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Four Factors that Could Make or Break Collections in 2020

TransUnion Third-Party Collections
Blog Post03/31/2020
Business
Three Budget Busters for Collections Agencies

What will it take for collections agencies to succeed this year and beyond?

According to the industry thought leaders interviewed by Aite Group for the just-released report, “The State of Third-Party Collections 2019: Challenges, Trends and Innovations,” it will require overcoming these four challenges.

#1. Recruiting and holding on to talent

The turnover rate among collections agents is a jaw-dropping 100%, even at strong companies. The job isn’t easy. Agents spend hours each day asking for money from stressed out consumers, who don’t have money to give. Adding to the problem, managers are stretched too thin, so they can’t offer the training or support agents need.

Factor in that it’s an entry-level job — with entry-level pay — and it becomes clear why it’s hard to hold on to employees. Then with U.S. unemployment still low, it’s hard to find replacements.

The cost to recruit, onboard and train is expensive, and with 100% turnover rates, agencies are bleeding money. Many people in-the-know believe that holding on to talented agents will require a shift in the culture, where the job is viewed as a way to do good by helping people get back on track financially.

#2. Connecting with consumers

Blame it on a lack of thorough information from clients, legislation, robocalls or scam artists — or people who have zero interest in talking to debt collectors — but creating opportunities to have productive conversations with consumers has never been more difficult. Agents are wasting too much time and money on dead ends or uncollectible accounts.

The first step to overcoming the challenge requires companies to choose data solutions that provide actionable contact information and help agents focus their efforts on people who are more likely to pay. (TransUnion can help you do both. Watch this video to learn more.)

Second, companies need to rethink their communications strategies to focus more on the consumer experience. In other words, once you have consumers’ attention, you’ll need to make sure you’re treating them with respect and helping them.

#3. Innovating and adopting new technology

Citing regulatory issues, information security concerns and thin margins, third-party collectors as a whole, are lagging behind other industries when it comes to adopting new technology.

Forward-thinking companies are investing in transformative innovations, such as machine learning, speech analytics that enable agents to be coached in real-time as they work with consumers, and artificial intelligence. However, that is far from the norm.

While some companies are building their own collection management systems or using vendor-provided software that is quickly scalable, highly configurable and cloud-based, most are working with antiquated systems with poor functionality that aren’t in the cloud.

The situation is a catch-22, because not investing in solutions that streamline operations and strengthen debt recovery strategies is actually hurting profitability.

#4. Complying with regulations and avoiding lawsuits

Changes resulting from CFPB rules

Federal/state laws and regulations

Existing state and federal legislative and regulatory initiatives already require agencies to tread carefully. Roughly 75% of survey respondents believe that proposed changes resulting from the Consumer Financial Protection Bureau (CFPB) to modernize debt collection regulations will make things even more challenging, particularly when it comes to call caps and provisions related to email and text messaging.

The number of lawsuits against collections for technical violations of the law has spiked in the last several years, so companies must worry about legal costs impacting already shrinking profit margins.

Meet the challenges head on with TransUnion

With a massive data repository that offers both trended credit data and alternative data, we can provide you with a more complete consumer view, help boost your recoveries and lower your overall expenses. To learn more, visit www.transunion.com/collections or call us at 800-856-5599.

 

Source: Aite Group Study commissioned by TransUnion: The State of Third-Party Collections 2019: Challenges, Trends and Innovations

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