How are Fintech startups changing debt collection?

By on June 19th, 2020 in Industry Insights

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. 

At TrueAccord 95% of accounts are resolved through self-service. Join our Director of Operations as she discusses how we uniquely manage the other 5%!

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. 

Are you ready to start up with a new technology-driven solution? If you want to learn more, schedule some time to talk to our team today!

Code-driven compliance is the future of debt collection

By on June 12th, 2020 in Compliance, Product and Technology

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. 

Are you interested in learning more about the content creation process? Here’s an interview with one of our content managers all about engaging with empathy.

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.

How do you correct (or prevent) email deliverability issues?

By on May 4th, 2020 in Product and Technology

Email is only one of many powerful digital channels at your disposal when it comes to connecting with consumers. Regardless of which of these channels you decide to use to reach those consumers, you also have to decide how to measure the effectiveness of your new digital tools. 

We’ve discussed email deliverability and what it means to collections, but once you have the proper email infrastructure in place, your team’s focus should shift toward both measuring the impact of those email efforts and understanding what declining performance can mean to your collections process. Here are a few things to keep in mind so that you can minimize the impact of deliverability issues and optimize your contact rates.

Build a baseline

The first step in effectively correcting email deliverability problems is to start with a baseline that you can compare to. Measuring the impact of issues on your digital collections strategy requires your team to establish what “normal” looks like for your business. Some engagement-related metrics that matter most to email-based digital debt collection typically include:

  1. Open rates
  2. Click rates
  3. Conversion rates

For email marketers, conversion rates signal when users take a desired action after engaging with marketing material. These actions often involve making a purchase or signing up for a product demo. In collections, conversion rates are measured by a combination of email engagement metrics and the more traditional liquidation rates. The desired action your collections team is looking for is a promise to pay or a completed payment.

With a baseline set for your digital performance, you can compare your average conversion rate to any fluctuations you see in your deliverability. Tracking this data over time then helps you to clearly measure how your deliverability rates impact collections and how specific deliverability issues (send volume, send time, content, etc.) impact your bottom line.

Identify and monitor engagement with deliverability

Email deliverability rates directly reflect whether or not you are reaching consumers’ inboxes, but your engagement shows you whether or not your consumers are taking action. Tracking deliverability in tandem with engagement metrics can provide insight into what changes need to be made to accommodate potentially shrinking inboxing rates. Here are two important correlations to keep an eye on.

Stable open rates and decreased deliverability

If you notice a decline in deliverability, but consistent open rates, there is a strong chance that your email list is out of date or a newly imported list contains incorrect contact information for your consumers. Consumers in your system that are listed correctly are continuing to engage at the same rate, but you have a higher number of bounces or failed sends.

Email validation is an important step in limiting the chances of a situation like this happening as this process confirms whether or not email addresses are legitimate. Large lists may contain small typos or transpositions that would turn an otherwise valid email address into a useless string of characters.

Decreased open rates and decreased deliverability

In the event that there is a decrease in both open rates and deliverability, it is likely that your send domains (the part of an email address after the @ sign) are being blocked or blacklisted. Fewer recipients are actually receiving your emails and even fewer are opening them.

There are a number of steps an organization can take to prevent this downtrend including using multiple domains and carefully scaling an email strategy before attempting to reach thousands of consumers. Attempting to remedy these issues after they have happened may prove to be too late.

Recognize the scope of an issue

Sending collections emails at scale can mean trying to reach thousands of consumers per day. It’s difficult to imagine a process of that scale without some sent emails not bouncing or simply being ignored.

TrueAccord successfully delivered millions of emails. Want to learn how we do it? Check-in with our team today.

As we mentioned earlier, a massive downturn in deliverability can lead to email domains being blacklisted which means those messages will be relegated to spam folders across ISPs (internet service providers). TrueAccord’s in-house Head of Email Operations, Raja Datta, has some extra advice (which was also contributed to a segment for Kickbox) for those looking to prevent these issues from causing further damage.

Attempting to recover your domain authority (proving to ISPs like Google or Yahoo that you aren’t a spammer) at that stage is remarkably difficult, but if you recognize a downtrend in click-rates, you can make relatively minor changes to the content of an email (phrasing on a call to action, different subject lines, etc.) to improve engagement. 

The scale of your deliverability issue will dictate how urgently you have to respond to it and how many resources must be put toward its resolution. Tracking these potential problems early and often can lead to intercepting them before your email strategy is significantly weakened and send domains are entirely blacklisted; update your subject line now and avoid getting blocked later.

Getting to the root of deliverability issues will ensure your email strategy is sustainable for years to come. As right-party contact rates continue to fall and digital channels take priority over phone calls, starting to track your email performance now and understanding how to measure your digital strategy’s success will get your team ahead of the collections curve. 

Does this all seem a bit daunting? We get it. Talk to our team today to see how we can help perfect your digital collections strategy.

Debt collection software vs. digital collections agency

By on April 30th, 2020 in Product and Technology

Traditional call and collect strategies are becoming increasingly difficult to maintain. High agent turnover rates, plummeting right party contact rates, and ever-evolving legislation are driving companies to abandon long-standing practices and seek new solutions.

The two driving options for bringing collections strategies into the digital world are integrating digital collections software into an existing plan or partnering with a 3rd-party, digital debt collection agency. What are the key differences and which one will work for you? Let’s take a look at the pros and cons of each to help your team make a decision.

Debt Collection Software

Collections software can help existing teams build new, digital infrastructure. They cover a wide range of services including:

  • Customizable self-service portals
  • A/B testing for communication
  • Engagement reporting
  • SMS and email automation
  • Chatbots
  • Pay by text tools

These tools offer the ability to engage consumers based on their preferences for time and digital channels. They also bridge the gap between traditional collections methods and consumers that prefer emails and online portals over phone calls.

Compliance support

Software as a service (SaaS) companies in the collections space also boast built-in compliance adherence and aim to decrease the risk of agent-driven call centers.

Cons

Debt collections software solutions can offer incredibly extensive performance evaluation and automation tools, but the volume of tools available can easily become overwhelming for teams new to a digital experience. This can lead to underuse and turn a powerful tool into a wasted resource.

There is also a struggle at the industry level to help transition collections into a digital space. Call and collect strategies continue to be the norm for collections, and the voices seeking to shift the industry in a new direction are met with the Innovator’s Dilemma: “the very decision-making and resource allocation processes that are key to the success of established companies are the very processes that reject disruptive technologies…”

This caution is multiplied by the fact that these software platforms may not be all-in-one answers to a collection team’s problems. The process of integrating a single tool can be costly (in terms of both money and resources), and suddenly needing to integrate another one because the first solution did not offer a specific SMS-based tool, can mean a team starts to look more like they’re putting together technology tech stacks than a collection strategy.

Lastly, traditional call and collect teams that do integrate new technologies may rewire them to drive inbound phone calls rather than focusing on the possible growth of primarily digital approaches. 

Digital debt collection agencies

Full-service digital debt collection agencies offer many of the same benefits provided by SaaS platforms, but they also provide the expanded assistance of an expert team and end-to-end service. Software companies provide account support and insight into product performance, but digital-first agencies not only have full teams and systems dedicated to product optimization, they also have agents that are trained to work in tandem with the digital tools.

Fully integrated teams also mean that agencies can offer simple, accelerated onboarding. In contrast, software platforms vary in how easily they can be integrated into an existing strategy, but successfully maximizing their performance still requires committed internal resources. 

Third-party team support

Digital debt collection agencies support their efforts with dedicated teams:

Product development

Product teams continually develop new strategies for improved digital performance including optimization of onboarding, enabling new digital tools, and continually improving the consumer user experience. 

Deliverability experts

Email deliverability teams optimize contact rates across digital channels. Deliverability metrics such as open rates and click rates become essential for evaluating the success of digital campaigns when compared to traditional call-to-collect solutions.

Building a scalable email infrastructure is incredibly challenging. Companies cannot simply start sending hundreds or thousands of emails overnight. Check out this article on how to build scalable email infrastructure.

Legal teams

Dedicated agencies require licensing and must adhere to the same regulations and laws that traditional debt collectors do. This means that digital-first agencies rely on in-house legal support and compliance to keep them up to date with evolving industry legislation. 

Account executives/success specialists

Account executives serve as liaisons between the creditor and the digital agency in a similar way they would for a SaaS platform. 

Cons

Digital-first debt collection agencies are not the norm. The biggest challenge to working with a digital agency is trying to understand a completely new approach to debt collection. When traditional call center metrics are no longer useful and your agency partner is ready to discuss open, click, and deliverability rates, there’s a hurdle that must be overcome to viewing collections through a new lens.

The industry is gradually realizing the effectiveness of digital debt collection agencies, but their naturalization will only come after existing agencies recognize the impact of using debt collection software and encountering the challenges that come with it first-hand. 

Whether your team integrates a powerful new software platform to support your internal collections efforts or brings on a third-party digital-first partner, digital debt collection is rapidly changing the collections landscape and redefining how collectors interact with consumers.  

Ready to learn more about what it means to partner with a digital-first agency? We’re happy to help. Schedule some time with our team to show you what more an agency can offer!

4 reasons companies worry about digital debt collection

By on March 26th, 2020 in Industry Insights

Committing to work with a collections agency can help to reduce the strain of losses on your business. Whether you’re an eCommerce platform with mounting chargebacks, a small lender, or a rapidly growing bank, working with the right collection agency can reshape how you manage delinquent payments. 

Some digital debt collection options also offer self-service products or platforms that allow companies to manage their collections efforts with an internal team supported by powerful, digital tools while other digital companies offer full-service collections.

No matter how you (or your collection agency partner) choose to collect, there are pros and cons to different approaches, and the newness of digital debt collection can create some cause for concern. It’s important to be informed and understand how digital debt collection can help you and actually directly combats many of the risks associated with collections.

“There’s a compliance risk”

Debt collection is a tightly regulated industry and in order to collect debts safely, companies have to conduct extensive training and build processes that adhere to those regulations. This includes federal laws like the Fair Debt Collection Practices Act (FDCPA), the Telephone Consumer Protection Act (TCPA), and any legislation passed through the Consumer Financial Protection Bureau regarding collections practices. Regulations on collections also vary broadly at the state-level. 

With all of these regulations in mind, companies that are beginning their debt collection efforts may be wary of investing in an extensive, internal infrastructure and will instead partner with established third-party debt collection agencies. Several digital debt collection platforms and tools have built-in compliance measures, but they still require internal teams to manage. With the proper systems in place, however, they can be used to great effect as they are coded to align with legal compliance measures. 

TrueAccord’s legal leadership team has been in the industry for decades. You can check out some of our legal advocacy work here and here!

Full-scale digital debt collection agencies take this a step further and are able to provide comprehensive debt collection services with built-compliance software alongside technology experts that manage the product for you. With measurable digital channels taking priority over agent calls, compliance fixes are integrated into every communication, no training required.

“This will impact how we talk to consumers”

Traditional collections agencies are driven by a call-to-collect model of business that leans on agents calling consumers. The collections industry has remained largely unchanged in its practices for decades, but consumer preferences have shifted. It’s becoming increasingly difficult to reach consumers over the phone; in fact, in the State of Collection 2019 report, one industry leader included in the survey said that “right-party contact has fallen off a cliff.” 

Transitioning to digital debt collection from traditional models is easier than you might think. Want to learn more about how easy it can be? Get in touch with us.

In order to meet the growing demand for convenient communication methods, digital debt collection strategies are redefining the industry’s approach to connecting with consumers in debt. While this digital transition will have a lasting impact on the collections industry, companies looking to start or change their collections strategy have the opportunity to work with partners that are embracing the change. 

“Setting up new technology takes time”

Implementing new processes always takes time. Using a traditional call-to-collection agency still requires building a business partnership and sharing debt portfolios for agents to begin working accounts. In the digital debt collection world, implementation can begin quickly and is made easier by uploading CSV files of contact information directly to the online platforms and applications.

Using internal digital tools can also cause delays due to the need for introducing agents and other team members to the system and allocating training time and resources to building infrastructure. Full-service digital-first collections agencies are able to merge the simplicity of starting with a digital strategy with the value of a dedicated team built specifically to manage these new processes. 

“We aren’t ready to bring on a new tool or partner right now”

Timing can be a blocker for any number of company decisions. Collections and recovery may be a year-round function, but teams still see a seasonal ebb and flow in payment rates. Trying to adopt a completely new strategy in the middle of a busy tax season, for example, can feel like a gamble. Or maybe you’re in the middle of a major acquisition or change in leadership and the business’ future is uncertain.

Even in times of change, it’s important to understand that digital collections tools perform better over time than traditional collections agencies. By beginning your digital approach sooner, even with a small subset of accounts, you can begin to compare digital efforts directly to other collections partners.

Comparing digital-first agencies and tools directly to traditional competitors on the market helps to illustrate the power of digital infrastructure on contact rates. The sooner you start, the sooner you can ramp up, and the sooner you can collect. 

Digital debt collection may be new, but that newness only serves to improve existing systems. Companies that depend on traditional collections efforts can see substantial growth in outreach using digital channels, and those that are not yet collecting have more opportunities to get started now than ever before. Future-proof your company’s losses, improve recovery rates, and keep your customers happy all at the same time. 

Connect with our team today to learn more about how digital debt collection is changing the industry for the better.

Multi-armed bandit models and machine learning

By on February 19th, 2020 in Machine Learning

The term “multi-armed bandit” in machine learning comes from a problem in the world of probability theory. In a multi-armed bandit problem, you have a limited amount of resources to spend and must maximize your gains. You can divide those resources across multiple pathways or channels, you do not know the outcome of each path, but you may learn more about which is performing better over time.

The name is drawn from the one-armed bandit—slot machines—and comes from the idea that a gambler will attempt to maximize their gains by either trying different slot machines or staying where they are.

How do multi-armed bandits fit into machine learning?

Applying this hypothetical problem to a machine-learning model involves using an algorithm to process performance data over time and optimize for better gains as it learns what is successful and what is not. 

A commonly used model that follows this type of structure is an A/B/n test or split test where a single variable is isolated and directly compared. While A/B testing can be used for any number of experiments and tests, in a consumer-facing world, it is frequently used to determine the impact and effectiveness of a message.

You can test elements like the content of a message, the timing of its delivery, and any number of other elements in competition with an alternative, measure them, and compare the results. These tests are designed to determine the optimal version of a message, but once that perfect message is crafted and set, you’re stuck with your “perfect” message until you decide to test again.

Email deliverability plays a key role in effective digital communications. Check out our tips for building a scalable email infrastructure.

Anyone that works directly with customers or clients knows that there is no such thing as a perfect, one-size-fits-all solution. Message A, when pitted against Message B may perform better overall, but there is someone in your audience that may still prefer Message B.

Testing different facets of your communication in context with specific subsets of your audience can lead to higher engagement and more dynamic outreach. Figure 1 below outlines how a multi-armed bandit approach can optimize for the right content at the right time for the right audience rather than committing to a single option.

Rather than entirely discarding Message A, the bandit algorithm recognizes that roughly 10% of people still prefer it to other options. Using this more fluid model is also more efficient because you don’t have to wait for a clear winner to emerge, and as you gather more relevant data, they become more potent.

Multi-armed bandits and digital debt collection

Collections continues to expand its digital footprint, and combining more in-depth data tracking with an omni-channel communication strategy, teams can clearly understand what’s working and what isn’t. Adapting a bandit algorithm to machine learning-powered digital debt collection provides endless opportunity to craft a better consumer experience. 

Following from Figure 1, digital collections strategies can determine which messaging is right for which consumer. Sorting this data in context can mean distinguishing groups based on the size or the age of the debt and determining which message is the most appropriate. In a fully connected omni-channel strategy, the bandit can take a step back and determine which channel is the most effective for each account and then determine messaging.

These decisions take time and thousands upon thousands of data points to get “right,” but the wonder of a contextual multi-armed bandit algorithm is that it doesn’t stop learning after making the right choice. It makes the right choice, at the right time, for the right people, and you can reach your consumers the way they want to be reached.

TrueAccord is optimizing how our multi-armed bandit algorithms create the ideal consumer experience. Come learn more about how we collect better!

3 essential digital channels for collections

By on February 13th, 2020 in Industry Insights

The debt collection industry is in the midst of rapid change. With the decline of the effectiveness of phone calls and upcoming legislation from the CFPB that includes limiting call volume, it’s more important than ever that your company’s collections strategy diversifies and introduces a digital, multi-channel approach to communicating with consumers.

Determining what digital channels work the best for your collection strategy isn’t an overnight decision, and using them effectively is another hurdle entirely. When reviewing potential communication channels, you have to consider how you want to use them, how you plan to scale them, and what the investment will be for doing those things properly.

Email

According to the State of Collection 2019, email is the most commonly used digital channel used to communicate with consumers in debt (beating SMS text messaging by 45%). Its frequency of use, however, does not mean that it is necessarily being used effectively. Sending manual emails haphazardly can lead to mixed results at best.

Trying to send emails at the scale required of a dedicated agency, however, is even more difficult, and poor email management can lead to low deliverability rates, poor domain authority (you may end up relegated to spam folders), and can even end up getting your company’s sending domains blacklisted from reaching any of your consumers. Figure 1, below, shows Debt Collector A’s email sending volume.

Figure 1

Sending hundreds of thousands of emails per month can seem like an effective strategy at face value, but when deliverability is taken into consideration, that appearance changes.

Figure 2, below, mirrors the bar graph in Figure 1 and represents the percentage of the emails sent from Debt Collector A that are delivered to an inbox vs. those that are filtered into a spam folder.

Figure 2

A 2019 email client market share study by Litmus shows just how valuable it can be to understand how to work with individual email service providers that all come with their own unique challenges and filters to protect their users. Gmail, for example, maintains 28% of email users, but only 1% of Debt Collector A’s emails are reaching Gmail users.

Cost

Emails can be an effective strategy, but doing so effectively at scale requires extensive infrastructure. That infrastructure includes five major things, including bringing on email experts to work with email service providers, detailed performance tracking, and creating valuable content for your consumers to engage with. Simple email may not cost much, but building a powerful email-driven strategy from the ground up won’t be cheap or easy.

Emails can serve as the foundation of an omni-channel digital strategy, but creating an ecosystem for consumers to engage at their convenience requires more than one tool.

SMS text messaging

Smartphones abound, and when Americans are sending roughly 26 billion text messages every day, it’s easy to see the potential in the texting as a collections communication channel. Millennials spend 3X more time texting than calling or emailing, and they hold an average of $4,712 in consumer debt (not to mention mounting student debt) which makes them prime targets for daunting debt collectors hounding them about a balance. This can be intimidating and turn consumers further away from wanting to work with you.

SMS allows for fast, direct contact with consumers that are on the move, don’t have time for a phone call, and may have breezed past an email or two. By creating a flexible system with multiple touch-points across different channels, you can create an organic system of contacting consumers rather that gives them the power to contact your team when and where they want.

Key uses for SMS:

  1. Payment notifications
    1. Following up with customers to confirm a payment can help to reassure them that their next step toward financial freedom is done and increases transparency between your business and consumers. 
  2. Payment reminders
    1. Even consumers on a payment plan might forget once in a while. A ping with a text message can be just enough of a nudge to remind them to log in and make their scheduled payment.
  3. Providing instant access to their account
    1. By providing a one-click option for a consumer to make their payment, you can make taking the next step easy! Pairing this option with a simple online payment portal gives consumers the opportunity for a full self-service experience.
  4. Tracking your performance
    1. As is the case with other digital channels, tracking your data and performance is easier than ever with texting. You can A/B test messaging and get consistent results for improving engagement.

When you’re considering what to include directly as part of the content of a text message, keep in mind that people expect texts to be short! Length aside, make sure to avoid:

  1. Sensitive information (e.g., account balances, credit card information, etc).
  2. Misleading information
  3. Threatening consumers
  4. Harassing consumers

Text messages have a 209% higher response rate than phone, email, or Facebook, and part of the reason for that is that they are digestible and often feel informal and friendly. On the flip side, misleading, threatening, and harassing texts not only deter engagement and damage your brand, they are also illegal.

Plus, the CFPB’s proposed rules will give consumers the ability to opt out of text messaging, and your texting numbers can still be blocked manually. Be selective with the messages you send and consider the consumer experience.

Getting started with texting using certain software companies can be as cheap as pennies per message. Full-scale agencies like TrueAccord also make use of SMS tools as part of a broader collections strategy alongside other digital tools.

Direct drop voicemail

Direct drop voicemails (also known as ringless voicemail drops) are a unique channel that can help supplement a digital communication strategy but can’t do much on their own. Rather than an agent calling a consumer directly, a voicemail is delivered to the recipient’s inbox without their phone ringing (hence the name).

The consumer still receives a message from a pre-recorded voice that can relay much of the same information that they would have gotten from an agent, but they do not feel the urgent response pressure associated with a phone call. Much like text messages, direct drop voicemails can be used sparingly as a touch point to remind consumers of upcoming payments or ask them to check an email or call an agent back.

From a cost perspective, direct voicemail offerings can range from a few cents to a few tenths of a cent depending on the provider, and many companies will charge based on successful drops rather than a flat charge for the volume sent which can avoid costs incurred for out of date or incorrect phone numbers.

Both direct drop voicemails and text messages are legally classified as phone calls by the TCPA as the law applies to “placing a call or text to a consumer using the consumer’s mobile number.” Be careful with when and how you decide to use either channel in your collections strategy!

As consumer preferences and collections law continue to evolve, we should expect to see rapid growth in both existing digital channels as well as the emergence of others! Effectively integrating these tools into your strategy together can create a much larger impact than any one channel in isolation, and teams that build these systems today will be the future leaders of the industry very soon.

How to Build Your Business’ Reputation Using Digital Collections

By on November 6th, 2019 in Industry Insights
five people putting their hands in for a deal

The age of the internet has brought about an age of transparency and exposure. News can travel around the globe in seconds thanks to the power of social media, and this visibility means that a company’s business practices, day to day operations, and mission are just as clear and present in the market as their products and services. Brand matters, and nothing helps to build or break a brand’s reputation faster than social proof

Today, companies don’t win just because they have the best products and services, they win when they provide the best customer experience and allow their customers to share that with the world. Companies that do this well are experience disruptors. Creditors looking for collections solutions can struggle to provide a positive collections experience (no customer wants to be in debt after all), but we know that it’s possible to build your brand and still collect on debts at the same time.

Stay ahead of compliance

This should go without saying, but collections teams that stay up-to-date and even ahead of federal and state compliance meet with fewer customer complaints and lawsuits. In an industry where not using (or even over-using) the right language can lead to a lawsuit, ensuring compliance must be the first step in providing a consistent, secure, and positive brand experience. 

Creditors and customers alike benefit from collections systems that keep compliance at the forefront. New regulations like the CFPB’s proposed rules can add new layers of complexity to the collections process. Thankfully, digital collections strategies can aid in coding compliance directly into outreach and minimizing human error!

Be transparent

Speaking of using the right language at the right time, using clearcut language that helps consumers understand their debt is essential to building a brand that is seen as reliable and trustworthy.

Building your brand with a modern, digital collections strategy is essential because today it isn’t just about reaching consumers and requesting payment.

While compliant language is a large part of transparency, making it easy for customers to understand the exact steps they have to take to get out of debt and how they can work with a team to pay off that debt helps smooth the process. When steps to get back on track are clearly outlined and presented in a way that is digestible to the least sophisticated consumer, the debt payment experience is better for everyone.

Adapt to changing customer expectations

Customers expect their financial services to be exactly that—services; they want their tools to work for them. If someone can do all of their day-to-day banking through an app, they shouldn’t have to wade through stacks of paper mail and phone calls in order to resolve a debt.

Traditional collections models have made some technological advancements, but are still largely bound to call-based collections practices. Financial technology experience disruptors like Rocket Mortgage have simplified and digitized their services to meet consumer expectations. NerdWallet says that their “document and asset retrieval capabilities alone can save you a bunch of time and hassle.”

Make a change

Digital debt collection agencies are dedicated to saving consumers time and hassle by reaching them via email and push notifications instead of calling in the middle of dinner. Customers can respond to outreach and utilize payment systems at their own pace. 

Building your brand with a modern, digital collections strategy is essential because today it isn’t just about reaching consumers and requesting payment. Companies build reputation by providing a proper experience. How they collect is why they win. 

TrueAccord is redefining the collections experience for creditors and customers alike. Click here if you’re interested in learning more!