While it was once expected and acceptable for lenders to enforce standardized payment due dates and policies, COVID-19 brought the impracticality and ineffectiveness of a “one-size-fits-all” approach to credit and lending to light.
Two-plus years later, banks and credit unions continue to feel the pressure to transform their credit and lending operations. And for good. Fortunately, at Perficient, we quickly realized the dire economic situation and the challenges financial institutions and their customers faced. We knew that we could help optimize the debt collections process, reduce loan loss rates, and increase customer loyalty by leveraging a highly personalized and humanized approach to lending that combines process reengineering and technology throughout the customer journey.
A Pathway to Improved Loss Rates and Happier Customers
IDC recently included Perficient in the “Loan Collections-Recovery” category of its “Market Glance: Worldwide Consumer & Small Businesses Lending Digital Transformation Strategies, Q2 2022 (Doc # US49009422, April 2022).” The IDC Market Glance offers an overview of the landscape for consumer and small business digital lending. Featured categories list companies that provide technology lending solutions and related services to financial institutions and other tech buyers.
Perficient developed a tried-and-true blueprint for collections optimization, which focuses on customer journey science and segmentation, key performance metrics, contact sequencing strategies, and supporting technologies. We help clients address outdated collections practices, accelerate the adoption of new technologies supporting collections, adhere to new laws and regulations regarding debt collection communications, identify opportunities for savings, and make debt collection processes more human and conversational.
As an example, for one client, we implemented a “treat-people-right-and-they’ll-pay-you-back” plan that meets today’s heightened customer expectations. The program quickly increased debt collection agent productivity by 46% and reduced monthly delinquencies by $3.4 million.
IDC’s Take on Lending Digital Transformation Strategies
In the report, Market Glance: Worldwide Consumer & Small Businesses Lending Digital Transformation Strategies, Q2 2022, IDC states, “Many financial institutions (FIs) have lagged their fintech competitors in the digitization of key banking business lines such as lending.” Developing sophisticated routes of communication (i.e., cross-platform communication capabilities) for credit and lending equips banks with the tools they need to empower their customers with a greater sense of control over their financial wellness.
The report notes “Digital lending platforms align extremely well with IDC’s 3rd Platform model of core technologies including cloud, big data/analytics, AI/machine learning, and mobility, that enable FIs to manage relationships and conduct business transactions more successfully.” This is partly due to these technologies’ ability to significantly reduce the potential for friction. Enhanced customer-lender communication is one example of how technology can help companies can make the collections process more human and conversational.
Coinciding with reducing friction in customer-lender communications is the potential for greater customer choice. Due to these technologies, customers can choose to have lenders contact them via text message rather than a phone call, for instance. The technology makes aligning to customer preferences much more possible.
To learn more about how Perficient can help optimize your credit and lending functions, visit https://www2.perficient.com/digital-collections or contact Scott Albahary, Financial Services, Chief Strategist.