Accurate payment information and respectful customer service key
Delinquent payments are bad news to all parties. For the organization they mean interrupted cash flow and difficult reconciliation processes. For the consumer they mean hits to credit scores and often becoming inundated with notifications and reminders. Without a doubt it is in the best interest of both parties to identify and prioritize the most effective methods of contact to ensure repayment and that resolution is quickly met.
But communications about debt repayment are uncomfortable. There are many reasons a customer may skip their payment, such as having insufficient funds or simply forgetting. It’s up to the organization to be tactful about their message and how and when it is being delivered. Are traditional paper reminders mailed to recipients too slow, too impersonal and a thing of the past? Are calls during work hours or dinnertime more irritating?
We at FICO sought to better understand exactly how customers hope to be contacted. We wondered, though, if the banks and financial institutions they deal with on a daily basis are keeping up to the changing consumer demands?
Mobile devices and digital communications have opened new avenues with opportunities for communication. However, organizations walk a fine line when working with these digital innovations. They are faced with the difficult challenge of using technology to maximize efficiencies, while also respecting privacy and not getting “too close for comfort.”
Consumer survey results
In 2017 FICO decided to skip the guess work. We commissioned a survey to ask consumers directly about their preferred and experienced methods of contact across the globe.
While in Canada, email has emerged as the most commonly used and preferred method of contact, one in five respondents indicated that they would actually prefer to hear from their banks via text messages. Text messages are direct and discrete, and are delivered through mobile devices that are now the norm, making them a good option to ensure customers receive the reminders, yet they enable them to respond on their own schedules. Despite this, only 11% of respondents say that text messages are regularly used to reach them at this time, making this the most under-served communication channel, both here and in the United States.
Preferences aside, respondents were also asked to consider what would really motivate them to make a payment. Over one-third (34%) of Canadians indicated that hearing from a live person would be the most effective tactic. In the United States however, it was more important to respondents that the banks’ messages be friendly and helpful, but not necessarily live. This is an important reminder to organizations who operate on both sides of the border. Often the audiences in Canada and the United States are grouped and treated as one entity, but there are a number of factors such as attitudes, demographics and cultural differences, that make consumers in each of the markets act and react differently.
How far is too far?
With over two billion active users, Facebook and Facebook Messenger have become the two most popular social and chat apps in Canada and the U.S. While the majority of customers are using these platforms regularly throughout the day, the idea of receiving late notifications through these channels was not well received by respondents in those countries. When asked, 71% of Canadians expressed that they would not be comfortable with this kind of contact.
Interestingly, global respondents responded quite differently to this question, depending on the types of social platforms they use most frequently. For example, countries such as Germany, Mexico, Spain and Brazil most commonly use WhatsApp, and when asked about their comfort levels with receiving late payment notifications through this channel, they were much more open to the idea.
Chat apps took off only five years ago, and have grown exponentially in the numbers of active users globally. An example of this in action is the growth of WeChat in China, where banks already incentivize the use of the WeChat app. This growth suggests that it is only a matter of time before chat apps are used extensively by customers here in Canada.
So how can organizations become more effective in the ways they are reaching out to their customers, without putting them off?
With the constantly changing decision-making environments, often the answer is not easy to come by. Fortunately, analytics can inform these decisions.
The future success of the collections organization and their ability to execute in the new environment is going to increasingly depend on how they manage, process and analyze their data. Data analytics software tools, like those offered through FICO’s Customer Communications Services, provide a wealth of valuable information on debtor profiles. They enable collection teams to work smarter by identifying and prioritizing those with the strongest likelihood of payment returns. They also facilitate broad access to data, including real-time updates. This leads to informed collection decisions to connect with customers over the right channels, whether via text messages, phone calls, letter mail or the most effective combination of communications channels and methods. Analytics can also ensure the proper tone and frequency are identified and utilized.
Know your customers through their data
Using these systems, the analytics directing each decision receive real-time data and information such as preferred contact time and method based on customer behaviour are retained. The system recognizes positive contact from a customer and prevents further contact in the following days. Better yet, a customer who makes a payment via a web portal will not receive a collections call to their mobile ten minutes later. These kinds of systems even record a customer’s preferred contact details, such as time to contact and channel to use to tailor future communication, ensuring the highest possibility of success in future outreach. This leads to more efficient outreach, and better customer experiences.
Canadian banks and financial organizations have big responsibilities and their customers are telling them to embrace the digital age in their communications. By instilling confidence in newer technologies, smarter communications and embracing intelligence, organizations will increase their repayment rates. These elements will result in customized responses based on consumer feedback and a better understanding of their changing expectations. They just need to listen to the data.
Kevin Deveau is Vice President and Managing Director, Canada, at FICO. He is responsible for growing FICO’s Canadian market share and strengthening client relationships.
FICO is a leading analytics software company, helping businesses in 90+ countries make better decisions that drive higher levels of growth, profitability and customer satisfaction.