24 Finance Monthly. Bus i ne s s & Economy Finding Compassion in Collection Most people would not automatically link compassion to debt collecting, because, in particular, those with problem debt have often only seen the uncompromising face of an outdated industry. But the sector has recently been through a period of self-reflection. Firstsource has been working with creditors and collection agencies for over two decades. Throughout this time, we have increasingly found that using compassion, relating to borrowers, finding ways to empathise with them, has been the best way to recover debts. Building a rapport helps borrowers feel appreciated and understood, leading to much higher rates of collection. One barrier to empathy has been that the number of borrowers has traditionally far outstripped the lenders’ ability to offer this kind of service. It is, in part, this blanket system that has given the industry its current reputation. But the advent of digitised debt collection is poised to change this. How Debt Collection Digitised While anyone would be hesitant to focus too much on the positives that have occurred during the pandemic, there are some rays of sunlight that have shone through. For one, consumers have begun to realise the importance of their voices. This has precipitated the aforementioned cultural change, rearranging consumer hierarchy to emphasise the adage: the customer is always right. And now many industries are looking for ways to become more customerfriendly. The debt collection industry has responded by ramping up its digital offerings. Through the use of various modern technologies, debt collectors can offer a more customer-centric service: • Machine learning: Digital debt collectors are employing machine learning to create tailored repayment plans for each customer. By understanding each borrower’s habits and unique financial situation, collectors can then find the best route to returns. • Personalisedcorrespondence: Customers are offered a range of electronic communication channels through which they can correspond with their collectors. Then, rather than generic messaging, they receive messages with personalised subjects and details about their repayment plan. • Automation: These communications are sent to borrowers through automation, reducing costs for collectors and allowing them to focus on finding new ways to further improve the customer experience. Digitisation has a habit of improving all services, particularly when used as a hybrid service with human interaction, and debt collection is no exception. Many digital debt collectors also offer 24/7 helplines, with phones answered by trained debt collection professionals, for when customers want instant replies from real people. Why Digital Debt Collection Works This digitalisation has worked in line with Firstsource’s findings that compassion is one of the best tools debt collectors have. Organisations like Martin Lewis’ Money Saving Expert, Citizens’ Advice, and a range of charities give advice to borrowers. But a pervading feeling from many borrowers that there is “Pre-pandemic, there were estimated to be just over 1 million UK households facing problem debt. But by mid-2021, Citizens’ Advice estimated that number would have risen to at least 1.5 million.”
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