One of the benefits of working with diverse Collections professionals is that you get lots of opinions on lots of topics. Despite the fact that opinions frequently differ, it keeps life interesting and is a way for all of us to keep learning.
One area that raises the temperature is the use of real-time data in debt collections with opinions roughly falling into two camps: those who are strong advocates and can see significant value and those who believe the impact on Collections performance is minimal.
Many people who aren’t advocates of data streaming are faced with data challenges, frequently caused by legacy technology, preventing the seamless flow of data across multiple systems. This can be very frustrating and is probably the main reason they believe there is no value. However, data streaming in Collections has enormous value, and as these businesses start moving off legacy systems, they will need to invest in platforms with the ability to consume streamed data and maximise the impact it has on their customers.
You only have to look around at our everyday activity to see the impact of data streaming.
For example, your bank prevents fraud from being perpetrated on your account by using a data streaming platform, such as Apache Kafka, that ingests and processes real time transaction data. It then takes the outputs of predefined rules, algorithms and machine learning models to generate an alert or notification for further investigation. Or at the supermarket, where you can pay using your smartphone or watch at the card terminal and data streaming sparks a whole array of processes to kick into action: the payment processed in real time by the payment gateway; the supermarket stock management system being updated with the items that you’ve purchased; and the supermarket loyalty card being provided with the same purchased items so that your loyalty points can be added and personalised offers made to you.
So what does this mean in our world of Collections and Recoveries?
One of the key tenets of the new Consumer Duty is that businesses are required to “avoid causing foreseeable harm” to consumers, across the whole of the consumer lifecycle. While nobody consciously sets out to harm their customers, “sludge practice” can inadvertently cause friction, delays and blockers where customers wish to resolve their situation quickly and easily. Collections and Recoveries processes either are, or have typically been, driven by legacy batch processes. This means that there is inevitably a time lag in decision-making which can have serious implications for consumers.
Take the example of a vulnerable customer, anxious about resolving their financial predicament but finding that their questions cannot be answered immediately due to their account being stuck in a work list. Their case is awaiting review for an appropriate solution to be identified, all because the data needs to be updated on an overnight batch run! This would simply not happen with event-sourced data streaming which allows for both internal and external information to be consumed empowering the Collections team to make immediate decisions and offer personalised solutions, which can then be relayed to the customer in real time, with no delay.
What about pre-delinquency?
The FCA is advocating that firms step up their efforts to proactively engage with consumers early and provide early support to consumers who may be experiencing financial stress: Top 10 “Consumer Duty” Takeaways
Firms will have to face the challenge of identifying customers who may be at risk of falling into arrears but who are currently up to date with their commitments (pre-arrears customers). This is an area where event-sourced data streaming comes into its own. By constantly scanning for “events” occurring across internal systems and external data sources, the data streaming platform is able to inform the Collections system, which then identifies potentially financially-stressed customers, in real time, without delay!
This dynamic approach helps firms to engage with ‘at risk’ customers at the earliest opportunity and, via Collections decisioning capability, offer personalised solutions to immediately help the customer. These personalised solutions can immediately be presented to the customer via their preferred channel, using digital capability where appropriate, meeting the requirement to offer customers early support.
Every day, in everything we do, we experience the benefits of event-sourced data streaming. Whether that’s your bank preventing transaction fraud, your supermarket utilising your weekly shopping data, or Instagram suggesting accounts that you might like to follow. The benefits are there to be realised in Collections and while it may not be a panacea, it certainly has a place in helping firms avoid causing harm while making sure they deliver the good outcomes that consumers deserve.