Modernizing your collection system: Reduce inefficiencies ... · Modernizing your collection system: Reduce inefficiencies and improve the consumer ... the health care, insurance,

© 2020 Fair Isaac Corporation. All rights reserved.

Q&

ADebt Collection & RecoveryAccount Management

Modernizing your collection system:

Reduce inefficiencies and improve the consumer experience

Nags Odedra

Client Partner,FICONags Odedra is a Client Partner at FICO, overseeing the health care, insurance, debt purchasing, and debt collection industries.

Ted London

Senior Director,FICOTed London is a Senior Director at FICO, with more than 20 years’ experience helping organizations optimize operations and compliantly collect more debt.

“If you’re ready to start assessing different vendor systems through requests for proposals, it’s important to make sure you’re comparing apples to apples. Having a detailed list of requirements helps you do that. Without that, it’s almost impossible to compare different systems and you could end up choosing the vender with the better sales team over the vender with the better technology.”

Ted London, Senior Director at FICO

© 2020 Fair Isaac Corporation. All rights reserved. 2

Account ManagementDebt Collection & RecoveryModernizing your collection system:


Modernizing your collection system or continuing on your existing system is a question every organization faces—particularly now as technology has truly advanced. There’s been a sharp acceleration in modernization of collections systems, and organizations that want to improve their wallet share and remain competitive are considering the upgrade. But there are a lot of considerations and questions to ask before taking the plunge on a modern collections system.

Q: How have the expectations and challenges of today’s industry changed?

A:When talking with clients, it’s a different discussion from what took place 10 years ago. Then the focus was a combination of improving financials and taking good care of the consumer. Now, the focus is improving the consumer experience, and what affect does this have on the financials? How can we become more efficient while we’re doing this?

Another change has come with the pace of technology advancements. If you haven’t upgraded your collections technology when your competitors have, there’s a risk of being left behind. The world is demanding higher and higher levels of customer satisfaction, and lower and lower costs. You need to be able to collect the most at the lowest possible cost, while providing the best customer service. It’s a big undertaking, and so a great moment in time to look at what new the technologies have to offer.

In this FICO Q&A, Nags Odedra talks with Ted London about ways to improve your collections operations, as well as how to start shopping for new systems.

Why you should upgrade your system

Topics that will be covered include:• Why you should upgrade your collections system• What to look for in a modern collections system• Considerations when modernizing your system• Best practices for modernization• What to ask prospective vendors




Q: What are the key reasons for modernizing my collections system?

A: There are so many reasons to modernize at this moment in time. I’ll cover more of them in detail throughout this Q&A, but I’ll highlight a few up front:

• Regulatory changes. No matter your industry, you’re forced to deal with regulatory changes. One of my clients had a court ruling on a Monday—they then had to adjust letters going out on Tuesday to be in accordance with that Monday court ruling. With a legacy system, that could take days, weeks, or even months of costly resource expenditure before being able to implement a regulatory change.

• Continual Improvement. Legacy systems pose challenges to nearly any change. Whether you need to modify a letter, report, or workflow, your legacy system undoubtedly has you trapped whenever you want to change your process.

• System integrations. Older systems are oftentimes hard-coded, making integration with a new system either prohibited by the vendor or difficult and costly.

• New data sources. Legacy systems often can’t handle new data, or they require major resource investments to do so. What do you do if regulatory changes bring in new data management requirements? If you bring on a new client, how will you manage their new data?

• Future growth. Your legacy system will not support your future growth. Maybe your system supports you today, but will it support your growth five years from now? Many of our clients don’t have systems capable of supporting 30% more customers.

• Employee satisfaction. In some cases, our clients are running older systems managed exclusively by people in their sixties. But, what happens when those employees retire? Younger employees don’t want to use old technology.

Q: How should companies think about scalability?

A: Let’s say you have a million debtors today. Well, you want to make sure the new system supports two million, three million, even five million debtors, because that may be where you are during the lifecycle of the system. Have the vendor you’re considering prove that they’ve done volumes well above what you’re doing today. You don’t want to be at their upper end.

What to look for in a modern collections system




Client

Challenge

Solution

Results“Most organizations go through a return on investment analysis to understand the benefit of installing a new system. But, oftentimes, clients can’t answer the question, ‘What is the cost of maintaining your current system?’ If they can answer it, they often vastly understate the true cost.”

Ted London,

Senior Director at FICO

There are a lot of raw emotions around estates collection, so Phillips & Cohen was focused on providing stronger customer service. Additionally, their legacy systems weren’t intuitive, flexible, or scalable enough to accommodate the firm’s rapid growth.

• Easy-to-use system saves employee time and lowers costs

• System adapts to growing amounts of probate information

• Flexible collections strategies

• Meeting country and client-specific rules

• More compassionate interactions with customers

FICO® Debt Manager™

Phillips & Cohen Associates, an international collections agency specializing in probate estate management.




Q: What is an open system and why do I need it?

Q: Why do I need self-service capabilities?

A: In this day and age, more and more debtors don’t want to talk with agents. No offense. They may be the nicest agents around, but debtors don’t want to talk to them. Debtors want to log in online and set up their own payment agreement, make their own payments, and, if permitted, do their own negotiations with an automated system.

When I first started working with self-service quite a few years ago, I was dubious. But I’ve learned that self-service generates higher customer satisfaction. People dealing with automated systems tend to be happier than the people dealing with agents—and it lowers default rates. That may be counter-intuitive, but a strong collector can sometimes push a debtor into a payment agreement the debtor can’t afford; whereas, through self-service, debtors are more comfortable committing to the longer payment agreement they can afford. Imagine if a higher percentage of debtors resolved their accounts without ever talking to agents—because agents are typically the most expensive part of your organization.

A: An open system means you can pull data into the system or push data out of the system to the system of your choice, easily and effectively. The key point being you can integrate with any other open system, even those which don’t exist at the time you go live.




Q: What should I be looking for in terms of analytics and optimization?

A: It’s important to have the capability to create custom models for scoring collection cases, and reaching out to the debtor in the most effective manner. Analytics will help you identify consumers requiring only light touches to pay—as well as consumers who, no matter how hard you work them, are not going to pay. Further, analytics can tell you which cases make the most sense for focusing agent energy.

Optimization takes that even further. Even if you’re not going to implement optimization tools today, you’ll want the ability to do so in the future.

Q: What should I be thinking and asking about upgrades?

A: We talked about the importance of ease for upgrades. You also want to consider cost. Have the vendor demonstrate that their clients make system upgrades and aren’t spending an inordinate amount of money doing so. I’ve seen vendors charge just as much for an upgrade as for the original project. You don’t want to be in that boat.

You also want to make sure the vendor is investing and continuing to upgrade their platform. Ask how many releases they’ve done in the last one to two years. And ask about their release schedule for the next one to two years. Talk to their customers and find out if they’ve taken upgrades and how easy or hard it was.

Banking

Automotive

Telecom, Energy & Utility

Government

Retail

Health Care

FICO® Debt Manager™

Collection Lifecycle

Payment Processing

Account Notification

Partner andData Manager• Third-Party Collection

Services• Credit Reporting• Skip Tracing• Attorney Network

Services

CollectionActivity

RecoveryActivity

Pre-DelinquentCollection

Early and LateStage Collection

Pre-Charge Off

Debt Sales

Post Charge-Off




Best practices for modernization

Q: How should I go about coming up with my requirements?

A: Try to focus on the “what,” not the “how” of your requirements. Each vendor’s collection system is going to operate a little differently. Different isn’t bad, so long as it meets your end need.

Developing requirements can be challenging for some organizations. I recommend asking vendors to connect you with clients who have recently upgraded. You’ll be able to ask their clients: What did you do right? What did you do wrong? What would you do differently? You’ll pick up on whether or not they chose the right vendor, and they’ll help you think through developing your requirements.

Q: Should I standardize my integrations?

A: The integration between your legacy systems and your new system can be your greatest challenge. Some of our clients had well over a hundred different interfaces to deal with. I recommend developing a process of standardizing these interfaces to make future upgrades easier, and lower your long-term operational costs. It’s not necessarily turning away customers who demand you receive data in their format. It’s more about taking those hundreds of interfaces and standardizing their formats.




Q: How do I know if the system is truly modern? What should I be asking?

A: The first thing you should be aware of is that there are vendors who have put new user interfaces on top of their old collections system. It may look modern and efficient, but is the technology behind it modern and efficient? You should be asking:

• Is there a relational database behind that modern user interface?• What technology stack is the application sitting on? • How configurable is it? • Can I easily change my workflow? • Can the business rules be maintained by my staff? • How flexible are the business rules and how long does it take to change them?

What to ask prospective vendors

Q: How important is configuration verses customization?

A: Extremely. It’s important to ask, requirement by requirement, whether the vendor will meet your requirements through configuration or customization. Configuration is good. Customization is bad. Configuration offers flexibility within an application using standardized settings. Customization requires modifying the underlying application—and when you’re no longer on the baseline system, it becomes much harder, or potentially impossible, to upgrade the system later.

FICO® Debt Manager™ is a configurable solution that easily adapts to any type of collections process. Available on-premises or in the cloud, it integrates with many systems, and offers transparent processing. And it’s scalable, so it can grow as you do.

Benefits include:

• Higher revenue: By automating and streamlining the collection process, Debt Manager gives collectors precise insights to strategically engage with consumers and maximize returns.

• Better productivity: With industry-specific dashboards, you can record, audit, and analyze interactions to spot opportunities for improvement.

• Strict compliance: With focused segmentation, advanced analytics, and behavior modeling, you’ll be able to apply the best treatments and compliantly restore payment.

FICO and Debt Manager are trademarks or registered trademarks of Fair Isaac Corporation in the United States and in other countries. Other product and company names herein may be trademarks of their respective owners. © 2020 Fair Isaac Corporation. All rights reserved.

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Modernizing your collection system: Reduce inefficiencies and improve the consumer experience Account Management

Debt Collection & Recovery

Q: What should I ask potential vendors?

A: The main items of business to consider during your vendor inquiries are:

• Find out what business rule engine the vendor uses. Is it robust enough to allow the flexibility to expand, and expand, over the next several years?

• Insist on a demonstration. Until you see the system, you really won’t understand everything you’re getting or what you want.

• Ask the vendor to demo one or more of your complex processes, configured within the tool. When you give them your business use case, you’ll see how well they meet your requirements.

• Ask the vendor how their system would solve your current workarounds. Can they take your twelve-step workaround and configure it into the system? Or, turn your 12 steps into 2 steps? Understanding your pain points is an important part of getting what you want.

• Find out if there are hidden costs. Some vendors provide the entire system at one price. Other venders structure their pricing differently and you might end up paying more for different modules. Find out if you’re buying the full system, or buying only certain system modules.

• Ask about their roadmap. What have they upgraded recently? Are there plans to sunset or move customers to a new product? Some vendors have several different systems within their portfolio—the risk is that they eventually become one. And are you on the system that “wins?” If you’re not on the “winning” system, it could become a costly choice five years down the road.

• Ask to speak with the vendor’s recent customers. Ask their customers: How did the implementation process go? Is the system meeting your needs? Were there surprises? Were there lessons learned? What do and don’t you like about the vendor?

To learn more about how you can modernize your collections system with FICO® Debt Manager™, visit www.fico.com/debtmanager

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Modernizing your collection system: Reduce inefficiencies ... · Modernizing your collection system: Reduce inefficiencies and improve the consumer ... the health care, insurance,