Big Data: A Crucial Investment for the Collections Industry (sponsored)

The collections industry is ever-changing. Delinquency rates remain near historic lows, despite a slight uptick in credit card and auto loan delinquency rates at the end of 2015. In this type of environment, numerous organizations are investing in diversification and competing for the same pieces of business.

Collectors need accurate data to find individuals quickly and collect debts faster. In an era of increasing expenditures, collectors are leveraging big data and sophisticated linking algorithms to improve their right-party contact rates to gain operational efficiency and build healthier bottom lines. According to a recent TransUnion survey, 95% of collectors said accurate and up-to-date information is essential to the success of their business.

Utilizing online databases has benefited collectors, with many seeing improvements in their efforts to communicate with consumers. In fact, more than half of the collectors surveyed (53%) said they improved their right party contact rates by 25% since implementing an online database strategy. 

The 635 collectors surveyed by TransUnion reported that “one best phone number for an individual” is the most important piece of the right party puzzle. One best phone number allows collectors to use resources more efficiently while mitigating compliance risk. Those surveyed also identified address and place of employment as important data to capture.

Of those surveyed, only six out of ten collectors are using sophisticated databases and online technologies in their everyday processes. This statistic presents an opportunity for some organizations to better educate themselves on how to improve collection rates. To help streamline the collections process and manage compliance challenges, companies should take the following three steps into account:

Step one: Examine your collections software. Updating software may be costly, but it is important to address because federal, state, municipal and client requirements are developing more rapidly and outdated versions may be operating under ineffectual guidelines.  Also, older software typically is less user-friendly than more modern options. Most current applications are nimble and have intuitive interfaces, allowing you to get easy access to data you need to improve your collections process.  The best tools operate from a centralized platform, providing resources to easily maintain demographics, view correspondence, log phone calls and resolve disputes from a single account page. Having up-to-date, user-friendly software can provide significant cost-savings and is the first step to leveraging big data to locate the right party faster and easier.

Step two: Monitor your processes. The developing landscape of consumerism provides massive amounts of big data insights to consumer preferences and behavior.  Modern collection strategies are a complex series of event-driven decisions engineered to maximize communication with the consumer. Having robust policies and procedures in place to document the choices you make is not enough to ensure the right protocols are being followed.  Defining the “why” at critical decision points in your process and ensuring you have the appropriate data to support that choice is paramount.  Conducting regular account reviews is an effective way to enhance your processes by challenging the status quo at each stage of the collection lifecycle.

Step three: Invest in accuracy. Bad data result in inefficiency.  Your resources are better spent on negotiating the best possible arrangement with the right individual; not chasing after the wrong person.  Data inaccuracy lengthens the collections lifecycle and may also create unnecessary compliance risk.  Partner with a database engine you trust to deliver accurate, actionable data.

Also, if your business requires large quantity customer data updates to reduce manual errors, be sure to enlist a data provider that offers batch, monitoring and API options. These are especially helpful when identifying right party contact information.

By taking the steps outlined above, debt collectors can better evaluate their current collections processes and improve right party contact rates with more accurate, up-to-date information obtained from online databases.

Peter Ghiselli is vice president of emerging markets for TransUnion. He is responsible for developing solutions and defining strategies for TransUnion’s collections business.