ASK THE EXPERTS: Using New Technology to Reach Debtors

Ask the Experts is an interactive section where readers can ask direct questions to the experts at Kaulkin Ginsberg, the leading strategic advisors to the ARM industry — and a sister company of insideARM.com — as well as other seasoned industry executives.

Question: What are some specific strategies collection agencies can employ to leverage new communications technologies to reach debtors?

Answer: (from Rob Fite, VP of Collections Solutions – LexisNexis® Risk Solutions)

The most basic interaction an accounts receivable management professional can have with a debtor is the traditional collection call. And this basic interaction is the goal of any ARM organization.

But it’s a goal that is increasingly difficult to attain. When answering machines were introduced to consumers, millions learned the simple pleasure of screening calls. And then came Caller ID, a technology that prevented people from suffering the indignity of not knowing who was calling.

As challenging as these hurdles were to overcome, nothing compares to the emerging roadblock of widespread wireless adoption. Mobile communication technologies currently enjoy a protected status from regulators in the United States.

While landlines are still the predominant avenue for collection calls, an ever growing percentage of debtors and the general population are utilizing mobile communication technologies for their primary communication, whether it be voice, text or email.  In fact, more than 20 percent of American households today have only wireless phones, according to a recent study.  Though many in the industry view mobile communications as a roadblock due to their current protected status from regulators in the United States, most wireless devices actually have a built-in technology that ARM companies can leverage to contact debtors: text messaging.

If one could solve the legal impediments and uncertainty, a straightforward sample strategy for using SMS text messages to contact debtors could be:

• Using an analytics suite, determine which of your contact numbers are wireless.
• Have a collector team dial those numbers for an attempted right-party contact (the regulations surrounding dialers and cell phones are still vague).
• If the collector does not make contact, do not leave a message.
• SMS the number with a brief message for the debtor to take action.

The message can give debtors a variety of action options, or you can test to see which works best. You can simply have them call a number to discuss their account, which will route to your collection team. Or, you can give the debtor the option to self-cure by leveraging another communication technology: the Internet.

You can have a debtor visit a specific Web site where they would input a personal PIN. After they did this, they would have the option to pay the debt off, make a payment, or get additional information about their account. Many collection attempts fail because people are embarrassed to admit to anyone they have debt hanging over them. If you give the debtor an opportunity to access their account on their own time, certain segments may be more likely to pay. The explosion in the growth of online bill payment would certainly lead us to believe that people would warm to this option.

And these are scenarios that many collection agencies are currently exploring. Imagine where we could be heading: mobile payment technology, effective email strategies, etc. Who knows…maybe some enterprising developer will create an iPhone app for debt collectors.

• Using an analytics suite, determine which of your contact numbers are wireless.
• Have a collector team dial those numbers for an attempted right-party contact (the regulations surrounding dialers and cell phones are still vague).
• If the collector does not make contact, do not leave a message.
• SMS the number with a brief message for the debtor to take action.

The message can give debtors a variety of action options, or you can test to see which works best. You can simply have them call a number to discuss their account, which will route to your collection team. Or, you can give the debtor the option to self-cure by leveraging another communication technology: the Internet.

You can have a debtor visit a specific Web site where they would input a personal PIN. After they did this, they would have the option to pay the debt off, make a payment, or get additional information about their account. Many collection attempts fail because people are embarrassed to admit to anyone they have debt hanging over them. If you give the debtor an opportunity to access their account on their own time, certain segments may be more likely to pay. The explosion in the growth of online bill payment would certainly lead us to believe that people would warm to this option.

And these are scenarios that many collection agencies are currently exploring. Imagine where we could be heading: mobile payment technology, effective email strategies, etc. Who knows…maybe some enterprising developer will create an iPhone app for debt collectors.

Rob Fite is the Vice President of Collection Solutions for the LexisNexis® Risk & Information Analytics Group, and brings with him nearly 20 years of experience in the fields of collections, credit, and risk management. At LexisNexis, Rob is responsible for leading LexisNexis collections market strategies, product development, business direction and revenue growth.

EDITOR’S NOTE: This article originally appeared in Know Your Debtor, a new FREE quarterly email newsletter published by insideARM and LexisNexis that focuses on understanding trends impacting consumers. To receive the newsletter, please sign up at http://www.insidearm.com/go/subscriptions.