How a digital-first collections strategy can help ensure conduct compliance

When a collector works on behalf of a creditor, they are usually paid a percentage of what they collect. Although this model makes sense commercially for both parties, it may lead to a payment-driven culture that could increase the risk of poor customer outcomes.

Here we explore some of the biggest risks that come with collections, and look at how a digital strategy can reduce conduct risk.

An emphasis on turnover comes at a cost

A profit-incentivised model can tempt businesses to create a service which is optimised to collect as much as possible in as short a timeframe as possible.

Businesses may be encouraged to set up user journeys and processes in ways that encourage high repayment rates, while staff may feel pressured through incentives or performance management to encourage customers to pay more than they might be able to afford. This second scenario is much more difficult to identify, and over time it can create a payment-orientated culture within the company which is hard to stamp out.

This focus on £s collected can inevitably lead to a collector providing unsustainable solutions that are detrimental to an individual's overall financial health. On top of being unethical, this will only lead to an increased operations workload as staff are much more likely to be regularly chasing up broken repayment plans.

Pressure to reduce expenditure

This is an inherent risk for any business; when businesses and teams are squeezed for expenditure, it's often the customer who bears the brunt of the impact, perhaps being faced with poor customer care or frustrating user journeys.

However, due to the small margins involved in collections, the pressure to reduce costs is only exacerbated. Cutting costs in collections without a strong digital proposition usually translates into employing less staff to do more things, quicker.

When margins are so important, businesses may focus on expenditure and put targets in place such as average call length times in order to reduce costs. This puts pressure on staff to spend less time with potentially vulnerable customers, or encourage them to not take the time needed to fully understand customers' circumstances, all in the name of hitting targets and ultimately reducing costs.

Digital transformation is essential for growth

At Ophelos we believe that taking a digital-first approach is the answer to meeting (and exceeding) conduct compliance. We have incorporated AI and machine learning into our processes and have automated as much as possible to provide individuals with a quick, convenient and stress-free solution to settling their debt.

By giving customers the freedom to explore and set up a payment plan via an online platform, collections teams can reduce costs while increasing customer satisfaction, customer loyalty and profits. Sustainable plans also lead to fewer broken plans, therefore significantly reducing operations costs.

The customer never has to speak to anyone unless they want to and they can log in from any device, any time, anywhere. With more customers handling their debt themselves, this convenient solution also eliminates the need for a dialler, and customer support agents can dedicate more time to individuals without having to worry about wrap-up or average call times. This in turn removes the focus on collections and instead support agents can concentrate on finding the right solution for each individual.

When a collector works on behalf of a creditor, they are usually paid a percentage of what they collect. Although this model makes sense commercially for both parties, it may lead to a payment-driven culture that could increase the risk of poor customer outcomes.

Here we explore some of the biggest risks that come with collections, and look at how a digital strategy can reduce conduct risk.

An emphasis on turnover comes at a cost

A profit-incentivised model can tempt businesses to create a service which is optimised to collect as much as possible in as short a timeframe as possible.

Businesses may be encouraged to set up user journeys and processes in ways that encourage high repayment rates, while staff may feel pressured through incentives or performance management to encourage customers to pay more than they might be able to afford. This second scenario is much more difficult to identify, and over time it can create a payment-orientated culture within the company which is hard to stamp out.

This focus on £s collected can inevitably lead to a collector providing unsustainable solutions that are detrimental to an individual's overall financial health. On top of being unethical, this will only lead to an increased operations workload as staff are much more likely to be regularly chasing up broken repayment plans.

Pressure to reduce expenditure

This is an inherent risk for any business; when businesses and teams are squeezed for expenditure, it's often the customer who bears the brunt of the impact, perhaps being faced with poor customer care or frustrating user journeys.

However, due to the small margins involved in collections, the pressure to reduce costs is only exacerbated. Cutting costs in collections without a strong digital proposition usually translates into employing less staff to do more things, quicker.

When margins are so important, businesses may focus on expenditure and put targets in place such as average call length times in order to reduce costs. This puts pressure on staff to spend less time with potentially vulnerable customers, or encourage them to not take the time needed to fully understand customers' circumstances, all in the name of hitting targets and ultimately reducing costs.

Digital transformation is essential for growth

At Ophelos we believe that taking a digital-first approach is the answer to meeting (and exceeding) conduct compliance. We have incorporated AI and machine learning into our processes and have automated as much as possible to provide individuals with a quick, convenient and stress-free solution to settling their debt.

By giving customers the freedom to explore and set up a payment plan via an online platform, collections teams can reduce costs while increasing customer satisfaction, customer loyalty and profits. Sustainable plans also lead to fewer broken plans, therefore significantly reducing operations costs.

The customer never has to speak to anyone unless they want to and they can log in from any device, any time, anywhere. With more customers handling their debt themselves, this convenient solution also eliminates the need for a dialler, and customer support agents can dedicate more time to individuals without having to worry about wrap-up or average call times. This in turn removes the focus on collections and instead support agents can concentrate on finding the right solution for each individual.

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