Savvy banks are working hard to comply with the new Consumer Financial Protection Bureau rule that revises the Fair Debt Collection Practices Act of 1977.
While the rule, which will come into effect on November 30, 2021, currently only applies to third-party collectors, many banks and financial institutions we spoke with anticipate that they will need to comply and are undertaking proactive transformation efforts. today. . They are expanding their use of advanced analytics to reinvent customer awareness, improve collector support and training, make themselves more accessible to customers, and automate payment plans. These are all good ideas.
The new rule limits collectors to a maximum of seven customer contact attempts (including voicemail messages without ringing and messages with limited content) within seven days. This means that organizations will need to generate higher recoveries from fewer interactions with customers. Thus, the new rule requires substantial changes in practices and the adoption of new technologies to ensure compliance.
Improving your collections operations now increases the chances of being at the top of the portfolio when clients start to pay off their debts. This is especially critical for banks that serve customers who have lines of credit from multiple institutions.
Here are some ideas to get a head start on the new rule:
Provide data-driven insight
A successful collections conversation is determined by a number of factors, all of which must work together. Based on a customer’s behavioral cues, banks need to identify which communication channels to use, sequence those channels correctly, and ensure that the tone and content of their conversation is relevant.
This is a difficult balancing act, but banks have access to a variety of data sources – including publicly available customer digital fingerprints – to inform their collection approach. Using advanced analytics, banks can turn this information into critical information about when and how to approach a customer for a successful collection outcome.
Empower agents with AI
Front-end digital channels increasingly handle lower complexity customer interactions, so customers who need assistance on higher complexity issues will need to speak with live agents. This means that it is essential for banks to better hire and support them in interactions with customers so that they can make more informed and efficient decisions.
Banks can use conversational artificial intelligence to do this. Digital agent aids include dynamic trading scripts that change in real time based on client feedback, as well as automated risk indicators that proactively flag high-risk clients. This type of intelligence helps agents personalize each conversation, which improves interaction and helps increase promoter scores.
Develop personalized training plans for agents
A well-trained and responsive debt collector can turn an adversarial conversation into a collaborative one. Highly skilled agents are also more likely to meet collection targets. Identifying areas for improvement for agents and verifying compliance violations should not be left to manual, sample-based quality assurance efforts. Voice analysis enables banks to objectively monitor, record and analyze 100% of calls automatically. Banks can use the information gained to create unique training plans for each agent and highlight red flags for compliance.
Facilitate inbound customer contact
A bad customer experience today can easily turn into a nightmare for collections tomorrow. If a bank’s website, app, and other digital channels are intuitive, informative, and connected, its customers are more likely to self-serve. With the new CFPB decision, a good customer experience is more important than ever. As the number of outgoing customer contacts decreases, banks need to facilitate inbound contact.
Automate payment plans
Targeted restructuring plans have higher adoption rates than generic cookie-cutter plans, and the banks that offer them are more successful in resolving delinquent cases. Whether communicated to customers digitally or through an agent, instant or hardship payment plans allow customers to act quickly to settle their debts.
The CFPB’s decision reflects the government’s expectation that financial institutions do more to protect consumers. It is in the interest of every financial institution to evaluate, strengthen and modernize its collection program.