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Collections and Recoveries for Retail Banking

Colection and recovery strategiesWhat can it do for me?

In the highly competitive retail banking environment, banks are spending large marketing budgets to win new customers. However, rising acquisition costs also mean that customer retention is key, with banks looking to prevent attrition and maximise the value of existing customers.

How can we help you?

The growth in the availability of credit over recent years has led to increasing numbers of banking customers becoming indebted across a number of different credit products. This has significantly impacted bottom line profitability as a result of increased provisioning, bad debt write-off and the increasing costs of collections activity.

Banks have recognised that managing credit loss is a key driver of profitability. In the multi-product, and therefore multi-debt relationship, banks are facing up to the challenges of adopting a customer-centric approach to the management of arrears.

Experian’s proposition for debt management in retail banking can be deployed across every product a customer holds, including credit cards, mortgages, asset backed loans, unsecured lending and revolving credit activities, to drive dynamic, tailored collections strategies for each delinquent customer.

A few key facts

Customers are finely segmented to create an accurate profile and, using behavioural scoring, each customer is assigned a risk score, which is used to drive the most appropriate collections strategy.

With customers holding multiple products, banks can deploy customer-centric collections activities, which closely match both the value of the customer and the overall credit risk they represent.Using the profile, collections actions can be effectively prioritised, such as leaving habitual late payers to self-cure and focusing resources on high risk, high value customers.

The system automates collections activities on lower risk, lower value accounts to minimise manual intervention and enable staff to concentrate on higher value, higher risk collections.

It also manages the allocation of debt to collections agents and accurately monitors performance to minimise commission payments.

Operators can benefit from: 

  • Minimising collections costs and time to collect
  • Increasing cash flow
  • Improving recovery rates and reduce bad debt write-offs
  • Improving staff productivity and focus collections resources
  • Protecting future revenue streams and reduce churn

Minimise activity costs and time by taking the most appropriate action

Benefits

  • Reduce collections costs
  • Decrease time to collect
  • Improve staff productivity
  • Focus collections resources on high risk, complex cases
  • Improve recovery rates

Consulting

Consulting is at the heart of every Decision Analytics delivery by Experian. Consultants work with clients at every stage of the project, firstly to fully understand the business and strategic direction, and then to help design and implement systems and processes that deliver objectives.

Following implementation, Experian consultants work with clients through a structured and regular review programme to continually evolve and enhance strategies so that organisations continue to gain maximum value as their needs change and the business grows.

Experian creates a partnership with clients to deliver a system that addresses their business challenges for today, and in the future. Bringing a fresh approach and independent viewpoint to every business, it delivers practical solutions that deliver measurable results.

Tallyman software

Tallyman is the sophisticated software system for managing customer revenue and collection.  Specifically designed for consumer credit grantors, or organisations which extend consumer credit as part of their business model, Tallyman provides its users with the necessary tools to implement fully integrated, end-to-end collections processes with flexible user applications and efficient automation.

The key to Tallyman’s ability to collect more revenue lies in its rules based architecture which underpins all the activities and functions. Rules can be as simple or as complex as required to ensure that the solution precisely meets requirements. Tallyman’s workload targeting function assigns accounts to be manually worked or to be automatically processed by either a worklist or a route.

Context sensitive displays mean that collections agents have all the relevant information at their fingertips to enable faster, more informed decisions.

Management information

Tallyman provides the ability to evaluate the performance of the implemented processes using visual, interactive, real-time performance dashboards and flexible and powerful management information through a suite of defined collections reports.  Progress of work queues, value of revenue collected and the progress of payment arrangements can all be monitored against KPI targets.

Using dashboard tools, managers can quickly predict daily outcomes and dynamically allocate resources and work queues in order to optimise system performance.

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Modular technology with flexible delivery options

The system has been designed and built for agile implementation, with all the elements required for effective debt management, but with the ability to customise elements to suit individual business requirements.  The functionality in the technology has been designed to be modular, so it can deliver the functionality needed today, and meet the needs of the business tomorrow.

Tallyman is designed to integrate seamlessly with all leading billing and customer management solutions for streamlined operating efficiency.  The fully-scalable system is capable of processing millions of customer decisions rapidly in this mission critical environment.

Experian offers integrated segmentation and profiling of customers with automation of collections activities to create a complete proposition in retail banking.

Sophisticated debt management can be deployed across every product a customer holds, including credit cards, mortgages, asset backed loans, unsecured lending and revolving credit activities, to drive dynamic, tailored collections strategies for each delinquent customer.

Create customer profile and segment Customers are finely segmented according to a wide range of variables to create an accurate profile. Using behavioural scoring, each customer is assigned a risk score according to their customer profile and delinquency type, which is used to drive the most appropriate collections strategy.

With customers holding multiple products, banks can deploy customer-centric collections activities, which closely match both the value of the customer and the overall credit risk they represent.

Prioritise actions

Using the profile, collections actions can be effectively prioritised, such as leaving habitual late payers to self-cure and focusing resources on high risk, high value customers.

Automate manual processes

Collections activities are automated on lower risk, lower value accounts to minimise manual intervention and enable staff to concentrate on higher value, higher risk collections. Banks can deploy modern communications technology within the collections process to enhance the speed and efficiency of collections.

Using Debt Collection Agents and legal processes

The allocation of debt to collections agents is managed and performance is accurately monitored to minimise commission payments.

A comprehensive approach is provided for the use and management of legal processes, such as legal charges against debtors, court judgements or the repossession of property.

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Improving collections productivity by more than 70%

“Improving our collections operation was a key part of our credit and risk strategy but we were restricted by operational and IT restraints.”

“Experian were able to offer a dedicated Decision Analytics collections package which could be deployed rapidly, and as importantly, deliver the business consulting skills and best practice experiences to support their solid implementation capabilities.”

Martin van Loon, Senior Vice President, ABN AMRO. 

In recent times, banks have seen an increasing level of delinquency in the dynamic consumer credit market, and are having to increase provisioning as a result. ABN AMRO itself has seen a 30% increase in loan impairment from 2005 to 2006.  This increasing default rate put pressure onto the collections operation to improve recovery rates and reduce write-off values. As part of the bank-wide project to overhaul the credit and risk systems following the Basel II programme, the bank recognised that the collections operation could make a significant contribution to improving impairment levels and managing provisioning levels.

ABN AMRO selected the Tallyman Debt Management system from Experian. This specialist collections management system enables ABN AMRO to automate and streamline the collections process, to collect more debt using a complete insight in the entire customer relationship. The system integrates with the existing customer management tool, Probe SM, for a customer-centric approach.

Benefits

  • Increased productivity with operators working 70% more cases
  • Improved cure rate by 24% reducing the number of cases being passed to late collections
  • Reduced employee costs by 31% with more automation of manual tasks
  • Decreased net additions to provisions by more than 20%
  • Improved roll rates as shown by reduction in net flows of over 60%
  • Implemented a customercentric approach to collections and recovery

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The comprehensive approach to debt management in the retail banking sector

A variety of pressures (market, legislative, competitive) are forcing change within the collection function, and the processes to collect debts are becoming increasingly sophisticated while adapting to change.

A variety of pressures (market, legislative, competitive) are forcing change within the collection function, and the processes to collect debts are becoming increasingly sophisticated while adapting to change.

Debt management and collections is an issue that affects organisations across the whole financial business spectrum and any organisation that has outstanding payments with customers will suffer from delinquent customers.

Early action is required where payments are late or missing to prevent financial loss. Over recent years the retail banking market has changed significantly with the worldwide growth in consumer lending and growing regulatory complexity.

Leading organisations are deploying advanced methods to ensure their collection department performs optimally, by understanding the objectives for the different stages of collections and adopting a strategic approach.

The comprehensive approach to debt management in the retail banking sector

The aim is to enable a rapid reaction to changing customer needs and market demands, as well as managing portfolio growth. Increasing the effectiveness and efficiency of the collections process results in a strategy that allows profitability to be optimised.

What is a comprehensive approach?

A comprehensive approach will employ all available information, both internally and from external sources, to inform a clearly thought through and optimised strategy, with the aim of recognising the signs of financial stress early, taking effective action to avoid the situation getting worse, and working the case to a solution if it should move to a fully fledged collections account.

A good collections strategy will use a range of techniques and information to understand the customer, engage with them in the most effective way, and change their behaviour.

This approach will optimise collections by:

  • Maximising profit by increasing the recovery of cash collected using efficient automated strategies and actions
  • Improving cash flow by ensuring earlier recovery of debt
  • Reducing costs through improved automation of decisions, actions and the use of best practice collections techniques
  • Utilising up to date information, at the right time, to ensure that treatment is appropriate and effective
  • Increasing customer retention through debtor rehabilitation and management by profiling the debtor and using the most appropriate collection technique.
  • Ensuring rapid ROI by utilising an agile deployment and optimised ability to further enhance the solution

Collections and recoveries

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