In Focus Collections
Playbook for your exit strategy
A new guide has been made available to help the industry as it plans to move forwards from the COVID-19 crisis
Chris Warburton Principal consultant, Arum chris.warburton @
arumplc.com
At Arum, we are well aware of the extent of the impact the pandemic has had across a variety of organisations, and how they have reacted differently, sometimes to the same issues; there have been some significant short- term impacts with longer-term ramifications expected for some time to come.
How have regulators and creditors responded? In financial services, the regulator (the FCA) was quick to react, launching a range of measures to support customers who may be impacted by the pandemic and without affecting credit reference records. In the early stage, organisations were
overwhelmed with requests for payment holidays, quickly suspending outbound, and inbound collections activity just to support these forbearance requests. Many quickly moved to an online process
which greatly helped with handling the call volumes, but there were still impacts from the process due to the manual nature of applying these changes on customer accounts. Regulators have been pragmatic and
understanding about the difficulties organisations have faced; whether they will be as understanding if there is a repeat occurrence, especially if organisations have not taken appropriate steps to mitigate the issues seen this time around, remains to be seen. It is, however, likely this patience will be thinner next time around.
What has been the impact on collections operations? Across the industry, the impact and response to the COVID-19 situation has resulted in considerable focus on Collections and Recoveries (C&R) teams. In many cases,
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the C&R teams have primed the response, leveraging their experience in handling vulnerable customers, payment holidays, and difficult situations in general. This has resulted in several operational
issues, not least of which has been a signifi- cant increase in inbound call volumes, with customers responding to government-spon- sored payment holiday schemes, and the associated work to process these requests. Outside of financial services, some other
industries were slower to react, with delays in regulator-guided change (utilities for example). In these cases, many customers simply created their own ‘payment holiday’ with mass cancellations of direct debits, and, with an inability to disconnect services or use enforcement activity, maintaining collections activity has been difficult. Some organisations (those which did not
have the infrastructure in place to enable mass home working and had to maintain an office presence) have suffered over a 50% reduction in capacity as a result of social distancing and other health and safety-related concerns. In some cases, this significantly impacted the efficiency of helping customers effectively, sometimes when they need it most. It was a challenging time for many.
What are we seeing in terms of digital investment? Most organisations have had great support, investing in digital capability and making fundamental (and sometimes complex) system configuration changes with speed. It has been an impressive and refreshing change for many. Indeed, a move away from more traditional funding and business case requirements has allowed an acceleration in digital capability that has been desired for a while.
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Once changes such as self-serve certification
and regulatory driven payment holidays schemes were put in place, inbound call volumes started to decrease. This has allowed organisations to now turn to planning – planning the strategy for exit and a gradual return to normal.
How can you plan for the new normal? With a large volume of customers on payment plans, which we know will end at some point, and a likely unprecedented increase in customer vulnerability, how will this unwind and what is the process to ensure volumes can be managed? A playbook is needed. We have developed
a comprehensive COVID-19 Exit Strategy Playbook to give you guidance on what to consider and how to structure your thinking as you look to plan for the ‘new normal’. This playbook will give you some key
considerations and guidance around five capability areas; Strategy and analytics, operational execution, performance management, technology and organisation and culture. Written by two of Arum’s principal consultants with a combined experience of over 50 years in the credit and collections industry, this is a must read for any collections and recoveries professional. l You can download your free COVID-19 Exit Strategy Playbook at
arumplc.com/covid
July 2020
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