Bankers will undoubtedly take the credit for the advances in mobile banking, but should they? Who is really leading the mobile banking and collections revolution, asks Daniel Melo, a banking analytics consultant for Fico in Europe, Middle-east and Africa (EMEA). In my opinion the answer is consumers. It is the consumerisation of IT trend that is pushing banks to do more with the mobile channel. Consumers are rewarding tech savvy banks by paying overdue debts faster, accessing self-service options, and responding quickly to fraud alerts he says in this debt collection focused article.
You can see the pent-up demand for mobile m-banking and for automated customer assistance via the mobile channel by examining the available statistics. For example, in February this year, the Bank of Ireland (BoI) reported that 20,000 customers signed up in advance for the bank’s new Pay to Mobile service. The good uptake for Barclays pingit application and the RBS plan to launch its own mobile peer-to-peer (P2P) UK m-payments service ahead of the planned shared UK-wide mobile m-payments service, which will not now launch until 2014, prove the present popularity of the mobile channel. These type of advanced solution are not the only game in town, however, as texts, alerts and communication with bank call centre agents via the mobile channel can all help improve efficiency too, cut manual processing and assist bank operations and collections.
Fico has been studying the results from banking clients who have made mobile devices the centre of their customer contact and debt collection strategies. One bank reported a 97% customer satisfaction rate for overdue customers who used the bank’s mobile services for payments. Collections departments using these services have reported a 58% reduction in misdirected inbound calls, and a 39% increase in customers reaching a collections case manager on their first call. One bank reported that 75% of its customers in collections can now self-serve and make a payment (for more statistics please see the mobile banking revolution infographic).
Mobile Collections and Customer Service Options
Banks using flexible mobile systems for collections report significant improvements in capacity, customer contact, and roll rates between cycles, while reducing the required staff in support of the business. A large US lender recently reported that they saw a 42% increase in right party contacts, with a 30% increase in payments collected during contact, and an average reduction in roll rate of 8% – all while enjoying a claimed large reduction in the cost of staffing.
The best solutions are two-way, allowing customers to act immediately to make a payment or a commitment to pay. If a customer receives a voice call or an SMS text they must be able to move straight to the payment stage by entering their card details over an interactive voice recognition (IVR) system, at an easy-to-access website, or by following a link or instructions in an SMS. While these payments are quick and convenient, for security reasons it is vital that any mobile offerings are compliant with the Payment Card Industry Data Security Standard (PCI DSS).
A multi-channel strategy also enables bank lenders to migrate customers who normally would use the call centre and make payments over the phone to the channel and person – or automated service – that is most suitable for them. This means that they pay more quickly and need less attention. In fact, automation can be a big cost saver for banks and the mobile channel can help achieve it. For instance, a US lender saw a strong improvement in roll rates, while being able to make cost reductions equivalent to 16 full-time equivalent (FTE) employees.
An automated strategy for collections will address how to interact with customers using automated calls, websites, two-way interactive text messages and mobile applications on smartphones or tablets. Solutions can even include social media as a means to alert customers and allow them to respond, although use of this channel needs to be carefully managed to avoid setting off alarm bells around privacy. It is useful for fraud alerts particularly though and other end uses.
A well-defined digital strategy takes a customer’s preferences into account, in order to create a customer-centric dialogue and workflow. The best solutions see close real-time integration of collections and customer management systems with the provider of choice. The provider should be able to advise best practice on segmentation and which channels have proved successful for customers in similar segments. Over time, communication and intervention strategies must be fine-tuned to provide optimal results and respond to changing customer behaviors.
Real-time integration is also essential to providing a tight seamless service for the customer. What could be worse than responding to an SMS and paying your bill only to be chased via an automated call an hour later? Or being denied in a normal card transaction? Companies will often start with a batch-integrated system and work towards a fully integrated real-time solution which provides the ability to best adopt a multi-channel approach.
Marketing and Payment Due Reminders
The collections and customer management system also coordinates which messages to send when, based on a customer’s recent activity which can aid marketing campaigns. For example, the scenario might go something like this: For an overdue customer, the debt collection system triggers the mobile service to send a text message requesting payment. This directs the customer to a website to devise, simulate, and set up a payment plan, which can then be presented to the customer based on the business logic of the collections system: the customer may use web chat to ask questions of a live agent, and then complete the payment plan. The customer could also be given the option to manage the payment plan through two-way interactive texting and make payments by text. The decisions about which channel to use to contact the customer, and what payment plan parameters to offer, are made within the collections system.
Any payments made, either through the website or via SMS texts, are instantly registered by the collections system and communicated to the customer relationship management (CRM) system. Based on the customer’s overall standing and new payment plan/debt situation, the customer may now receive different treatment from a customer management perspective.
Multi-channel Approach and Analytical Segmentation
Some collections systems may integrate with multi-channel mobile and web technologies, and enable customer segmentation that determines which customers are most likely to use these services. Specific behavioural analytics are best to drive this decision. This may be based on age: mobile services are still most popular among younger customers, though usage is growing across all age groups. It can also involve additional factors, including the customer’s expressed preferences and past successes with other contact channels.
In collections, the best call is the one you don’t have to make. With mobile collections strategies, you can minimise customer contact and maximise results. Best of all, you can please your consumer with a fair and transparent contact channel and no personal embarrassment if it is done correctly and sensitively. Happy customers are the best resellers and your best promoter as a tech savvy bank.