ANALYSIS CCR
In association with
DO YOU UNDERSTAND THE VALUE OF YOUR PORTFOLIO?
Technology and data analytics can certainly help to understand the value of a portfolio, but the challenge is to prove it to a cost-sensitive buying audience. CCR talks to managing director Christian Jacob to explore the current industry approach to portfolio analysis and data segmentation, and the progress made
IN three years of operation Qualco has picked up an array of clients via word- of-mouth and managing director Christian Jacob’s experience in the fray of panel management. They have recently undertaken recoveries on one of the Sigma Financial Group’s benched debt books, seeing significant returns in 14 months. A key challenge in bringing on new
originator clients is to prove that a data analytics platform can add value prior to – or instead of – a debt sale. Mr Jacob says: “When you have a large amount of debt on the balance sheet it is understandably desirable to consider selling it off at a good price and move on. But how can you truly understand the value of your book if you do not have the processes or platforms in place to undertake even the most basic analysis?“ The backbone of the organisation
is reliant on data and its analytics platform continuously interrogates and enables it to provide insight and visibility on a company’s accounts. Qualco’s panel of agencies are required to send daily updates including any piece of information that is considered relevant to the customer, which means across the board the data held is consistently enhanced and cleaned from one day to the next. From these data exchanges they are able to build on the datasets to run comparable sequence analysis to gain a better understanding of the customer and, as a result, a better understanding of the portfolio. Analysing data is not a new
phenomenon, nor is its application in collections and recoveries. While operating within an analytical framework, it is crucial not to forget that people are people, that control
July 2015
groups allow the test of such complex models and that circumstantial changes sometimes cannot be predicted. If portfolios liquidated at 100% after
the originator had exhausted their processes, the debt sale market would be very different. Equally, if originators were able to collect all outstanding amounts, there would be no need for a secondary market. Mr Jacob says: “The truth – as we all
know – is somewhere in the middle. But to understand the data and understand the customers, we can get close to the ideal, which means the vulnerable are
with our debt purchaser clients. But that is not the case. “Whilst the purchaser may have to
pay more for a book we have worked on, the data they will be receiving via that sale will be in a much healthier state. So much so that many of the processes a purchaser would have to undertake after the sale are unnecessary, therefore the cost of servicing that debt is reduced. It is a win-win situation.” Another challenge has been to
change the way in which originators and debt purchasers approach their
Investment in the appropriate platform offers such unique analytics and resulting customer segmentation that it actually enhances the rate of collections
identified and protected and each customer is treated in the appropriate manner. We have not yet seen a collection script that can be all things to all people.” In today’s M&A environment, the size
of originators’ panels are decreasing. Mr Jacob says: “Not only are we able to give real insight into the value of a book, we know which agency performs best on any class of debt and, as a result, we are in a unique position to help our clients increase their collections rates before they make a decision to sell.” But is it a case of robbing Peter to
pay Paul, with almost half of their clients being debt purchasers? Mr Jacob disagrees: “We continue to work with debt purchasers as well as originators, and, of course, it could be construed that working direct with originators to drive up the price of their portfolios could damage the relationships we have
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debt-recovery strategy. In a cost- sensitive environment it is a risk to go from a model that achieves the most pennies in the pound to considering an intermediary that, on the face of it, looks to be a more expensive option. But Mr Jacob says: “Investment in the
appropriate platform offers such unique analytics and resulting customer segmentation that it actually enhances the rate of collections, coupled with the benefit of full insight and visibility into your accounts. Only then can you truly undertake meaningful and informed strategic decisions.” CCR
Christian Jacob is managing director of Qualco E-mail:
CJacob@qualco.co.uk
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