The Analysis CSA


Surprise surprise!


A good conference will always deliver a surprise or two to keep the delegates engaged


Colleen Peel Head of marketing and events, Credit Services Association info@csa-uk.com


The tone for this year’s UK Credit & Collections Conference was set by the president’s address: John Ricketts not only told conference that members were on track to return more than £4bn to the UK economy, and that it held £59.6bn for collection (as at end Q1 2018), but he also revealed the top 10 debt-buyer members’ contribution to Fair Share, which last year stood at £22.6m. By way of context, he said this represents around half of the total generated by the whole of the financial- services community, and was a 54% rise on 2016. He also reminded delegates this was in addition to the levy collected by the FCA on behalf of the Money Advice Service. Such surprising statistics and the silence in the room spoke


volumes as delegates digested the extent of their commitment to funding debt advice. How they ‘coped’ with such news was a central theme of the keynote speaker, Nathalie Nahai. She explored the importance of understanding the psychological drivers required to effect change that ultimately lead to action. Changing a customer’s emotional state, by building confidence and engendering trust, leads to positive engagement. This concept of homophily, in effect, a ‘love of the same’, was illustrated through the advertising of McCains and Lloyds Bank, and she encouraged members to create content on their websites and marketing materials that better reflected their customers’ own stories and circumstances. Individuals are only capable of processing a finite amount of information, and this ability drops further when they are stressed. Removing that stress by using simple, empathetic communication moves customers to action. Jonathan Phelan of the FCA made a welcome return, and took


conference through a major research project completed earlier in the year that reflected the rapid change that is ongoing in the collections space. He particularly focused on technology – a key theme of the conference overall – and how collections agencies were increasingly moving away from telephone and letter-based communication to a more ‘digital’ engagement including webchat and apps. He believed the key drivers for adopting new technology was to further improve efficiency, but acknowledged that it was also being used to better identify and engage with vulnerable customers. While ‘human’ oversight was still essential, the march of AI and machine learning was inevitable. In a presentation that covered considerable ground, he also acknowledged the increased costs that agencies had been


October 2018


facing with compliance and the advent of a new regulator, and that while costs had risen, fees had stayed largely the same. It was important a pressure on margins did not lead to corners being cut. Firms were obliged to innovate, diversify and develop new-business models and strategies, including to outsource services to third parties. While technology was a tremendous enabler, the over-reliance on technology was also, conversely, a risk. The first of the day’s panel debates


brought together experts from the advice sector and the Cabinet Office to explore the correlation between lending and debt, and the need to make it much easier for


consumers to understand what they are ‘buying’ and what happens if it all goes wrong. The stigma of debt was ever-present, and this was still a major concern. Liz Barclay of the MALG said the collections industry had come a long way in a comparatively short space of time, and that 25 years ago she would not have been allowed into a collections conference, let alone be asked to speak. Peter Wallwork, CSA chief executive, agreed, but said that many members still felt like the ‘outsiders’ when it came to discussing debt, and were not included in discussions where it could make a valuable contribution. Egos within the debt-advice sector, he said, were also a problem, with certain commentators proposing actions that the industry was already doing. Much greater collaboration was needed, but they needed to stop talking about it and actually do it. The second panel debate focused on technology, and in particular


the opportunity and the threat posed by Open Banking. What was clear from the debate is that the genie is out of the bottle, and can never be put back. In what is a very fast-changing world, new developments such as ‘requests to pay’ would soon dominate, and apps that would put customers in complete control of their payments and who they allowed access to their accounts would change the face of payment processing forever. It was only a short step into the future before Amazon would be taking money directly from an individual’s account (with their permission), and that Mastercard and Visa were already beginning to re-invent themselves. How Open Banking related directly to collections was also discussed, with panel members agreeing that the access to greater, richer data would help both in determining a customer’s behaviour – and their propensity to pay – and in pricing portfolios more accurately. The change, they said, would be ‘transformational’. CCR


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