How Thailand’s Digital Ecosystem can Power Customer-Centric Debt Collection
The Thailand economy has made remarkable social and economic progress over the last few decades. However, there is a visible economic slowdown with debt levels reaching a 11-year high, according to the latest survey by the University of the Thai Chamber of Commerce (UTCC).
According to the report, this level of debt is primarily due to higher living costs and easier access to loans. While the Thai banking system is well-capitalised and profitable, high debt levels for households and SMEs are expected to result in asset quality deterioration. Also, as with any economy in a state of transformation, financial services organisations, along with established incumbents, are grappling with challenges on the other end of the lending process – collections.
Considering historical perceptions of a typical collections process, it is only natural that consumers are wary of debt recovery practices. According to a 2018 Benchmark Study released by Intelligent Contacts and conducted by Marketing Research Firm AYTM, both consumers and lenders want the same thing – to pay it off. Most consumers, (including almost 80% surveyed in the study) are willing to be proactive in paying off what they owe.
They need to feel empowered and not intimidated by the recovery process. Lenders need to provide them control along with a digital, safe and consumer-centric environment to engage and manage their payments. This will eventually lead not only to better recovery rates but helps build trust, provides convenience and improves the customer experience, while successfully navigating an inherently frustrating process such as collections.
So, what ails the collections process currently? The absence of quality contact information, dependence on manual processes, interoperability issues with legacy systems are all leading to business inefficiencies, dissatisfied consumers, and increased bad debts. Add to this, customer expectations are constantly increasing.
Consumers today expect to be engaged in ‘new digital’ channels and this is the new normal. So, how do financial services organisations navigate this new normal to manage their debt collections?
Harnessing the growing digital ecosystem in Thailand
People in Thailand have embraced digital technology with much fervour and the digital ecosystem in the country continues to thrive. According the latest ‘Global Digital Report’ from We Are Social report, the country is home to 57 million active internet and 51 million social media users with 92.33 million mobile subscriptions and 49 million mobile social media users. While this shows the potential in implementing digital strategies to engage collections, engaging customers effectively across digital channels is yet to take off meaningfully in Thailand.
There is a growing trend in early collections activities focused on customer-centricity and satisfaction. Customer-centricity is at the heart of building enduring customer relationships that bring better and more measurable value back to the lender as well as the borrower – particularly for a country such as Thailand that has high smartphone penetration and adoption. It is time financial services players focused on a new approach to collections.
Placing the customer at the centre of the collections process; aided by technology
In today’s digital world, the collections strategy needs to be digital, analytics-led and omnichannel. The approach needs to factor in individual customer circumstances (data), engagement preferences (digital and omnichannel) to drive positive and consistent customer experience. Customers today want personalised services that are delivered and managed through a channel that they deem appropriate.
With the implementation of the right technologies and focusing on customer needs, the engagement strategy can be based on data that helps lenders determine effective channels and resource allocation. Identification of outreach initiatives can be correlated to customer behaviour data points – helping lenders to identify defaults early and implement strategies before the default happens or managing delinquencies in a more effective manner.
Getting ahead of potential future losses by deploying next-generation techniques in collections will strengthen value-added returns from customers, changing the perception of collections from a cost centre to a value generator. It also helps reduce dependencies on frontline collections capabilities such as call centres and collection personnel since it is evident that consumers do want to engage collections agents, unless it is at their choice.
At Experian, we help organisations to streamline their collections process, while ensuring stringent compliance to local collections laws and regulations. Our analytics, segmentation & communication tools allow for better collections segmentations that drive better response rates. We also work with our clients to improve cost to collect; helping them maximise recoveries while managing operational costs incurred in the recovery process.
Experian frequently collaborates with leading financial services providers to develop distinct collections scorecards for each of their key lending portfolios including areas such as property financing, shop house financing, structure personal financing and vehicle financing. Each score can fall under individual buckets – early stage, mid-stage and late stage. The purpose of the collection score is to stop the flow rate from the first bucket to the next.
Experian’s collections solution, PowerCurve Collections, works on maximising data and analytics to drive decisions in prioritising collections efforts which are most profitable to the business. Each interaction with a customer is seen as an opportunity to strengthen the relationship with the client, even at a collection phase. PowerCurve Collections helps guide the business to personalised and unique actions to help recover the debt while preserving the long-term customer relationship.
We do this through a data-driven approach using multiple data sources that leverages analytics-based actions to have a more accurate and complete view of the customer. Insights unlocked from this data help the business determine a fair collections process, personalised to each customer profile taking in to consideration the most appropriate time of contact and channel using an integrated decision engine. With a modern user interface, organisations can then design and execute a strategic and efficient collections approach that is compliant to local regulations.
Several financial institutions rely on us to increase their recovery rates through relevant and targeted debt collections, reduce costs through improved automation of decisions and use of best practices in collections techniques, maintain regulatory compliance. This helps protect and enhance their brand reputation as an organisation that practices fair, effective and convenient collections actions.
Collections can be a win-win situation
The debt collection ‘experience’ does not have to be an oxymoron, nor does it have to be a painful process. With investments in the right technologies and focus on providing the right customer experience, debt collection can be aligned to both lender and borrower needs – making the process intelligent, accessible, positive and engaging.
Managing Director, SEA & Emerging Markets
Portions of this commentary were reproduced in The Bangkok Post on 11 October under the title, Collections Made Easier.
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