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How Collections Can Prepare for a Post-Pandemic Debt Storm

Webio recently sponsored a Credit and Collections panel as part of the Online Credit Connect Series. 

A panel of four experts discussed the ongoing challenges facing the collections industry and how digital engagement is quickly becoming the most dependable and cost-effective collection strategy in a post-pandemic world.

In this final post of our 3-part series, we’ll talk about the future of debt collection and how the industry can prepare for an inevitable post-pandemic debt storm. In order to survive, organizations will need to focus on three key things: preparation, implementing new technology and embracing change.

There’s a storm coming, and you need to get ready

A general consensus amongst all of our panellists was the prediction that an upcoming wave of post-pandemic debt default is inevitable. And credit and collections agencies need to get ready. “There’s a debt tsunami coming,” Aman Ghaiumy, Co-Founder & CEO at Ophelos said. 
 
Mark Oppermann, Co-Founder & Head of Sales & Marketing at Webio agreed, signalling January of 2022 as the initial start. “People will want to get through Christmas,” he said. “Then there will certainly be a spike in the number of defaults.” 
 
“There is definitely some form of spike that’s due,” Jim Appleby, Managing Director at Arrow Global added. “Like three months away, some form of apocalypse will happen. And we should all be ready.”
 
The reason for this grim forecast? Government-backed pandemic subsidies are winding down, payments on business and personal loans are coming due, and there is a whole new concern about the increasing availability of “buy-now-pay-later” offers from cash-strapped retailers. 
 
Another real problem facing the credit and collections industry is a worldwide talent shortage. The pandemic led to what is being called “the great resignation,” with a large number of employees leaving their current jobs to search for better pay, better work-life balance, or to change careers altogether. Transunion reported on this in The State of Collections: Trends and Insights for 2021 and Beyond, stating that acquiring and retaining talent is the biggest challenge collections companies are now facing.
 
With fewer employees to handle the increase in collection activity, organizations are going to have to turn to technology to take up the slack.

Investment in technology will be key to survival

Another agreement among the panel was the fact that technology will play the biggest role in managing the increase in collection activity. When it comes to surviving the debt tsunami, think of technology as the lifeboat, especially where artificial intelligence and automation are concerned. Both will factor largely in orchestrating the customer journey as well as determining the level of engagement and overall outcome.
 
“How do you get the right technology tools in the hands of the call-centre agents so they can operate in a more efficient and customer-friendly manner?” Aman asked. “Then you have to focus on giving customers an easy way to solve their problem. You must have a well-designed journey.”
“Vulnerability is in sharp focus,” Gary Moffat, Customer Debt Operations Manager at British Gas stated. “For us, the question is how can we use AI and automation to reduce vulnerability and to drive more effective engagement?” 
 
Mark from Webio discussed the role AI and machine learning plays in the company’s credit and collections solution. “Our Propensity Studio AI application is able to use historical data to predict the outcome of a conversation from the start with over 85% accuracy. This not only helps to free up time for the agent but also helps to determine the next route along the customer journey.”
 
Automation tools such as Webio’s Propensity Studio and others provide more personalized customer journeys while also eliminating inefficiencies. And with the addition of tools such as webchat and SMS messaging, you are better able to give the customer more of what they want, which is a feeling that they have a certain level of control. The key, Mark adds, is getting the right technology.
 
“Many companies are asking themselves, ‘do we build now or do we buy now?’” he says. “Most of them are going down the buy road. They want the experts. They want the best practices. And they want the best tools.”

Going forward, you’ll have to get really comfortable with change

If the pandemic taught us anything, it’s resilience. We learned how to work from home, how to use new technology, and how to best protect ourselves from Covid and its variants. But the biggest lesson the pandemic really taught us was how to deal with unexpected challenges and changes. And it isn’t quite done with us yet. 
 
“Relentless challenges will be the new norm,” Jim of Arrow Global stated. “As far as predicting the future of collections, the winners will be those that provide a seamless customer experience across all channels while providing an array of choices.”
 
Collection companies will need to rethink everything going forward...how they hire, who they hire, how they allow those people to work, and the technology they will be using. There will be a huge focus on automation, with more companies using chatbots and automated messaging tactics. Investment in good quality data and AI will be key in order to better predict customer outcomes and prevent defaults before they happen. The focus will be on the customer and the relationship as opposed to the bottom line.
 
“The best organizations will learn to go beyond collections and build upon the relationship,” Amon said. “Long term, it will become about prevention. Educate, rehabilitate, and ultimately, prevent.”
 

Conclusion

The only way credit and collections companies will be able to survive in the post-pandemic world is if they get prepared, get the right technology, and get extremely comfortable with change. They must continue learning to adapt. The future will call for not just one, but several contingency plans. And those plans need to be incredibly flexible.
 
Is your organization prepared for the upcoming debt tsunami? If not, we can help! Webio has the perfect technology to help you automate your process and achieve better customer conversation outcomes. Contact us today.

 
 
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Webio, The Conversational Middleware Company™ brings true AI driven customer conversations to the enterprise. Webio's channel agnostic conversational AI  platform uses the power of AI driven chatbots, machine learning and NLP to introduce a 'blended AI' approach to customer engagement that lets AI agents work alongside human agents to seamlessly engage with customers.
 
 
 
 
 
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