Erin: The enterprise collection space can be a difficult segment to navigate because as well as trying to solve a financial challenge, institutions involved in this area also need to manage their customer's emotional needs too.

Dale: People that can pay, want to pay, but removal of that stigma actually helps a lot.

Michael: If your strategy is to have one person Badger a client, I can assure you your results will be horrible and you will, I don't know a better word for this, but you will be dead in the court of public opinion also.

Erin: And while allocating more people to the task would appear to be the logical solution to this challenge. It might actually be that a balanced approach between tech protocols and empathy could actually hold all the answers.

Guy: Most people do want to not be in debt. They want to work through their situations, and they just need help and understanding to function through that. And so I think the solution to the technology and the processes have to address that.

Erin: This is financial futures, the podcast that charts, the frontiers of FinTech innovation. In this series, we're exploring some of the biggest advances in banking platform, ecosystems to guide you through the developments that are changing the way consumers and businesses alike think about their finances. I'm your host, Erin Dangler. And today we'll be discussing enterprise collections. I'll be joined by Dale Williams, CEO at Telrock Systems; Guy Hammon, general manager of enterprise lending at FIS; and Michael Peretz, housing finance practice lead at Capco. And in today's episode, we'll be finding out which trends and technologies are augmenting the way debt is handled. We'll discuss the challenges that institutions need to overcome to satisfy customers in this emotionally complex space. And we'll take a look at some of the potential solutions that could help them achieve that goal. But before we get into the weeds, let's take a step back to understand what the enterprise collections landscape looks like as a whole.

Dale: Enterprise collections, to me, has sort of two dimensions to it. One is when one thinks of the enterprise of being a full-service bank, for example, that lends multiple products, so: mortgages, vehicle loans, lines of credit, credit cards, and what have you. And in that context, enterprise means a view of a consumers borrowing across multiple products in a collection view across multiple products. And then the other sort of dimension that's often talked about is the lifecycle of collections all the way from very early arrears or even pre-areas all the way through to charged off debt recovery. So, you know, the enterprise being literally from pre arrears, all of the cycles and all of the process, through to a very late stage after the loan product is charged off by the bank.

Erin: Who are some of the key players involved in this process and landscape?

Dale: There are the creditors that are communicating with their customers themselves, full-service banks, credit card issuers, fintechs all the way across any enterprise, such as a utility company, even. So all of those organizations will be involved in talking or communicating with their customers relative to collecting an overdue account. Then there are the providers in the space such as FIS global ourselves, especially as consulting organizations. Many partners assist many creditors collect overdue accounts from consumers and it's an evolution because it's ultimately a business engaging with consumers and that requires, you know, sensitivity and an approach and systems to support those approaches.

Erin: So within talking about those systems to support, it comes down to tools. How are those tools leveraged in order to be successful?

Dale: Well, any enterprise is going to have a finite amount of human resources at themselves. So the tools that are used are typically, you know, extensive databases to maintain the data necessary for the processes, workflow and rules, engines to identify and segment particular cohorts of accounts for treatment strategies, a user interface for those agents to be able to view the data, and then tools such as obviously integrated telephony, email, SMS, self-serve portals, and the like to enable them to engage with their overdue customers.

Erin: So, this is really a big picture look. Like we are zooming out at all of these different tools and players in the game, you know, whereas I'm used to thinking of it as one annoying person on the phone, badgering, one individual customer, you know, we're looking at really big picture operations. Guy or Michael, do you have anything to add to what Dale has just shared?

Guy: Yeah, I think certainly there is, we'll see a number of examples of where it's software and solutions, it's strategy and process, it's technology of play and the human element, uh simply because some of these conditions that have led to someone being overdue, we can't lose sight of that. And so there's some sentiment and empathy that, that comes into play about how a collections can be a successfully operating.

Michael: Guy, I think you said it there. There is a culture aspect of this and a decision that needs to be made, a tone from the top, you know, from the C-suite or the enterprise as to how they want to handle collections, both pre-emptively and Erin, you said something, which I think is very important. If your strategy is to have one person badger a client, I can assure you your results will be horrible and you will, I don't know a better word for this, but you will be dead in the court of public opinion also.

Erin: I love that you bring that up because it was one of the most fascinating things I've found when researching this topic is that that piece of empathy in that all of these new technologies can actually really help with that. But we'll dive into that a little bit later because actually leading up to that, I think is how the industry has been impacted by COVID-19. And I think that's going to lead into our discussion around empathy. But what's had to change or be overcome in the collections industry because of COVID?

Michael: In enterprises' COVID 19 responses, they had to learn the nuances of collection that most of them had never needed to know and understand before a lot more of what was happening in COVID-19 things like forbearance, delayed payments, things that were going to stop and start is the much more complex action of collection that you don't always see. It's not as black and white. So forcing the banking industry, the lending industry to evolve was certainly one of the results of COVID-19 and the challenges they had to overcome. Or again, this sense that, that it was black and white, there was money owed and it needed to be repaid. Whereas the large-scale nuances were very, very important.

Erin: It's interesting that you talk about things being in, in black and white or red, as we think in the financial industry, but there really are many, many, many shades of gray as you're talking about and these nuances. So do the current enterprise collection solutions have any particular shortfalls?

Michael: I think they do. I think that we need to understand a 360 view of our clients that's imperative, and we know a lot about our clients and there are solutions out there that unfortunately don't take into consideration a 360 view. So that's really, really, um, difficult to serve the client and serve the enterprise without really understanding what's going on and what the possibilities are for those clients.

Dale: I was just going to say that, uh, interestingly COVID has created a significant awareness in banks and other lenders of the impact of something on a consumer's ability to conduct a business with the bank. Somewhat similar in the UK, uh, the regulator has become very focused on vulnerability generally. Any consumer that has issues, you know, such as, you know, marital break down, mental health challenges, things like that. And Michael's right. I think the solutions that are out there in the space need to be able to enable the collection agent to understand those kinds of dimensions of, of a consumer's ability and circumstances as opposed to can he pay or can he not pay? I think that's one thing. I think the other challenge that COVID has brought about is many lenders, many banks, relied on systems that were installed on their premises and the only way he could access them was through an internal technology route. A number of collectors in the industry were required to work from home. And that brought a whole raft of new challenges in terms of can they actually access the systems from home securely, safely and in compliance with regulations? So I think there's several aspects to the impact of COVID that has really turned the focus on the systems and processes that support collections because of the impact on consumers and the impacts on the lenders themselves in terms of how they've had to operate.

Guy: I think we continue to come back to it's so much more than just either a singular approach to process or strategy or technology. It's all of it, right? Certainly in collections, COVID challenged, uh, you know, many of the things we've talked about, access and remote working and, and system data, you know, accessibility and so forth that, you know, wrapped around as the world super accelerated digital access and convenience to financial services, you know, overnight in many cases where we saw the explosion of how people found, how they needed to service their needs while bunkered in, if you will. So collections was impacted and you look at the lessons learned from that and how you move forward. And I think, I think Dale brought up an important thing that ought not be lost, and it is, with more data and understanding of it as well as an appreciation to circumstances, there's so much more involved, there's so much more awareness around their ability to pay because most people do want to not be in debt and they want to work through their situations and they just need help and understanding to function through that. And so I think strategy and Michael said it earlier culture and the awareness of the much more complex nuances that can be happening in, in each individual case, uh, the solution to the technology and the processes have to address that.

Erin: So were these new technologies already in place prior to COVID and COVID just lit a fire or was COVID the necessity that created these new invention?

Guy: To answer that question, Erin, I think we have to look at just where financial services and industry technology has started to move over a number of years, just prior to COVID, but certainly cloud technologies, certainly in the advancement and people's comfort with conducting banking online and digitally and without seeing their banker or their, uh, lender, you know, face to face, those have been moving in the industry for some time.

Dale: I think COVID has just bought more awareness of the need for solutions that do really two things. One is, enables an organization to be nimble, uh, in terms of where its agents are located. The other thing is that the enterprise themselves, they need to be nimble as well. And I think. COVID has just bought the message home that their entire business could be disrupted through an event beyond their control that could cause them to have to work very differently. I think the other thing is that pretty much every consumer now is mobile savvy, uh, has a smartphone conducts various other aspects of their life via technology and different channels. So I think the, the evolution in the software, the evolution and the strategy over the last several years has been very much aimed towards giving the consumer the omni-channel choice. Be that SMS, email, going to a portal, or indeed speaking to you on the telephone. But the important thing is give them the choice, because if you give them the choice, they're likely to be better engaged with you. And therefore you're more likely to resolve the issue.

Erin: Dale, you've just segued right into our, our next topic, which is talking about how the new players in the collection space changed the game. You're just talking about these new technologies. Um, how do these new technologies free time to focus on the customer?

Dale: Firstly a self-serve is increasingly available now where consumers can go and resolve their overdue account, whenever it suits them, be that 2:00 AM in the morning if they've just finished a shift and you know, the banks call centers closed. So that's very powerful. It enables the consumer to engage when they want to engage, but also removes some of the stigma of actually talking to an agent in a call center as well. So in our business, we see that as being very powerful because a percentage of customers will self-cure without any agent intervention and with very little cost to the bank or the FinTech. The ability to be able to communicate via other channels is, as I've mentioned, you can then learn which channel your customers most responsive to. Ryan always responds when we send them an email. It's very, very cheap and effective to send an email to Ryan and other people like Ryan. We're able to mine our data, understand that, and then segment our portfolios into cohorts where we can apply the most likely effective treatment strategy based on channel.

Erin: And that's kind of the artificial intelligence piece.

Dale: Exactly. I mean, there's a lot, there's a lot said about artificial intelligence and one man's sort of basic artificial intelligence is another man's rocket science. But, at the end of the day, if you have the data, you can interpret it and you can use it to create efficiency in your organization. And ultimately that leads to you having more time to deal with those customers on a empathetic level that really need a personal touch of a phone call and for the agent to be able to find a way to resolve that overdue position by spending time with them. It creates economies if you will.

Erin: I love how you talked about customers being able to self-report and avoid the stigma. I mean, cause there really is a shame piece involving debt.

Dale: I think Michael said earlier on that people that can pay, want to pay, but removal of that stigma actually helps a lot. They don't want to be reminded that they're overdue in their financial obligations and they certainly don't want to be reminded, they think, by somebody that's going to stigmatize them. So self-serve is a great channel where they can resolve themselves the self-serve channel supports rules and data to negotiate the right outcome. And then, like I said, and they can resolve this at 3:00 AM in the morning if they want to.

Erin: By having basic self-serve solutions, customers are able to address some of their needs without requiring human assistance. This helps eliminate their fears of feeling judged or shamed about their financial circumstances, and therefore makes them more likely to try to resolve their debt issues. And by implementing more and more sophisticated technologies like AI, institutions will be even better equipped to allow customers to remedy issues of increasing complexity themselves. But this use of technology doesn't just help the individual customer. It can actually be used to meet the needs of B2B customers too.

Guy: It goes in lock step with what we've talked about a little bit from a technology perspective where cloud certainly informs and provisions lots of opportunity from a cost-savings, multitude of deployment value and benefits as far as access and processing efficiencies. But it also opens the door from a SAS commercial subscription consumption model. And that's where we're seeing, particularly in financial services areas where that's the buying pattern that our customers simply want to take receipt and use of their, uh, their solutions. It aligns closer to how they use the system. It allows a better understanding from a subscription model, what their ongoing rate will be and how they pay and how they use the system. And so I think that's another aspect that's certainly not necessarily unique to collections, but certainly has been in the work for a number of years with financial services, is to change that model about, you know, how a bank or how a financial institution will take receipt of the solutions and then use them and how they pay for them. And then that allows them to, uh, have a better business model, uh, business case for how they're going to conduct their business to their end customers. So certainly new solutions in the collection space certainly want to take advantage of that.

Erin: So, Michael, do you have anything to weigh in on what Dale and guy have just shared?

Michael: I think they nailed it. I do think there's two things I'd like to build upon. One is AI is wonderful, but the process and the decisions that need to be made before using AI as a tool, I think, are maybe more critical at this juncture. If you are a very mature organization with a pointed way of handling both pre-emptively and when accounts move into a collection status, I think that you should absolutely be looking at artificial intelligence at this point. However, if the foundation isn't there, I think you need to look at AI as one of the tools, but there are other things that need to be done first. The second thing, and I think Dale articulated this extremely well, but I do want to build on it, that clients given their preferences want to be treated uniquely, but obviously the lending institutions don't have the ability to treat every client differently, but we have a much greater number of ways of interacting with the client and that can't be lost. So if you don't have the ability for self-serve, that's critical with, or without AI, if the lending institution doesn't have the ability to reach out and to have voice with a client in certain situations, that's problematic. If email and these types of communications are poorly managed - these are not hyper modern solutions, these are just basics, and it's imperative, I think that enterprises have the right variety of potential solutions.

Erin: And so these changes that have already been made, do you think they're here to stay?

Michael: Well, they've got to be. In my line of work if someone told me they were going to now restrict the number of opportunities and the number of ways that a client could communicate. I would red flag that I don't think that that's the way they want to go. Um, so these changes in my mind are here to stay this notion of working with the client of understanding. One other thing I think that I might've failed to mention is the ability of a frontline collection agent having more decision-making power. If we are truly going to be working. In a remote environment where we can't necessarily be as collaborative as we would like internally, then we've got to empower folks to be able to make decisions and work out particular sets of issues. But I think the last thing is, and my colleagues probably can speak to this. You know, their clients move at a much faster pace. So it's not only that the stuff that we've done over the past two years is here to stay. It's that the pace of innovation is increasing.

Erin: Well, I mean, you couldn't have given us a more perfect, uh, segue into talking about the future. What does the enterprise collections look like moving forward?

Guy: Certainly a solution has to use new technology, modern architecture. We've spoken a few of these, you know, whether that be cloud deployments, certainly looking at, you know, API enablement. So we certainly need to leverage and have a solution that takes advantage of those new technologies and enables the best use of those things forward. Certainly look at, from a capability perspective, you have to kind of have an omni-channel approach. Again. I think Michael just testified to the critical importance of, of, of self-service portal. Uh, certainly has to have all of the contacts, uh, you know, the multitude of contacts ways, whether it be email, text, phone calls, SMS, online banking - cover the spread, because, again, it's about accessibility and convenience. And then certainly it has to be regulatory compliant and it has to be a built in such a way that it can take new compliance and regulation rules and put them into a fact in a timely manner, in a graceful manner. And then certainly, you know, from a business sense, a lot of that technology or the capabilities can offer up, you know, new views to, you know, pricing models and that SaaS consumption-based subscription pricing that is advantageous. And then probably, most importantly, it has to have a solution that has the ability to be empathetic to the end consumer. And that comes across, whether it be in strategy and process, workflow rules, and in that interaction and engagement level and cues to, uh, the operators about when to reach out and how to reach out and do so and inject that human element because we want to effect the most positive outcomes with an efficient, you know, turn on the effort as we can.

Dale: I have one more dimension to add to that if that's okay. Certainly, if you go back 10 years or so, collection platforms were characterized such that they were difficult to change and therefore difficult to meet evolution of need. So a very important criteria in modern platforms. Is for the client to be self-reliant. And what that means is that the solution is configurable by the client, they don't have to rely on the vendor to make changes to processes, strategies, emerging legislation. So that's a characteristic now that is necessarily pervasive in, in more modern platforms. The client can make the changes quickly, easily, they can adapt to what's going on in their universe without having to, uh, go back to the vendor.

Erin: So we're talking about all of these technological changes, um, in a cloud-based collection service versus a traditional model. Are there any other differences that aren't just the technology itself?

Dale: I think we've touched on the main points and that is that if you cannot be empathetic and treat your customer as a customer of one, you're not going to optimize your performance. And at the end of the day, Uh, consumers will prefer to do business with people that treat them with respect and empathy and understand what is going on in their universe. So it's no longer the blunt tools, it's the, the sharper tools that are more appropriate. The data that is there to support the agent, and I think Michael rightly said that agents need to be more empowered. But I think that the organizations that are going to succeed in collections are those that are enabled to be empathetic with the consumer. At the end of the day, the consumer has to need to want to pay you, right. As opposed to pay somebody else. And I think a good part of that hinges on how you treat them when you're conducting the business of collections.

Erin: I love that. I had no idea that's where this conversation was heading. I just think that's absolutely lovely. So, Michael, can you give us an example of a client who's adopted this more modern enterprise collections solution and how it's benefited them?

Michael: We had a client that came to us and said, we have, we believe 40,000 at-risk clients and we're, we're looking for you to help us understand where we may be right or wrong on that, where we may need increased staff, where we may need to improve our IVR technology, you know, phone response, where we need to improve web from a UI/UX perspective, um, the empowering of frontline resources to make decisions and then lots of internal conversations. How do we involve legal? How do we involve compliance? How do we involve risk? How do we involve in some cases, treasury? Right? There are multiple implications here, but these are solvable problems. Ultimately, what they decided to do was to redesign their web presence, to make it much easier, much more streamlined. They were not able immediately to combine all of the data that they had at the bank level, into the process, but they made clients aware that they were willing to have conversations on these things, meaning that if the client felt as though the solution that was being outlined for them, didn't incorporate key data, they had an outlet for that. And that was very, very well received. Dale made a, an excellent comment, which, you know, when people want to repay, but there's other people who want to explain their situation because they have had a 10 or 15 or 20 year relationship with the bank and they don't want to jeopardize that relationship with the bank. So they feel it's important to have the account noted as it were. And they want to reiterate that they do feel some loyalty to the lender and hope that the lender will continue to feel some loyalty to them. So we wanted to give borrowers outlets to make those sort of comments, and so another thing that they ended up implementing was adding a massive number of CSRs, customer service representatives, to their line-up with the idea that, that it was important to have at this critical time communication with their clients.

Erin: As well as incorporating new tech, it's just as important for institutions involved in enterprise collections to maintain a strong customer service base. Because even though a good pool of quantitative data can help to reveal better solutions or uncover helpful insights, it can't always be utilized straight away. And, as Michael said, maintaining a human presence allows representatives to collect qualitative data and gives customers the chance to explain their circumstances. Not only does this give collections agents access to more insights, but it helps customers to feel like their relationships with the institution are valued. So as we near the end of the show and with all these solutions in mind, it seems like the opportunity to succeed in this area has never been so strong. But what advice do my guests have for institutions thinking about bringing their collections activities in-house?

Dale: Many organizations have historically outsourced the collection of their overdue accounts. Uh, they may have seen themselves as being subscale, if you will, or unable to make the necessary investment to acquire the technology, have their own collection agents and so on. I think. With the advent of cloud-based solutions. Firstly, the commercial model enables those organizations to think about that more. You know, there isn't a significant upfront capital cost. Like there would be with a traditional software license of 10 years ago. I think the other thing they want to think about is that is the reputation. If they're collecting the accounts themselves, then they are dictating the treatment strategies as opposed to allowing a third party to do it. So I think if smaller organizations or organizations that haven't thought about collecting their own overdue accounts in the past should certainly think about it now because the technology is there to support it and support it for smaller organizations that perhaps haven't done it.

Guy: I think Dale's answer is spot on. The new collections solution, particularly one that can sit across the entire enterprise and understand all of the data that a financial institution can offer ,certainly unlocks the potential for those that have outsourced that to third-party to control their own future, to take advantage, as Dale said, of that reputational advantage they can have dealing with their own customers and certainly, uh, dictating the control and the empathy that we spent a lot of time talking about to affect the experiences and, um, that they would like to their in customers, because more than likely this isn't the only relationship that that end customer has with the bank and appreciating that, understanding that, and demonstrating the awareness to that borrower will produce the most optimal outcomes.

Erin: So talking about enterprise collection, these advances in technology, I'd love to just hear your final thoughts on who benefits. Is this a win-win for everybody?

Michael: It's a win across the board. The landscape is so much more competitive than it was even five years ago for the relationships that enterprises, and particularly large enterprises, want to have with their clients. Clients tend to be very good at lending. They tend to be very good at servicing. Where they tend to be very weak is in their ability when things aren't on the happy path. So, you know, it's got as many wins as there are entities involved in the equation. It's lower cost for the client. It's lower cost for the enterprise. The servicer is better off. There are no losers in this. That's how I look at it.

Erin: Dale, what do you have to say?

Dale: what Michael said. And I think everybody wins. The consumer benefits from a more refined approach, more empathetic approach. The lender benefits from solutions that enable that relationship. As Michael quite rightly said that it's not the only relationship they have. So, protect, you know, the relationship, uh, for the enterprises as a whole. Yeah, everybody wins.

Erin: And Guy, you can bring it on home. What do you think?

Guy: My colleagues have expressed, uh, the exact outcome here that we want, which is, you know, a modern solution that drives better opportunities, uh, for everybody in that collection spectrum and lifecycle. And, uh, we, we think highly of, uh, not only the technology, but the human element in the capabilities within the solution and wrap that up and a heavily regulated world, and you need a, a provider that can, uh, bring the solution, the operations and the strategy all to fruition. And that creates a win-win for everybody in that spectrum.

Erin: Dale Williams is CEO at Telrock systems, Guy Hammon is general manager of enterprise lending at FIS, and Michael Peretz is housing finance practice lead at Capco. That's it for today's show. Thanks for listening. We'll see you next week for the season seven finale as we go digital to explore the world of decentralized finance and cryptocurrency.