Putting the right debt recovery approach in place for Financial Services

Where should Banks and Building Societies focus to start improving their Collections Lifecycle?

Debt Management for Banks and Building Societies is crucial to business success. After all, credit is at the heart of most customer relationships. So why, after all these years, are Banks and Building Societies still finding they have a problem with debt collection? Why are they still overly reliant on costly late stage litigation and enforcement action to force their customers to repay what they borrowed? Why are many customers still dissatisfied with how their Bank or Building Society treats them throughout a collections lifecycle?

There is no one single answer to these questions. However at Sopra Steria we believe there has to be a better way forward for Banks and Building Societies in relation to the collection of outstanding debts. We believe they need to develop a debt management approach which improves the collection rate of outstanding debts earlier in the customer lifecycle and takes into account different types of debtors.

What action can Banks and Building Societies take to understand their debtors better and improve recovery rates?

From our own experience of working with Banks and Building Societies, we have identified that if successful transformation of the debt management process is going to happen, the fundamentals need to be put in place. This means starting with the customer journey and understanding each and every touchpoint they have with your organisation, their data, their expectations, their likelihood to repay and making sure relevant information, educational materials and opportunities to repay are available at each stage of the process.

At Sopra Steria we have designed a Debt Management process which takes into account an organisations needs in terms of timely collection and a debtors requirements at each stage of the lifecycle. Our model can be implemented or tested at any stage and contains 5 distinct parts:

By working with Sopra Steria Financial Services to create the right Debt Management approach, collections departments can unlock a number of benefits including:

Tailored intervention approaches for different customer groups and better accuracy of predictions on who is likely to default
Improved data, information and reporting for management teams
Understand where digital transformation initiatives can help improve debt management models and processes
Identify areas in the debt management value chain to reduce operating costs related to collections activities
Build the right educational literature and offer support channels to customers early in the debt management cycle
Maximise recovery using automated processes prior to delinquency status
Make sure fair customer outcomes are at the heart of the final collections decision process
Offer final opportunity to pay through digital channels