In the FSI industry, the technologies deployed in the Collection & Recovery (C&R) division basically make up a system that allows bank users or collectors, to track customer contacts in order to follow up on repayment.
The C&R function is an important one, as banks are in the business of lending money – which will all come to naught if that money cannot be recovered. For the bank user, i.e. C&R heads, managers and collectors, their job effectiveness is measured by ‘Optimal Collection’ – which simply means ability to recover the maximum amount of money with the minimum amount of effort/ resources.
Some customers will never pay up no matter how many times collectors call. Meanwhile, there are some customers who will pay up with just one reminder or with even none at all.
One of the biggest challenges in C&R is the perennial “Who do you call?” – to which, many IT vendors tout can be answered with the necessary technology, namely analytics.
Intuition still rules
The C&R system is supposed to provide the calling list to collectors, queueing customers in a manner that disallows ‘cherry picking.’ But why does the system prioritise let’s say the Male Classic Card holder, age 29, OVER the foreign female living in Penang who has recorded spending over two grand within six months? Who makes these C&R rules? Are they really set to ‘Optimise Collection?’
Many bankers admit that the rules made for their C&R systems are not backed by hard analytics data, but rather by intuition. “Analytic companies tell us that they can remove all the ‘guesswork’ we have been doing, but actually this (guesswork) is a necessary evil. We cannot run away from it so long as the deployment of analytics continues to be hindered by the lack of flexibility that the C&R function requires,” my banking colleagues share.
Solution failings
Another colleague, who has been in C&R for over two decades, surmises, “For analytics to beoptimised for C&R, it would require tighter integration with the core banking system and related applications; and more importantly be able to adapt to the multiple authorisation and security cmpliance policies.
“Most of the time all of it becomes too difficult, so C&R departments fall back to human intelligence to wean out the hardcore delinquents and more.” The immediate C&R Wish List for improvements via better technologies are:
1) More flexible setting up of rules and parameters for collectors.
“Current C&R systems are not exactly in the easy drag-and-drop formats we wish for. Also, one cannot simply undo the new rules once it is set because we have to use live (customer) data. So if the C&R system is updated with the wrong parameters, we could end up in dire situations.”
2) Better visibility into outcomes of ‘What-If’ situations.
“It would be great if we could see the end results of hypothetical rules such as: Not needing to call Platinum Card holders of certain credit score rates, for at least 60 days.
Often, we want to initiate ‘What-If’ tests to explore ways of improving customer satisfaction, find out the impact on the collection pool, or just to innovate smarter ways for collection. However the design of C&R systems still cannot accommodate these ad-hoc, hypothetical rules.
If they do, it’s mostly limited to changing just one parameter at a time (which is time consuming), or on sample sizes of customer data only.
IT BYTES BACK! SAYS: FSI technology deployment is successful when it solves the nitty-gritty challenges – something that comes only by being hands-on with daily operations
