Almost all finance and banking organisations have now mastered the basics of CRM (Customer Relationship Management), but because of the state of the economy and social changes, we now need to move to DRM – Debtor Relationship Management, says Elliot Howard, Director of software solutions specialist Sopra Group.
In the same way marketers learnt that bombarding customers with spam is expensive, ineffectual and counterproductive, banks, building societies and financial services companies that insist on endlessly chasing delinquent customers with letters and calls have seen credit losses reach new highs. As debt continues to be an issue for UK customers, it’s becoming increasingly clear that financial institutions need to be just as targeted and flexible in their debt collection processes as in their customer outreach.
The good news is that some innovative banks and financial organisations have started benefiting from such a forward-looking collection management approach and are deriving huge benefits from it. Not all financial services firms have yet reached the same point as these pioneers however. A survey* we commissioned this year found only a half of the financial services organisations polled described their segmentation profiling as “fully optimised”; and 9% admitted their system needs a complete overhaul in this respect. The inability to analyse debtor profiles is another related focus of concern. Almost a third of financial services companies admitting there is definite room for improvement when it comes to understanding the real behaviour profile of their customers – especially at that crucial gap after the sale has been made and before any problems begin.
Asked to name the greatest challenge in debt collection in the next twelve months, the response that came back from the survey was the difficulty in actually recovering debt. That’s a problem compounded by the recessionary pressures the country is under. One insurance company respondent sums it up: “The steady increase in burdens of debt as a result of the financial crisis.”
Improved analytics can help organisations in that position to best test new contact and risk mitigation strategies, as these strategies require robust data to support change. If organisations can do this, it gives them a means of intervening appropriately at an earlier stage. Taken a small step further, your organisation’s new ability to differentiate between ‘good’ and ‘bad’ or more risky customers means you can apply different treatments and terms to different customer demographics, based on their propensity to default.
For instance, it could be that certain postcodes prove to be an indicator of risk. If this bears out, this information could become an immediate flag for action. Or perhaps there is a high level of delinquency on a certain mortgage or finance product being financed; this might indicate a need to review similar customer profiles and assign resources to proactively manage them.
The point is that anticipation of problems will always give you options. Effective use of analytics – the ability to dig down into data and spot important patterns as a way of providing what you need to do about them – is about managing risk rather than having to react to it after the fact.
Holistic view of indebtedness
If you want to try and head a customer off from defaulting on their credit card or on their mortgage payments, you need to know about that customer’s other financial commitments – their personal loan, that risky joint loan with someone else, where they are with their student loans, on-going payments on their car and so on. In other words, you want the ability to have a consolidated view of the customer or potential debtor so as to provide a really tailored, helpful service. The data analysis therefore leads to a better relationship with the debtor and gives an insight into how best to manage this.
The evidence is mounting that without analytical functionality, organisations have difficulty seeing their whole exposure with a given customer.
The potential contribution of analytics doesn’t stop there. If you are an organisation with a collections systems, you will have an asset-financing requirement as well. Analytics and the resultant relationship with the debtor can be a key enabler here again. After all, the biggest cost an organisation always has is customer acquisition, e.g. doing credit checks, underwriting, etc. So once acquired, you want to make sure to try and retain them.
You know this as a consumer yourself. If you are coming to the end of your three-year mortgage agreement, chances are you are going to be looking in the market. The supplier should want to entice you at that point to either to continue on that particular agreement or arrange another period of finance or move to some other new, profitable arrangement. There are broader business benefits – risk can be contained yet more flexibility extended to customers who spend well. More strategically, providers can offer preferential terms to ‘safer’ customers, differentiating themselves in the process and encouraging these customers to spend more. The alternative is to be passive and vulnerable and watch as customer accounts all go red at once.
Modern analytics can really help with these types of scenarios so you as a financial product vendor can proactively cross sell, up-sell and proactively manage any default situations. Analytics and workflow are the key enablers to put in place a strategy here, in other words.
Understanding the difference between a ‘customer’ and a ‘problem’
As that tough Autumn Statement made clear, our economy remains static and we face an uncertain period of on-going constriction. As a result, defence of your market share and improving your bottom line may depend upon further efficiency gains. Organisations need to focus on the real behaviour of their customers and the behaviour of those that have defaulted.
Debtor relationship management is your best way of doing that – ensuring that those individuals that have unfortunately over-extended themselves but have every intention of making good their loan are properly looked after, or identifying clearly what cases are hopeless from your point of view.
Once activity can be better targeted, collections departments find they are better able to maximise their resources, expending less effort, yet recouping more payments. Ultimately, the smart way to collect is about learning not just how to collect, but how to avoid or manage the risk of that collection.
Getting that right – knowing the real difference between a valuable customer and unprofitable debtor – could be the extra edge you need to manage your way through the next few years of tough trading and into sustainable, long-term success.
The writer is the UK Director of Sopra Software Solutions (www.sopragroup.co.uk), a provider of industry-leading credit collection management platforms and mortgage solutions
The survey on the state of the UK collections business is available, free, at http://www.sopragroup.co.uk/creditresearch2012
Board Report Highlights Complex Decision-Making Process Across Banking and Finance sector
‘The State Of Decision-Making’ report from Board, reveals business decisions made in silos without modern planning tools
A third (33%) of Banking & Finance decision-makers believe decisions made in silos, despite majority (63%) of decisions being implemented worldwide
More than half (57%) of Banking & Finance decision-makers rely on spreadsheets for decision-making despite modern planning tools now available
The #1 decision-making platform, has today released ‘The State Of Decision-Making’ report focussing on how UK organisations make their important business decisions.
Based on a survey of 500 senior decision-makers, across industries including, Banking & Financial Services, Consumer Goods, Manufacturing, Pharmaceutical, Professional Services, Retail, and Transport & Logistics, ‘The State Of Decision-Making’ report from Board shows that today’s business decision-making process is increasingly complex, with multiple departments and seniority levels all responsible for some form of decision-making, leading to a lack of cohesion between units and a waste of business resources.
‘The State Of Decision-Making’ research found that while a clear majority of respondents (63%) working within the banking and finance sector say the important decisions they are responsible for get implemented globally, the decision-making process itself is not joined-up across the business, with one third (33%) also saying that crucial business decisions are made in departmental silos.
The research, conducted on behalf of Board International by independent research organisation 3GEM, also asked respondents the tools they use to make decisions and, while almost every action within an organisation today will lead to the creation of new data, it seems many businesses are not using the crucial insights which data can provide to make important decisions.
More than half (55%) of respondents in the banking and finance industry said they were making business decisions based on data and insights, but ‘gut feeling’ decisions are still made by up to 44% of companies. What’s more over half (57%) of the sector’s companies still rely on spreadsheets to aid their decision-making, despite more modern and reliable tools now available.
“In today’s fast-paced, data rich and evolving business environment, making quick and effective decisions is critical to both compete and survive,” explains Gavin Fallon, Managing Director for UK, Nordics & South Africa at Board International. “Important decisions are being made at any one time across multiple business functions, but all too often, important decision-making is disconnected, modular or fragmented.”
The research also asked respondents about the challenges banking and finance decision-makers face at their organisation, with nearly a third (29%) citing a lack of available data and insights and one quarter (25%) citing the fact there are too many people in the decision-making process as their biggest frustrations. However, industry decision-makers believe that the process can be improved with the introduction of new technology, with the majority (57%) of respondents saying this would make their decision-making better, while 41% also felt increased use of data and insights would help.
“Businesses have to plan every day for a far more uncertain future and set themselves up to prepare for change and keep changing against the backdrop of a more volatile and uncertain marketplace than ever,” continues Fallon. “A bad decision can have wide-ranging impact across the whole organisation and no business can afford to waste time and resources on bets that may or may not come off. As the business environment increases in complexity, the ability to not just react, but predict, in real-time, becomes more important than ever.”
Reinventing Your Digital Marketing Strategy Post-Covid
By Paige Arnof-Fenn, Founder & CEO Mavens & Moguls
I started a global branding and marketing firm 19 years ago. Marketing is a term that means different things to different people so it helps to clarify whether you are talking about market research, PR, social media, advertising, promotions, guerrilla marketing, strategy, analytics, SEO, SEM, B2B, B2C, content, etc. There are so many tools in the marketing toolkit today but I think it is redundant to say digital marketing because truly everything has a digital element since everyone is accessing and interacting with your brand online, through their phone or via the website at some point. In the old days there was print, TV, radio, direct mail and outdoor those were your only options but today technology runs our lives so everything is digital eventually. If digital is not part of your strategy then you would not be relevant so digital marketing is marketing in 2020.
As far as digital goes I am a big fan of SEO, social media especially LinkedIn and Content Marketing. Because we are always online now 24/7 it is easy to get sucked into it but you do not have to let it run your life! My advice is to pick a few things you enjoy doing and do them really well. You cannot be everywhere all the time so choose high impact activities that work for you and play to your strengths. It does not matter which platform you choose just pick one or 2 that are authentic to you. It should look and sound like you and the brand you have built. Whether yours is polished or more informal, chatty or academic, humorous or snarky, it is a way for your personality to come through. Everyone is not going to like you or hire you but for the ones who would be a great fit for you make sure they feel and keep a connection and give them a reason to remember you so that when they need your help they think of you first.
There have been a lot of changes in the past few months due to the virus crisis but one thing that has not changed is that smart technology still runs our lives today and it is hard to stay on top of the latest tools and platforms to take advantage of current trends so you may feel lost, confused or frustrated by all the options and noise in the market today. There will be new tools and technologies coming for sure but here are some digital strategies to include in your plans to grow your audience:
* Smart speakers and voice search are growing in importance so being able to optimize for voice search will be key to maximize the marketing and advertising opportunities on Siri, Alexa, Google Home, etc. I predict that the brands that perfect the “branded skill” with more customer-friendly, less invasive ads are going to win big. Are you prepared when customers ask your specific brand for help like “Alexa ask Nestle for an oatmeal cookie recipe” or “What is the best Mexican restaurant in Boston?” if not you are missing a big opportunity!
* Live video grabs attention – live streaming is available on every major social media platform and it is only getting bigger to hook in users with short attention spans, in a mobile first world, you have less time to grab people, attention spans are shorter than ever so video will be used even more, show don’t tell for maximum impact, rich content drives engagement.
* Interactive marketing makes it stickier — brands will drive engagement even more with polls, surveys, quizzes, contests, interactive videos, etc. to grab audience attention even quicker
* AI-powered chatbots cut costs and convert visitors into leads by encouraging themed content to answer FAQs with voice search-friendly semantic keyword phrases, is your content strategy ready?
* More confidence in trusted content, friends and influencers than advertising – the world has been moving this way for years with people seeking their friends’ and influencers’ opinions and advice online on what to buy, where to go, and what to do more than a paid ad or fancily packaged content. Customers are savvy today they are happy to buy what they want and need but they do not like to be sold things. Curated content and ideas from a trusted source beat paid content every time. Partnering and building relationships with the right influencers with content that is co-created helps brands scale and grow faster and amplify and boost their message.
* Authentic relationships beat marketing automation — technology runs our lives more than ever but it is relationships that drive business and commerce so people will find more ways to connect in-person to build trust and strengthen connections. Make sure you offer several ways to talk with them and get to know them. Algorithms can only tell you so much about a customer, transactions are driven by relationships. Use automation where you can but do not ignore the power of the personal touch.
* Big data is getting bigger but customer conversations are key to best insights for content. Talking directly to your customers to get first-hand in real-time their experience and knowledge will be a priority and competitive advantage to get the messages right.
* Content will match the buyer’s journey and understanding that journey will inform how to attract, engage and convert customers and which keywords and topics are used.
* Influencers will continue to rise in prominence so partnering and building relationships with the right influencers with content that is co-created helps brands scale and grow faster and amplify and boost their message.
Banking beyond the office
By Tim Hood is the Associate Vice President for Hyland in EMEA.
Following months of unprecedented challenges, the global financial community is beginning to get a sense of COVID’s long-term legacy. And while the current situation still has some way to run, the prospect of a rapid bounce back to the old normality looks doubtful.
Over the last six months, a wholesale review and reinvention of a raft of working practices has taken place.
Fortunately, the financial sector was able to adapt relatively quickly to this altered reality because compared to some, it was well down the path to digital transformation.
And as the work-around solutions using technology that was never intended or designed for remote working have been refined or replaced, many firms are finding that these new ways of working are actually working well.
That’s evidenced by the fact that ‘return to office’ dates keep rolling back, with a number of institutions not expecting staff to return to the office until the beginning of 2021, at the earliest.
However, the social distancing measures that remain in place will undoubtedly continue to have a major impact on the traditional office space. With almost half of British workers now working from home according to the Office for National Statistics, how many will want to return to the office, having been free of their daily commute for the last six months? In a recent survey by the Centre for Economics and Business Research (CEBR), one-third said they wanted to continue working from home.
And as homeworking protocols become ever more embedded, that could see many functions where remote oversight is possible, never return permanently or totally to a central office.
So, with homeworking seemingly here to stay, for a large number of organisations the new norm is likely to be a blend of remote and office-based working.
In uncertain times, one of the most critical business skills is the ability to adapt. Just because we have always done things that way is no longer a valid line of thinking. So, when it comes to matters like remote working, it’s time for a more flexible mindset.
Some banking leaders are beginning to acknowledge the changing reality. Barclays CEO Jes Staley said that corporate offices “may be a thing of the past.” JPMorgan, Goldman Sachs and Morgan Stanley are also proving to be trend-setters in the reassessing the future shape of offices and flexible working.
Of course, effective remote working depends on people having access to accurate, up-to-date information.
That may require reprioritising investment to ensure more appropriate technology solutions are in place. Believe me when I say that accelerating digital transformation is no mere nicety, but a prerequisite for corporate survival over the coming months and years.
Of course, every organisation is different and will have to review its existing systems and procedures before implementing any major technological changes. But I would say that there are several core components required to help ensure future resilience.
As a minimum, there should be the establishment of a content services hub to centralise document storage and workflows in a single location, with a user interface that’s consistent – whether you are logging on from your dining table at home or at your office desk.
This will remove potential information silos where data gets stuck, and also prevent the creation of multiple document versions that inevitably follows.
Next, look to introduce intelligent automation where you can, to accelerate improvements in document storage and workflows.
Then, look at shutting down any redundant or unnecessary systems and applications. This is an opportunity to streamline operations by ensuring business-critical information, which may be spread over several dozen apps in some corporate organisations, is uniformly updated and easily accessible. When staff have to search for important documents across multiple locations, they end up frustrated and prone to making mistakes that result in delays and poor customer service.
Though the immediate response to COVID-19 may have had a short-term adverse effect on many in the financial sector, longer-term it can be the catalyst that enables the creation of a truly digital workplace that seamlessly melds together a flexible, distributed workforce with a much streamlined corporate space.
Achieving that will require organisations to carefully chose the correct technology solutions. If they can do that, then our brave new world may not be so scary after all.
Board Report Highlights Complex Decision-Making Process Across Banking and Finance sector
‘The State Of Decision-Making’ report from Board, reveals business decisions made in silos without modern planning tools A third (33%)...
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