Preparing for tomorrow’s customers: The future of payments and collections

Today an array of digital service, payment and engagement channels are available, created to provide personalised, individual services to consumers. Research continues to show that the younger customers are more likely to respond to digital communications from service providers, rather than traditional methods. The implications for retail financial service providers are wide-ranging. A recent whitepaper …

by | October 7, 2016 | TALKINGTECH

Today an array of digital service, payment and engagement channels are available, created to provide personalised, individual services to consumers. Research continues to show that the younger customers are more likely to respond to digital communications from service providers, rather than traditional methods. The implications for retail financial service providers are wide-ranging.

A recent whitepaper from Experian, the credit monitoring service, explains how service businesses can overcome the top five challenges concerning collections. In a piece of research linked with its whitepaper, Experian found that 1 in 3 (32%) of UK adults want to deal with unmanageable debt by using an online option following a missed payment. Those aged 35-54 prefer to settle their outstanding arrears online (36%), with only a fifth (22%) choosing a phone conversation and 18% willing to go into a branch. It’s no surprise then that the third of the five challenges in the whitepaper focuses on how to connect with a younger generation of borrowers. Gathering more granular customer data, providing self-service options and creating a menu of options for all communications and digital channels all aid choice, and are recommendations we fully endorse.

There’s no time to stand still – this generation, and others, will evolve to expect new and yet-to-be-discovered payment channels and preferred ways to communicate. Our Innovation Lab is working on new methods including biometric payments, such as ‘pay by selfie’, and integration through social channels, such as Whatsapp and Facebook Messenger. We, and others, are also developing payment technologies in the areas of machine learning and artificial intelligence – both of which have real scope to streamline the collections process.

Financial services providers need to keep their fingers firmly on the pulse and be prepared to continually innovate. They should focus on the following key areas to strengthen their collections strategy, now and in the future:
•    Ensure that customers can engage via their communication and payment channel of choice, personalising these exchanges to reflect past behaviour and circumstances.
•    Invest the time and resources to regularly analyse the consistency, tone and content of existing payments communications to help cultivate a fast and favourable reaction from customers. Timing is also an important factor for communications. We know that communicating early with customers who have just entered the collections process, offering a number of simple ways to pay in firm but amicable language, can help customers avoid falling further into arrears to the benefit of both parties.  
•    Choose the best technology-driven processes, including self-serve options, and offer them at scale to provide a consistent, personal and fair level of customer service and also help efficiently speed up the return of funds.  Digital transformation can still be a struggle, seen as a complex and costly project that is too sprawling to implement.  Gradual digital adoption with services like ‘Pay by SMS’, card registration, IVR and web bill payments don’t require significant infrastructure investments, and can truly achieve the same goal. 
•    Keep up to date with emerging payment technologies, as well as social and customer communication channels. Plan out how these could fit into your collections strategy in the future. 
•    Ensure that you have a deep understanding of industry regulations, or work with a trusted partner who will do this for you. As the number of payment technologies has proliferated, regulation in financial services surrounding communications and the provision of payments has changed frequently to keep up. 
•    Regularly review the foundational business working practices, and evolve them in response to consumer behaviour.

How businesses deal with customers who owe them funds, and the procedures, policies and technologies that underpin that approach, are absolutely critical to achieving a successful outcome – for both parties. The best providers are those who understand that debt comes with emotional, as well as financial impact, and act accordingly.  

Preparing for the next stages of digital developments will certainly help, but the reality is that no one can predict where payments (and therefore collections) are going to be in the future. Financial services providers must be ready to adopt new technologies so that these channels can be incorporated into a seamless and frictionless collections journey for every customer – one that enhances the brand experience, rather than damages it. 

By Grant de Leeuw, Global Sales Manager at TALKINGTECH.

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