A new year often marks the time for resolutions and major change. Goals are set. Budgets are ready to go. Product roadmaps start to unfold. For us, change and growth don’t just start and stop in January. TrueAccord is working to be better every day, and this year is no different.
We know that the collections industry is changing quickly, and we’re ready to ride the wave. Check out what TrueAccord’s leadership has to say about the future of collections and what we expect to see in 2020 and beyond!
We’ve seen a recent growth of digital debt collections strategies for to the benefit of both collectors and consumers. As the industry jumps forward, what do you see as the biggest challenge facing teams in the collections space?
The collection industry has been fighting a losing battle against the demise of phone calls as a valid contact channel. Rule changes and consumer behavior are rendering phone calls obsolete, and we’ve started to see the result in consolidation and closures. This trend will accelerate in 2020, and the realization will come, whether in 2020 or subsequent years, that companies will need to adapt.
And what makes this change such a significant challenge to existing collectors? Could a traditional call-based agency simply start sending emails to consumers in debt?
This shift isn’t only a conceptual one; it has deep technological and operational implications. Operating digital channels at scale is a new challenge, completely different than calling using a dialer, and traditional providers will find it increasingly difficult to catch up at scale.
Emails and text messages aren’t simply cheaper alternatives to letters—they are two-sided, complex media that require data and inference infrastructure that’s difficult to build and maintain, especially with thin margins. Clients will need to re-evaluate how they work with a narrowing landscape of skilled, at-scale providers who can handle this new world.
As Ohad mentioned, the collections industry has largely remained unchanged for years and relied heavily on call-based collecting as its primary contact channel, what will make the 2020s different?
Technology is advancing exponentially. When combined with the lightning speed of adapting consumer expectations and a regulatory landscape driven largely by consumer advocacy, leaders in this industry will anticipate and create the way forward. Those playing catch up, or missing the cues, will inevitably struggle to survive.
Those that lead the charge in the 2020s will drive a focus on machine learning, AI, advanced analytics, and automation as the entire industry finds itself at a tipping point in this new decade.
New technologies are often developed to address a specific problem. What is the main issue you feel these new technologies are working to solve?
The digital revolution has already started. Much of the technology exists, and many creditors and collectors are experimenting with digital channels such as SMS and email. That said, being able to close the gap between consumer expectations and creditor or collector offerings represents a high hurdle for many in this space that more complex machine learning and AI can help to address.
Rapidly advancing technology is complex in and of itself, but collections is also a carefully regulated industry. The last major update to collections law was in 1977, long before most of today’s technology was even a possibility.
We’ve spoken before about how the CFPB’s NPRM has set out to make major changes to existing laws in order to incorporate new technologies into collections regulation. How will those updates shape the industry going forward into 2020?
The NPRM, which should have a final rule sometime this year, makes clear that “modern” forms of communication (email, text, and others) are methods by which agencies can use to communicate with consumers. Those agencies who haven’t invested in these technologies yet are all starting to broaden their communication tools now in order to prepare.
As we move into the new decade, innovative agencies will continue to build out ways to reach consumers based on their preferences, using tools we don’t even know about today. We might even see the reputation of the industry shift as these friendlier collection methods allow consumers the freedom to choose how best to communicate and resolve their debt.
Consumer communication preferences are evolving, new channels are becoming available to collectors, and merging these shifts together will be the key to successful collections through the 2020s.