Thailand has made remarkable social and economic progress over the last few decades. However, the country is now experiencing a visible economic slowdown with debt levels reaching an 11-year high, according to a survey by the University of the Thai Chamber of Commerce.
According to the report, high debt levels are primarily attributed to higher living costs and easier access to loans. While the Thai banking system is well-capitalised and profitable, high debt levels for households and small businesses are expected to result in asset quality deterioration.
As with any economy in a state of transformation, financial services organisations are grappling with challenges on the other end of the lending process -- collections.
Considering historical perceptions of typical collections processes, it is only natural that consumers are wary of debt recovery practices. According to a 2018 study released by Intelligent Contacts and conducted by the marketing research firm AYTM, both consumers and lenders want the same thing: to pay off debt.
Most consumers -- almost 80% surveyed in the study -- are willing to act to pay off what they owe. But they need to feel empowered and not intimidated by the recovery process.
Lenders need to provide them control along with a digital, safe and consumer-centric environment to engage and manage their payments. This will eventually lead not only to better recovery rates, but also will help build trust, improve convenience and better the customer experience.
So what ails the collections process? The absence of quality contact information, dependence on manual processes, and interoperability issues with legacy systems are all leading to business inefficiencies, dissatisfied consumers and increased bad debts. At the same time, customer expectations are constantly increasing.
DIGITAL ENGAGEMENT
It is normal for consumers to expect service providers to engage with them through digital channels. How do financial services organisations navigate this new normal to manage their debt collections?
People in Thailand have embraced digital technology with great fervour and the digital ecosystem in the country is thriving. According to the latest Global Digital Report from We Are Social, the country is home to 57 million active internet and 51 million social media users, with 92.3 million mobile subscriptions and 49 million mobile social media users. While this shows the potential in using digital strategies for collections, engaging customers effectively across digital channels has yet to take off meaningfully in Thailand.
There is a growing trend towards early collections activities focused on customer-centricity and satisfaction. Customer-centricity is at the heart of building enduring relationships that bring better and more measurable value back to the lender as well as the borrower -- particularly for a country such as Thailand that has high smartphone penetration and adoption. It is time financial services players focused on a new approach to collections.
In today's digital world, the collections strategy needs to be digital, analytics-led and omni-channel. It needs to factor in individual customer circumstances (data) and engagement preferences (digital and omni-channel) to drive a positive and consistent customer experience. Customers want personalised services that are delivered and managed through a channel they deem appropriate.
By using the right technologies and focusing on customer needs, lenders can base their engagement strategy on data that helps determine effective channels and resource allocation. Outreach initiatives can be correlated to customer behaviour data points -- helping lenders to identify defaults early and devise strategies before the default happens or manage delinquencies more effectively.
VALUE GENERATOR
Getting ahead of potential future losses by deploying next-generation techniques in collections will strengthen value-added returns from customers, changing the perception of collections from a cost centre to a value generator.
It also helps reduce dependence on frontline collections capabilities such as call centres and collection personnel, since it is evident that consumers do not want to engage collections agents, unless it is at their choice.
Experian helps organisations to streamline their collections process, while ensuring stringent compliance with local collections laws and regulations. Its analytics, segmentation and communication tools allow for better collection segmentation that drives better response rates. It also works with clients to reduce the cost of collection, helping them maximise recoveries.
Experian frequently collaborates with financial services providers to develop distinct collections scorecards for different lending portfolios including property financing, shophouse financing, personal and vehicle financing. Each score can fall under individual buckets -- early stage, mid-stage and late stage. The purpose of the collection score is to stop the flow rate from the first bucket to the next.
The debt collection experience does not have to be a painful process. With investments in the right technologies and a focus on providing the right customer experience, debt collection can be aligned to the needs of both lender and borrower -- making the process intelligent, accessible, positive and engaging.
Dev Dhiman is the managing director for Southeast Asia and emerging markets with Experian, a multinational consumer credit reporting company.