Top Debt Collection Trends in 2022

It likely will not surprise you that the collections industry is ripe for even more change in 2022. The recent update of Reg F, lenders’ digital-first approach to working with consumers, and the rebounding economy are all set to make it a bit trickier for third-party collectors to navigate the landscape. Exacerbating the situation are changes in customer behavior and the end of industry-specific moratoriums.

So, what are the biggest trends your business will benefit from focusing on? Below are four key trends that will set the stage for, and impact, the rapidly evolving landscape. If you are a growing collection business, keep a tab on these items to strengthen your operations, maximize productivity and improve customer sentiment. For a more comprehensive analysis, you can download our white paper. 

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1. Digitization is on the rise in consumer finance. 

According to a 2021 J.D. Power study, a record 41% of U.S. retail bank customers are now classified as digital-only. The use of non-cash payments is rising at a rate of 32%, digital payments could overtake cash payments for the first time in 2022. This trend, along with the ​popularity of the Buy Now/Pay Later (BNPL) lending model, will directly influence debt repayment behavior. So, what should collectors do? They should make a sharp turn towards digitalization to meet the changing customer expectations.  

Ways to make the most of this trend: 

  • Map out your existing processes and identify areas that could be automated. 
  • Consider implementing BPA/RPA Solutions to add scale and processing accuracy.
  • Switch to an automated compliance software to reduce costly errors arising from internal and external non-compliance.
  • Leverage AI to analyze your customer data and provide next-level case management.

 2. Self-service is a sought-after feature in the post-pandemic world. 

According to Boston Consulting Group, the use of self-service channels has increased by 20% since the pandemic began—and this trend is likely to continue moving forward in 2022. Having said that, it is still too early for an out-and-out "digital-only" collection strategy. For many consumers, a text message or an email could be okay in the early stages, but too passive in later stages. To build a successful multichannel contact strategy, revisiting your infrastructure, data analytics, and automation strategies is a great place to start.

Ways to make the most of this trend: 

  • Sign up for a self-service app such as IConnect247 to help consumers of all ages better manage their accounts, removing manual activity for your agency.
  • Ensure a seamless consumer journey through whatever channels consumers prefer - SMS, Email, Chat, and Phone.
  • Integrate your insights from Speech Analytics to understand consumer sentiment and preferred channels.

3. You cannot ignore the voice of the consumer. Thanks to Reg F. 

Thanks to new guidelines in Reg F, clear rules have finally been established but with strict guidelines. The new rules proposed by the Consumer Financial Protection Bureau (CFPB) also involve agencies having to refer to the model validation notice and limiting the number of calls every week. Hence, you as a collection agency need to identify an effective consumer contact strategy that’s empathetic yet effective from a business standpoint. By getting it right, you can increase your time-to-repayment, increase liquidation rates, and improve Consumer Satisfaction (CSAT). 

In your pursuit to adopt a “consumer-first approach", real-time speech tools can help you improve your call center QA and discover better ways to guide and coach agents for improved customer experiences. Here, segmenting the consumers with the help of big-data analytics can also help you communicate better with consumers without losing a human touch. The introduction of sophisticated data analytics tools such as IPERFORM can allow you to closely analyze consumer behavior and the trends driving that behavior.

Ways to make the most of this trend: 

  • Dig deep in your call center data to know each consumer’s preferred communication method and revise the collection strategy quickly. 
  • Put all your payment accessible on digital channels. Try to make sure customers don’t have to call an agent if they don’t want to.
  • Make it easy for your consumers to engage with you. 
  • Ensure your digital presence has clear instructions to make navigating your digital channels as intuitive as possible. 

Figure out ways to capture regular consumer feedback. Implementing their ideas can help you design a frictionless consumer experience.

4. Talent crisis in the industry is real.

According to a new TransUnion study, over sixty percent of collection companies say that finding and retaining talent is “very challenging.” Staffing is a challenge across most industries, as the monthly quit rate hit 2.9 percent in 2021. Unfortunately, the talent crunch is a trend that will not only continue through 2022 but grow because of the increased need for talent to support agencies for the extra workload. 

In a scenario like this, agencies have to ramp up their hiring efforts as well as make the most of their existing agents with better segmentation and smarter resource allocation strategies.

Ways to make the most of this trend: 

  • Create a streamlined process to ensure the most-experienced agents are only assigned to consumers that face complex issues. 
  • Use speech analytics data to target the right training for the right agents. This should help you turn new agents into seasoned professionals quickly. 
  • Check if outsourcing call center or back-office work to a Business Process Management (BPM) expert is a viable option as per your business maturity model. If your answer is yes, prepare a list of questions around Production Management, Transition Management, Compliance and Performance, Resource Management, SOPs, and KPIs practices for the selection of the contender. 

The road ahead 

As you expect more accounts to be placed in collections in 2022, Provana can help you invest in the right collections technologies and place off-payroll agents that are critical for the anticipated volume increase. Our full suite of technology offerings that span across the collections lifecycle, will help you embrace all changes mentioned above and constantly seek to reinvent, making your processes more effective and consumer-friendly. Want to learn how?  Click here.