For decades, collections strategies have been built on legacy logic.

You set the accepted workflow: SMS at Day 1, Dial at Day 7,  Letter at Day 14.

It gets hard-coded into the system and becomes the unquestioned law for the next five years.

But is this the best way to recover debt today?

• Are you using high-value agent hours to call low-risk customers who would have paid via a self-service link?
• Are you giving too much leeway to high-risk customers who need intervention at Day 3, not Day 14?

For most organisations, the answer is: they don't know. They can't test an alternative without changing the process for everyone.

This is where Champion/Challenger testing comes in. It is much more than tweaking email subject lines. It is about testing entire operational strategies to answer the big questions: "What if we went digital-first?" or "What if we prioritised vulnerability assessment over demand for payment?"

Champion/Challenger vs. A/B testing: What’s the difference?

While A/B testing is tactical (usually a 50/50 split to test a specific message), Champion/Challenger is strategic.

It allows you to pit your existing strategy (the Champion) against a new, experimental hypothesis (the Challenger) in a controlled, safe environment. Crucially, it supports robust risk management by using a variable split, typically 90/10.

It works like this:

1. The Champion (90%): The vast majority of your accounts continue down the tried and tested path. Your revenue is protected.
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2. The Challenger (10%): A small, random sample of accounts is diverted to a new workflow. This is where you safely test innovation.

If the Challenger fails, you’ve only impacted 10% of a specific segment. But if it wins? You roll it out to the other 90% and immediately start building the next Challenger.

The business case: three ways testing drives ROI

Champion/Challenger provides a direct, measurable return, transforming your operation from reactive to data-driven.

1. Collecting more

Different customers respond to different journeys. A one-size-fits-all workflow inevitably leaves money on the table.

• Test: Does introducing an Income & Expenditure (I&E) assessment earlier in the journey change promise rates to arrangement conformance rates?

• Result: The Challenger strategy may result in lower initial cash collection but significantly higher sustained repayment rates over 90 days, boosting long-term ROI.

2. Improving customer outcomes

Lenders are often hesitant to change strategies because "if it ain't broke, don't fix it." Testing removes the fear of change.

• Test: Does a 'Breathing Space' workflow for customers flagging financial distress lead to better engagement than a standard path?
• Result: You validate that an empathetic, pause-based approach reduces complaints and increases long-term cure rates. You now have the data you need to satisfy compliance teams.

3. Spending less (reducing cost-to-collect)

Dialler activity is expensive. Digital automated activity is cheap. Champion/Challenger lets you find the optimal balance.

• Test: Can we remove the Day 7 Outbound Call for low-risk customers and replace it with a WhatsApp message?
• Result: If the Challenger strategy achieves the same resolution rate but costs 80% less to execute, you have instantly unlocked game-changing operational savings.

A 4-step guide for your first strategic test

Step 1: Define the hypothesis.
Don't just change a font. Change a process.

• Hypothesis: I believe low-balance customers are ignoring our calls but will respond to an SMS link to a self-service portal.
• The Test: The Champion workflow keeps them in the dialler queue. The Challenger workflow removes them from the dialler entirely and sends a digital-only sequence for 10 days.

Step 2: Set up the split.
In a modern system, this doesn't require coding. You configure a decision table with a random input variable.

• Configuration: You set a rule: If [random value] is <= 0.10 (10%), assign to Challenger Workflow. Else, assign to Champion Workflow.
• Safety Net: You can further restrict this. For example, ensuring that no vulnerable customers are ever routed to a testing path.

Step 3: What to measure
Think big. You are testing business outcomes.

• Liquidation Rate: Did the Challenger collect as much cash?
• Cost to Collect: Did the Challenger cost less to run?
• Broken Promise Rate: Did the Challenger strategy improve arrangement conformance rate?

Step 4: Analyse and roll out
Look at the results in your MI dashboard, comparing the Champion cohort vs. the Challenger cohort side-by-side.

• Scenario: The Challenger collected 2% less cash but reduced agent call volume by 40%.
• Decision: The cost savings outweigh the slight dip in collections. You promote the Challenger to be the new Champion (100% of traffic).

The legacy barrier: why you probably can't do this today

If strategic testing is so powerful, why do most lenders stick to the same strategy for years?

The answer lies in their collections system.

On a legacy collections system, a strategy is hard-coded. To run a Champion/Challenger test, you typically have to:

1. Pay a vendor or internal IT team to code a new workflow.
2. Wait months for a release window.
3. Manually try to segregate data for reporting.

By the time you can run the test, the market conditions have changed. No wonder people stop trying.

This is the core difference of a modern, cloud-native platform like Flexys. The functionality is built in. Business users can clone a workflow, make a tweak, set a 90/10 split rule in a decision table, and deploy it, all without writing a single line of code.

Conclusion: Stop guessing, start knowing

The ‘gut feel’ approach to collections strategy is past its sell-by date. It is inefficient, expensive, and risky.

Today, you can rely on readily available quality data, not "how it’s always been done". Champion/Challenger strategies allow you to innovate safely. You can protect your bottom line while simultaneously hunting for the next breakthrough in performance.

The only barrier is having the right technology to empower you to ask the question.

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