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TAR048
Issue Date: 7th June 2007
Current climate increases debt management role
7th June 2007. It is now even more important to manage debt
more effectively, and to identify and assist customers at early stages of
arrears, according to Andrew Moore of Target Group, speaking at The Future
of Retail Banking in London. With the growth in bankruptcies and IVAs, and
against a background of rising interest rates which can only increase this
trend, lenders are moving away from customer acquisition at any cost to
maximising product penetration and profit from the existing customer base.
But this can only be achieved if it is tied to more flexible and responsive
debt management processes.
Assisting customers during early arrears or pre-delinquency will reduce
the flow of accounts in to the debt management cycle. To do this, there
needs to be a fundamental understanding of the customer base and what tactics
will work for specific clusters of customers. By matching collections strategy
to customer circumstances, cost of collections is minimised and, if there
is little chance of recovery, this can often now be established early in
the process and alternative action taken.
Credit management systems can support this and enable collections departments
to manage larger volumes by helping them to differentiate between different
customer segments. As a result, the right collections technique can be applied
to the appropriate segment of customer: the 'one size fits all' approach
is not longer acceptable. With increasing levels of indebtedness, systems
are able to use a customer's previous payments history together with other
internal and external data to establish whether a customer is likely to
be in real difficulty, or whether they will pay if an appropriate collections
technique is applied.
According to Moore: “Organisations need to be flexible enough to react
to ever-changing economic conditions and proactively manage customers through
changes in lifestyle. If you get it right, the collections department can
be the most profitable area of the business by reducing arrears and keeping
provisions at an acceptable level. An efficient and effective collections
process which offers the flexibility to evolve with the times will enable
lenders to better weather economic storms.”
For further information contact:
Hannah Edwards, Marketing Executive - Tel: 029 20 301401
Target, Target House, Cowbridge Road East, Cardiff, CF11 9AU
Tel: +44 (0)2920 301 401
email: Hannah.edwards@targetgroup.net
Website: http://www.targetgroup.net