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We recently started a series of blogs about how growing organisations can scale their collections and recoveries. In previous pieces, we’ve looked at how you can leverage AI, what you can learn about regulatory compliance from the recent FCA fines, and the benefits of selecting the right collections technology.
In collections and recoveries, effective strategies and efficient processes are the keys to success. Data-driven insights can make all the difference, improving performance outcomes, optimising cost to serve, identifying vulnerable customers, and delivering proactive customer support. Let’s dive into how data analytics can transform your collections operation.
Optimise performance and prioritise resources
Deciding on which is the next best action for any given customer account is critical to unlocking value from a collections portfolio and delivering great customer outcomes. Data analytics provides targeted insights that will help you hyper-personalise user journeys and experiences, resulting in improved financial performance, increased customer trust and better decisions.
How can you achieve this?
1. Target high-risk accounts effectively
Categorising accounts by risk level, payment history and customer behaviour will enable you to prioritise high-risk accounts. By leveraging predictive models, teams can anticipate payment trends, identify likely defaulters early, and maximise recovery rates, all while nurturing positive customer relationships.
2. Optimise resource allocation for maximum impact
Data analytics can determine where hands-on intervention is needed versus where automation can suffice. By prioritising accounts, optimising resources, and focusing on high-value segments, teams can improve cost to serve and ensure effective coverage across all accounts.
3. Drive revenue growth and streamline operations
By utilising analytics, you can find revenue growth opportunities by identifying high-potential accounts. You can also streamline your operations by uncovering inefficiencies, helping teams increase productivity, reducing costs, and achieving faster, more impactful recoveries.
Deliver great customer experiences
Supporting customers throughout their product journey with you, especially those with vulnerabilities, is essential. Data analytics will provide you with the tools to improve recovery rates, and help customers feel supported throughout their financial journey.
How can you achieve this?
1. Identify and provide tailored treatment for vulnerable customers
Analytics can help identify customers in financial hardship, including those whose circumstances have changed for the worse (either temporarily or permanently), whose personal situation has changed, impacting their ability to pay, or who have mental or physical circumstances that need to be catered for. Internal and external data, including interactions with your people and technology, all need to be curated and analysed to offer the right type of support.
2. Prevent bill shock
By monitoring spending patterns, teams can detect spikes, proactively alert customers, and help prevent delinquencies.
3. Offer flexible payment options
Analytics can identify customers who could benefit from alternative plans, fostering goodwill and improving engagement. Offering the right type of plan to the right individual to ensure affordability directly impacts plan sustainability and kept rates.
Maximise debt sale returns
Debt sale can be a smart move, especially when managing overdue accounts that have exhausted active recovery. But to get the most value, teams need a solid understanding of portfolio valuation, timing, and buyer alignment. Data analytics will allow you to make informed debt sale decisions, reduce costs, and focus on accounts where recovery is most likely.
How can you achieve this?
1. Value your debt accurately
Analytics helps teams assess debt portfolios comprehensively to determine fair pricing to maximise keep, place, sell decisions.
2. Choose the right time to sell
Analytics tools can pinpoint the ideal sale period by analysing market trends and internal data to boost profitability.
3. Connect with the right buyers
Data analytics can identify buyers who specialise in certain types of debt, leading to better recovery results and efficient relationships.
Summary
Data analytics has the power to transform collections and recoveries. From optimising segmentation and resource allocation, to enhancing debt sales and customer treatment, analytics empowers collections teams to achieve strategic success.
By adopting data-driven strategies, organisations can boost financial performance and create a more efficient, customer-focused collections process. In today’s financial environment, informed, data-backed decisions are more important than ever, and analytics holds the key.
Not sure where to start?
Arum has a global team of specialists in collections and recoveries that can assist you with your technology growth journey.
If you’re not sure where to start, we’d love to offer you a free one-day review workshop that looks at your entire collections operation (including your use of data and analytics), followed by a report of our findings and recommendations. This will help you to identify and prioritise areas to focus on as you scale.
Register for your free workshop and report
About the author
Matt Washington
Lead Consultant
Arum
With 20 years of experience in collections and recoveries, Matt has successfully led service delivery functions and implemented transformative improvements across the entire credit lifecycle. He is highly skilled in optimising technology solutions and designing and delivering Target Operating Models that enhance efficiency and deliver lasting value.