800lb Gorilla Enters Debt Collection Software Space

Yesterday Oracle announced the launch of a new product of interest to the ARM industry: Oracle Banking Collections.

Per the company’s press release:

“Financial institutions looking to recoup delinquent accounts while maintaining a positive association with their brands have a powerful new tool: Oracle Banking Collections. The cloud-enabled solution announced today provides lenders a more comprehensive look at debtors’ total financial pictures and features so they can more easily repay their loans.

Oracle Banking Collections provides financial institutions a single system for comprehensive collection activity across all products related to a delinquent account. The collections process is designed for the digital world with efficient workflows, improved decision making and intuitive customer centric capabilities that empower the consumer with self-service remediation,” said Chet Kamat, senior vice president Banking Products for Oracle Financial Services. “Financial Institutions can choose to deploy the solution on the Oracle Cloud or on premise.”

Each year financial institutions waste millions of dollars attempting to solve their debt collection problem with the age-old tactic of throwing 3rd party debt collection agents who may use decades-old technology riddled with inaccurate borrower data, at the problem. The actions by collection agents, who know nothing about the customer or customer’s relation with the financial institution, can border on harassment with phone calls at all hours, dunning letters and the threat of lawsuits. The new Oracle Banking Collections offering is helping financial institutions and their collections agencies improve collections on delinquent accounts by offering three unique and powerful capabilities:

1. Detailed insights into a borrower’s entire relationship with the financial institution, enabling collections agents to know more about who they are communicating with and how best to have a meaningful conversation about remediating the account.
2. A single system of record for all collections activity, helping to support compliance with strict collections regulations including those set forth by the Consumer Financial Protection Bureau.
3. Unique self-help features that enable the consumer to proactively determine a remediation plan for their account and avoid the collections process altogether.

insideARM Perspective

This announcement is very interesting. insideARM has heard industry “gossip” over the past couple of years suggesting that one or more large financial institutions are considering a major change in the third party collection agency process by moving some or all post-charge-off accounts into an “in-house” process or requiring that all third party agencies use software provided by the bank.

From the information provided in the press release it appears that this product would help facilitate such a move. This would be detrimental to the traditional third party agency if, by using Oracle Banking Collections, the bank eliminates or reduces placements to third party agencies.

On the other hand, the product might create more opportunities for ARM companies that are proficient in first party collections, as banks that outsource first party collections might have their partners simply utilize this product.