinquencies, consumers are expected to fall behind on their payments and require assistance to repay their debts. Synapse, a BaaS platform that provides the infrastructure and leverages APIs to enable companies to quickly build and launch best-in-class financial services, selected TrueAccord to join their growing tech stack of fintech partners with similar approaches to financial services and customer experience to address the need for debt collection when it arises.  “We chose to partner with TrueAccord to add debt repayment services to Synapse’s BaaS ecosystem, because it aligns with consumer preference for a frictionless, digital-first financial services experience, especially when they fall behind,” said Sankaet Pathak, Founder & CEO of Synapse. “We want to ensure our customers have a good experience across all aspects of their financial journey, and providing that in collections is just as important for customer retention as it is in origination and servicing.” Through an API integration, TrueAccord’s Recover debt collection solution will service charged-off debt accrued through Synapse’s lending platform. This will expand the Synapse fintech suite to follow a customer from loan origination to application and all the way through to collections, if needed. Additionally, TrueAccord’s Retain solution for early-stage delinquencies will be available on a referral-basis to the fintech partners in the Synapse ecosystem as an option to help get customers back on track with payments before being sent to collections. “As a fintech company itself, TrueAccord knows the fintech business and customer better than most, especially in debt collection,” said Mark Ravanesi, CEO of TrueAccord Corp. “We speak the fintech language of consumer communication preferences, data and machine learning-driven technology, and no credit bureau reporting, offering customers a streamlined and hassle-free way to settle their debts and get back on track with their finances.” With open banking on the rise, more companies will look for ways to incorporate collections into their service offerings. TrueAccord’s industry-leading Collections-as-a-Service product will enable  fintech innovators to scale their businesses and offer best-in-class recovery with a customer-centric approach. To learn more about TrueAccord, its API and built-in collections solutions, click here and follow @TrueAccord on Twitter and LinkedIn. About TrueAccord TrueAccord is the intelligent, digital-first collection and recovery company that leaders across industries trust to drive breakthrough results while delivering a superior consumer experience. TrueAccord pioneered the industry's only adaptive intelligence: a patented machine learning engine, powered by engagement data from over 16 million consumer journeys, that dynamically personalizes every facet of the consumer experience – from channel to message to plan type and more – in real-time. Combined with code-based compliance and a self-serve digital experience, TrueAccord delivers liquidation and recovery rates 50-80% higher than industry benchmarks. The TrueAccord product suite includes Retain, an early-stage recovery solution, and Recover, a full-service debt collection platform.

By Laura Marino TrueAccord’s Chief Product Officer, Laura Marino, was recently featured in the New Standard in Debt Collection panel as part of the Beyond Digital: The Next Era in Collections summit. As a civil engineer turned product management executive, Laura has a unique viewpoint on the evolution of machine learning in software across a variety of industries. In this blog post, Laura shares her perspective on machine learning at TrueAccord and in collections, in general. At TrueAccord, we know that consumers prefer digital channels and self-service. We also know that just providing the digital channels is not enough. To truly engage with consumers we need to help them throughout the journey. This is where machine learning comes in. What is machine learning? Machine learning is an application of artificial intelligence (AI) that provides systems the ability to automatically learn and improve from experience without being explicitly programmed. In the context of collections, and specifically in the context of our consumer-centric approach to collections, machine learning is a wonderful tool to personalize the experience for each consumer, effectively engage with each of them, and ultimately help resolve their debt. There has been so much hype around machine learning, but often companies that claim to do ML are really using fixed rules or heuristics (if a consumer does X, then do Y) without including any of the automatic learning and improvement. Or they may be using ML for a very specific, very limited scope - like automating some consumer support responses. The reason that leveraging ML is so difficult for something as complex as collections and recovery is that it requires a lot of expertise in data science and behavioral science, it requires a lot of user research, and it requires a lot of data.  This is not something that a company can decide to start doing overnight as an add-on. https://www.youtube.com/embed/T_7AA82-p8Q How does TrueAccord apply machine learning to debt collection? TrueAccord is leveraging machine learning and behavioral science throughout the entire journey, from initial engagement all the way to resolution. We were built specifically around the hypothesis that focusing on machine learning-driven, digital-first experiences was the way to transform debt collections. We have been doing this since 2013, and we have orders of magnitude more data than anyone else. Just to give you an idea: we send millions of emails per day, and hundreds of thousands of text messages per week and our ML engine learns from every open, every click, every action on our website, and every interaction with our call center agents. Because of all of this, we have something that is very hard for anyone to imitate. Unlike traditional collections, we do not use demographic data like age, zip code, or creditworthiness to personalize the experience. Instead, we use engagement data about how the consumer responds at every step in the process.   We have handled debts for over 24 million consumers and we have collected data about each individual interaction with those consumers. That wealth of data, combined with our ongoing user research is behind the ability of Heartbeat (our fully automated and reactive decision engine) to personalize the experience for each consumer.  We’ve seen this data-driven machine learning customer-centric approach lead to increased customer satisfaction, better repayment rates, and lower complaint rates. Machine learning is used to personalize and optimize every step of the customer journey. The first thing we need to do is to effectively engage with the consumer.  For that we have several models:  Cadence optimizer: determines the right cadence to communicate with each consumer about their debt. Specifically, it determines which day to send the next communication. We don’t have a fixed rule that says “send an email every x days.” Our decision engine decides it dynamically based on the type of debt, the consumer behavior, and where they are in the process. Send time optimizer: determines when during that day, communication should go out. A working mother who is busy with her kids in the morning and in the evening is more likely to check her messages in the middle of the day during her lunch break. A construction worker has a very early start to their day, may prefer to check messages at the end of the day.  We want our consumers to receive our communications during their preferred times so that they are at the top of their inbox and not buried under 50 other emails. Reaching people at the right time of day has a big impact. Due to our send time optimizer, we saw a 23% increase in liquidation for certain types of debts. Email content rater: we also want to make sure that the tone of our communication is one that will best resonate with a specific consumer. For each piece of content we send out, our content team has created multiple versions with different voices, ranging from very empathetic to more ‘to the point’ because different people respond to different styles. Heartbeat chooses which one to send based on what it has learned from the behavior of each consumer.  After engaging the consumer with the right cadence, timing, and content we want to make sure that they commit to a payment plan and stick to it until their debt is resolved. For that, we have machine learning models that determine the best combination of discount and length of payment plans to offer to each consumer. The options that the consumer sees when they get to the payment plan page are tailored to them based on what Heartbeat believes will work best. The consumers can build their own plan but, if we can proactively offer options that work, we make it easier. We also have a ‘payment plan breakage model’ that helps us identify consumers who are at risk of not making a payment so that we can proactively reach out to them and give them options. With this we were able to increase the resolution rate among customers at risk by 35%. What do customers think about TrueAccord’s model? We have a lot of very positive feedback from our consumers which I attribute very much to our machine learning capabilities. It is one of the things that I think is so exciting for everybody who works at TrueAccord. We consistently get messages saying, "Thank you for making it so easy. Thank you for allowing me to do it via digital channels without having to talk to anybody." And then when people call with questions, our call center knows that they're there to help. People definitely respond very positively to the approach we’re taking to collections. This content originally appeared as part of the Beyond Digital: The Next Era in Collections summit. Watch the entire summit here. 

Consumer adoption of Buy Now, Pay Later (BNPL) products skyrocketed in the past year, fueled in part by an increase in online shopping due to Covid-19. There are many payment and credit options available, but it really comes down to consumer preference and consumers are choosing to use BNPL. But why are consumers into BNPL and what happens when BNPL installment loans go unpaid? The outlook for BNPL customers that default on payments and go to collection is different than for those who default on credit card debt. TrueAccord is a digital debt collection platform that works with the leading BNPL providers and compiled data on debt trends, repayment performance, and consumer preferences from millions of customer accounts to report on the BNPL phenomenon. The report explores the trends and why BNPL continues to be a preferred payment option with consumers, even after going to collection. Key findings include: Since the onset of the pandemic, younger consumers (18-34) are going into collection for lower amounts due to an uptick in BNPL usageBNPL debts see higher and faster repayment rates than similar-sized credit card debts— BNPL repayment is 2x+ higher than credit card repayment at both 30 and 90 days.Consumers like installment payment plans, whether at the time of purchase (by using a BNPL product) or after default (by setting up a repayment plan over a period of time)  To learn more about BNPL and collections, click here to read the report “Buy Now, Pay Later, Consumer Preference and Collections Outlook” from TrueAccord.