How many collections executives have been frustrated in the past by their top management’s assessment that a further investment in collections efficiency or effectiveness is “unwarranted at this time, given other more pressing priorities” (a recently heard description of a series of past decisions by a major bank in choosing to defer maintenance and investment in new collections and dialer technologies over several years)? Judging from conversations we have had across the industry for years, this is by no means an isolated example.
Why is this? For one, overall loss rates tend to cycle up and down more as a function of the overall economy, as well as specific lending risk decisions made by each bank, than by the specific actions and investments of the collections operation – or at least, that is the perception. Another perception is that “we can always throw bodies at it if the problem gets acute”.
The advent of zero-tolerance compliance expectation from our regulators changes all that. No longer can we live with a manual surge – the “compliance tax” of extra people needed to manually manage the letters, individualized consent capture, non-automated contact and other reporting requirements now makes a cover-it-with-people strategy unaffordable (and, by the way, these manual approaches actually fail to reduce the risk of an enforcement action anyway).
Another factor is that borrowers don’t want to talk to agents to the extent they used to, making it so much more expensive to chase them with more callers as to be questionably cost-justified; but having the coordination and control over self-service and digital strategies needed to really affect the collections unit’s performance requires an investment in technology and organization and operational strategy.
What used to be good enough simply no longer is – it’s time to re-think the “old dependable” strategy for dealing with an expected upsurge in delinquencies…
Showing posts with label Compliance. Show all posts
Showing posts with label Compliance. Show all posts
Tuesday, April 8, 2014
Monday, January 13, 2014
The Top 5 Things We’re Expecting to See in 2014
2014 already? Where did the time go? Every January, most of us are instilled with a renewed enthusiasm to make this year better than the last. Amid a number of accomplishments and wins in 2013, we are certainly aware of challenges the industry faces as we head into 2014! Here are the top 5 things we expect to see in 2014:
1. Regulators continue to drive (too) much of the agenda for banks in 2014
The OCC’s latest guidance of 10/31/13 on Third Party Vendor Monitoring will force even more stringent risk management principles to be applied, putting pressure on Vendor Management teams to come up with more, and more provable, ways to oversee third party vendors. And the CFPB’s ANPR of 11/30/13 will reappear as new regulatory guidelines that will further reshuffle the deck for creditors, third party agencies and debt buyers. Whereas the banks that invested heavily for the past 1-2 years in risk and compliance systems are struggling to get more business benefit out of those investments, others will come to realize that they can’t avoid biting that bullet any more.
2. Despite regulatory challenges, top management focus turns increasingly to efficiency and yield
Collections operations are being scrutinized once again for efficiency measures as the U.S. economy gains steam and lending begins returning … repeating a familiar cycle. This time, however, many organizations will also be facing vendor-induced decisions brought about by the end-of-life of some key collections and recovery package solutions. The good news, as told to us recently by a collections executive, is that it means the entire collections organization is available to participate in streamlining through new technologies as well as new thinking about transforming and automating manual- and paper-intensive business processes and workflows.
3. More banks create digital/mobile/self-service initiatives
In addition to needing to find significant cost-efficiencies, banks are recognizing that changing consumer demands are providing an impetus for leveraging digital technologies better. As James Gordon of Needham bank put it, “We’re entering a society where before the phone was an add on, now the computer is becoming an add on”. Despite more and more hyperbole about how the world is going mobile, the larger trend toward creating a seamless series of interactions across all channels (labeled “omnichannel communications” by the analystgentsia) and incorporating dynamic offerings and treatments is what will occupy banks’ attention this year.
4. Banks seek to get closer to customers to gather information and personalize offers
Based on better data management (integration across systems and normalized for optimization) and analytics, banks will try to reach customers with more individualized offerings and treatments in an attempt to improve yield in marketing, collections and recovery efforts. We were surprised to hear a client executive predict that, in the not-too-distant future, the bank’s outbound calling efforts would be completely halted in favor of various synchronized digital communications aimed at driving customers to interact – by calling in, texting, emailing, going online or chatting or video chatting – and that they have to be prepared to manage that array of separate and parallel threads into a single productive dialogue with their customers. Individualized campaigns comprised of dynamic, interactive customer-facing enticements are already generating terrific results in automating credit line increase execution, and we expect that trend to expand into collections and recovery operations as well.
5. Banks who deployed short-term band-aids turn to more comprehensive, enduring solutions
The financial crisis was typified by creditors whose response to the crisis conditions and the uncertainty of the new regulators was to deploy short-term band-aid solutions involving large staff increases and system workarounds. Given the chance to take a breath, these banks are finding that there’s no time like now to replace piecemeal workarounds with more comprehensive, enduring systems and business transformations. Regulatory uncertainty and unknowns are largely becoming known and are no longer the deterrent to broader action that they were in years past. We expect to see a continuation, and in fact acceleration, of the trend toward banks gaining substantial efficiencies through automation of document management, workflow and business process management to replace time-consuming, paper and manual intensive business processes with simpler, web-based tasks.
What are you expecting in 2014? Click this link to add your thoughts on our blog.
CMC would love to help you be prepared for challenges in collections, recovery, regulatory compliance, agency and third party vendor management, marketing, and customer service. Automating customer-facing business processes with our comprehensive and unified solutions can be your key to getting out in front of the coming wave of new regulatory requirements, rising delinquency volumes, and “efficiency challenges” from top management.
To learn more, contact us at sales@cmcagile.com or call us at +1-302-830-9262.
1. Regulators continue to drive (too) much of the agenda for banks in 2014
The OCC’s latest guidance of 10/31/13 on Third Party Vendor Monitoring will force even more stringent risk management principles to be applied, putting pressure on Vendor Management teams to come up with more, and more provable, ways to oversee third party vendors. And the CFPB’s ANPR of 11/30/13 will reappear as new regulatory guidelines that will further reshuffle the deck for creditors, third party agencies and debt buyers. Whereas the banks that invested heavily for the past 1-2 years in risk and compliance systems are struggling to get more business benefit out of those investments, others will come to realize that they can’t avoid biting that bullet any more.
2. Despite regulatory challenges, top management focus turns increasingly to efficiency and yield
Collections operations are being scrutinized once again for efficiency measures as the U.S. economy gains steam and lending begins returning … repeating a familiar cycle. This time, however, many organizations will also be facing vendor-induced decisions brought about by the end-of-life of some key collections and recovery package solutions. The good news, as told to us recently by a collections executive, is that it means the entire collections organization is available to participate in streamlining through new technologies as well as new thinking about transforming and automating manual- and paper-intensive business processes and workflows.
3. More banks create digital/mobile/self-service initiatives
In addition to needing to find significant cost-efficiencies, banks are recognizing that changing consumer demands are providing an impetus for leveraging digital technologies better. As James Gordon of Needham bank put it, “We’re entering a society where before the phone was an add on, now the computer is becoming an add on”. Despite more and more hyperbole about how the world is going mobile, the larger trend toward creating a seamless series of interactions across all channels (labeled “omnichannel communications” by the analystgentsia) and incorporating dynamic offerings and treatments is what will occupy banks’ attention this year.
4. Banks seek to get closer to customers to gather information and personalize offers
Based on better data management (integration across systems and normalized for optimization) and analytics, banks will try to reach customers with more individualized offerings and treatments in an attempt to improve yield in marketing, collections and recovery efforts. We were surprised to hear a client executive predict that, in the not-too-distant future, the bank’s outbound calling efforts would be completely halted in favor of various synchronized digital communications aimed at driving customers to interact – by calling in, texting, emailing, going online or chatting or video chatting – and that they have to be prepared to manage that array of separate and parallel threads into a single productive dialogue with their customers. Individualized campaigns comprised of dynamic, interactive customer-facing enticements are already generating terrific results in automating credit line increase execution, and we expect that trend to expand into collections and recovery operations as well.
5. Banks who deployed short-term band-aids turn to more comprehensive, enduring solutions
The financial crisis was typified by creditors whose response to the crisis conditions and the uncertainty of the new regulators was to deploy short-term band-aid solutions involving large staff increases and system workarounds. Given the chance to take a breath, these banks are finding that there’s no time like now to replace piecemeal workarounds with more comprehensive, enduring systems and business transformations. Regulatory uncertainty and unknowns are largely becoming known and are no longer the deterrent to broader action that they were in years past. We expect to see a continuation, and in fact acceleration, of the trend toward banks gaining substantial efficiencies through automation of document management, workflow and business process management to replace time-consuming, paper and manual intensive business processes with simpler, web-based tasks.
What are you expecting in 2014? Click this link to add your thoughts on our blog.
CMC would love to help you be prepared for challenges in collections, recovery, regulatory compliance, agency and third party vendor management, marketing, and customer service. Automating customer-facing business processes with our comprehensive and unified solutions can be your key to getting out in front of the coming wave of new regulatory requirements, rising delinquency volumes, and “efficiency challenges” from top management.
To learn more, contact us at sales@cmcagile.com or call us at +1-302-830-9262.
Tuesday, December 10, 2013
Compliance "Provability" Achieves a Whole New Level
I was given pause recently when hearing a client tell me that they were ‘throwing bodies at the problem’ of putting the bank into position to be able to withstand upcoming audits. “What are all those people going to be doing?” I asked, naively. Turns out that even when the bank has expensive, high-tech systems in place to manage collections inventory, decisioning, letters, auto-dialing, email, text messaging, and IVR messaging…. they still need to manually reconstruct a view of each customer’s experience with the bank. These hoards of staff he mentioned were taking data from all the disparate systems and sources – they HAVE all the data, he assured me – and creating a normalized data set that then could be combed to find all instances of a particular customer’s experience and “paste them together” in a manner that was responsive to their audit examiner’s request.
Proving a negative (“show me, by walking us through the experience of at least 100 customers, that your systems and people are consistently executing the policies and practices that you assured us are in place for your bank, 100% of the time”), it turns out, is much harder for the bank than it is for the examiner to find the one exception to the rule. The examiner therefore holds the high ground, until we can IN ONE PLACE, under the control of one system, easily step them through the entire experience of as many customers as they want to see, any time. And if we can also show them the strategy-writing and maintenance process we are following at the same time, in the same system… we win. CMC’s CredAgility offers just such a system, and with it the granularity needed to “provably” report on all activities at the individual account or customer level.
Prospects are always asking us to quantify the value of CMC’s comprehensive customer experience management automation platform. Viewed solely through the lens of staff avoidance, the savings can be very substantial during the peak staffing demands typically associated with an audit, and significant (if lower than at audit times) by making ongoing customer-facing business processes more efficient. There is also the effectiveness gain that occurs when a unified strategy is executed and customers’ experience improves, resulting in more resolutions: higher collections, higher issue resolution rates with less re-work needed, increased pull-through on complex processes like loan modifications. But the greatest value comes in the form of eliminating the dread fear of what an examiner might find and how much the ensuing enforcement action might cost the bank…
Proving a negative (“show me, by walking us through the experience of at least 100 customers, that your systems and people are consistently executing the policies and practices that you assured us are in place for your bank, 100% of the time”), it turns out, is much harder for the bank than it is for the examiner to find the one exception to the rule. The examiner therefore holds the high ground, until we can IN ONE PLACE, under the control of one system, easily step them through the entire experience of as many customers as they want to see, any time. And if we can also show them the strategy-writing and maintenance process we are following at the same time, in the same system… we win. CMC’s CredAgility offers just such a system, and with it the granularity needed to “provably” report on all activities at the individual account or customer level.
Prospects are always asking us to quantify the value of CMC’s comprehensive customer experience management automation platform. Viewed solely through the lens of staff avoidance, the savings can be very substantial during the peak staffing demands typically associated with an audit, and significant (if lower than at audit times) by making ongoing customer-facing business processes more efficient. There is also the effectiveness gain that occurs when a unified strategy is executed and customers’ experience improves, resulting in more resolutions: higher collections, higher issue resolution rates with less re-work needed, increased pull-through on complex processes like loan modifications. But the greatest value comes in the form of eliminating the dread fear of what an examiner might find and how much the ensuing enforcement action might cost the bank…
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