solutions to recover and collect from the consumer safari into consumer credit – october 2015 john...

SOLUTIONS TO RECOVER AND COLLECT FROM THE CONSUMER

SAFARI INTO CONSUMER CREDIT – OCTOBER 2015

John GardeHead: Collections and Recoveries Solutions

Work Wonders. © 2015 Principa Decisions (Pty) Ltd.

How fit for Purpose are we to influence the future?


The 5 ‘P’s’ – ‘’What Price Paradise?” Consider your Capability & Maturity Doing the Basics Brilliantly

- Pre-Delinquency & Risk Segmentation

- Treatments

- Campaign Management

- Intelligent Insights

From Good to Great- Data Consumption

Agenda


The 5 P’s: What Price Paradise?

Prevention (Pre Delinquency)

Prediction (Risk Segmentation)

Policy(Treatments)

Purify (Campaign

Management)

Pathology (Yields,

Penetration and Activation)

The 5 ‘‘P’s’’


Consider your Capability & Maturity

CMM

Strategy

People

Process

Tech

• Business Planning• Strategy Design• Analytics• Portfolio Yields• Reputation Risk• Policy Framework• Regulatory

Framework

• Leadership Competency

• Performance Management

• Role profiling• Capacity Planning• Reward

Management• Training

• Process Leadership• Audit Enterprise• Stakeholder Management• Productivity Management• Vendor Management• Cost Management• Management Information• Policy Groups• Dialler Optimisation

• Systems Architecture• Collections & Recovery

Workflow• Strategy Software


FollowerFails to exceed the

minimum capability and maturity standards in more than 50% of the

categories

Performance consistently does not

meet expectations and/or Performance does not fully meet

expectations

LeaderMeets the minimum

capability and maturity standards in more than 70% of the categories

Performance generally meets expectations and

occasionally exceeds expectations

VisionaryMeets the minimum

capability and maturity standards in more than 90% of the categories

Performance consistently exceeds

expectations

Consider your Capability & Maturity?


Consider your Capability & Maturity?

• No risk segmentation• Practitioner management

criteria unclear• No defined yield

expectations• Basic management

information• No business intelligence

to shape allocation and strategy

• Risk segmentation based on internal data

• Generic practitioner management criteria

• Yield rather than activation expectations understood.

• Basic regulatory and compliance framework

• Reputation risk policy• Generic contingency tariffs • Business allocation supported

by comparative performance reviews

• Good, insightful Management Information

• Defined propensity to pay based on internal and external data

• Practitioner panel supports concentration risk profile

• Clearly defined yield and activity metrics and consistently tested against industry benchmarks

• Yield outcomes and recovery strategies based on propensities to pay

• Robust framework for business allocation and withdrawal

• Economic Selling Point defined and implemented

• Tiered contingency tariffs to incentivise required yields

• Hybrid of recovery processes based on commercials

• Superior governance and reputation risk framework

• Optimum suite of MI

Follower Leader Visionary


Doing the Basics Brilliantly: Pre-delinquency & Risk Segmentation

Profile:

Requires a predictive capability across

all components of the delinquent life

cycle.

Below par collection and recovery

yields and is looking to create crisper

treatments in response to differing risk

profiles.

Requires newer generation scorecards

with more predictive risk variables.

Where existing risk scores are primarily

driven by internal behavioural

information only.

Variable Source ContributionPercentage of months where payment > 0 in the last 6 months

Client 0.128

Consecutive no change in delinquency in the last 12 months

Client 0.085

The number of open satisfactory trade lines that have been open for 24 months or more

Bureau 0.068

Ratio of overdue balances to monthly instalment on open trade lines

Bureau 0.053

Current delinquency level Client 0.050

Maximum consecutive decrease in balance in the last 6 months

Client 0.036

Maximum delinquency level in the last 12 months for trade lines that have been open less than 12 months

Bureau 0.031

PTP kept in the last 6 months as a %of PTP made in the last 6 months

Client 0.030

The number of times 1+ delinquent in the last 6 months across all trade lines

Bureau 0.011


Doing the Basics Brilliantly: Pre-delinquency & Risk Segmentation

Benefits:

Enhanced collection and recovery

yields.

Synergy between strategy and

tilted treatments.

Ability to obtain aspirational yields

in different risk segments of the

portfolio.

Variable Source Contribution

Percentage of months where payment > 0 in the last 6 months

Client 0.128

Consecutive no change in delinquency in the last 12 months

Client 0.085

The number of open satisfactory trade lines that have been open for 24 months or more

Bureau 0.068

Ratio of overdue balances to monthly instalment on open trade lines

Bureau 0.053

Current delinquency level Client 0.050

Maximum consecutive decrease in balance in the last 6 months

Client 0.036

Maximum delinquency level in the last 12 months for trade lines that have been open less than 12 months

Bureau 0.031

PTP kept in the last 6 months as a %of PTP made in the last 6 months

Client 0.030

The number of times 1+ delinquent in the last 6 months across all trade lines

Bureau 0.011


Low Medium HighGross Monthly Income Prediction 9 148 7 683 7 507 NLR Compuscan Score 637 609 601 CPA Monthly instalment 3 088 2 102 1 922 NLR Monthly instalment 1 929 2 095 2 212 Number of judgements L5 years 0.09 0.21 0.29 Value of judgements L5 years 1 404 2 749 3 686

Current delinquency level 0.2 2.2 2.9Percentage of months where payment > 0 L6m 57% 33% 10%Max. delq. L12 months (tradelines open < 12m) 1.6 5.7 7.5Consecutive no changes in delq. L12m 3.4 0.4 0.2No. of open curr. satisfactory tradelines open for 24m+ 2.9 1.4 1.0Ratio overdue bal. to monthly instal. on open tradelines 1.1 2.9 3.7Max. consecutive decrease in bal L6m 2.2 1.3 0.3PTP kept L6m as a % of PTP made L6m 11.9% 23.3% 12.2%No. of times 1+ delq L6m across all tradelines 1.9 5.7 6.3

Score

card

vari

able

sDoing the Basics Brilliantly: Pre-delinquency & Risk Segmentation


RehabilitationX – 60 Days

Repayment61 – 120 Days

ICURepayment150 Days

Recovery180 Days +

Defined Treatments

Defined Teams

Defined Handovers

Defined Metrics

Doing the Basics Brilliantly: TreatmentsBenefits:

Synergy between risk strategy and operational

execution.

Enhanced collection and recovery yields.

Reduced cost to collect and recover.

Optimised Dialler campaign management.

Profile:

Lack of synergy between collection and recovery strategy design and

operational execution.

Below par collections and recovery risk strategy and treatment performance.

Immature treatment frameworks that do not create a compelling ‘alternatives

to consequence’ pathway for defaulting clients.


Pre and Post Write Off Broken PTP Call Script 1 Pre and Post Write Off Broken PTP SMS Pre Write Off High Propensity Call Script 2 Pre Write Off (HP SMS 1) Post Write Off High Propensity Call Script 5 Post Write Off (HP SMS 2)

Key script points:

- Agent spoke to customer on <PTP Made Date>- Customer agreed to pay <PTP Amount> by <PTP Date>- Assisted customer by sending two PTP reminder SMS's- Remind the debtor that he/she has a history of failed repayment promises.If they didn't receive the SMS's confirm mobile number- Why did customer fail to honour the agreed payment?- What will the customer do to fix the problem and remind the debtor that there is a repayment or settlement option (wait for the customer to offer a solution)

What consequence options are available?

- If Status 4 and broken PTP - refer to credit score compromise, additional collection costs, that debtor will be listed at the credit bureau and the fact that debtor's other credit providers will be aware of the account status.- If Status 5 and broken PTP - refer to credit score compromise, additional collection costs, that debtor will be listed at the credit bureau and legal action will be considered to recover the outstanding amount.

Despite previous SMS's you have failed to pay <PTP Amount> by <PTP Date> on your <Brand> account. Call <ACS (External Debt Collector)> to prevent

further costs and legal action.

Account is in arrearsNumerous SMS's sent (give detail)Previous PTP's made (give detail)Why have they defaulted despite undertakings?Confirm contact details and stress it is customers responsibility to maintain contact details

Are they employed and confirm employment/source of income.

Consequences:Credit score compromise.Ability to access future credit.External Debt Collector costs for clients account.

Payment options:Repayment: Up to 3 months to settle in full.Settlement: Lump sum repayment (as per the NPV calculation) in full and final settlement.

Your <Brand> account is <Arrears> in arrears. You need to pay immediately to prevent your credit profile being compromised.



Consequences:Credit score compromise.Ability to access future credit.External Debt Collector costs for clients account.Credit Profile compromised and listed at the Bureau. Attorneys will be engaged if there is further default - cost for debtors account plus judgement and potential attachment of movebale or immovable property.Payment options:Repayment: Up to 4 months to settle in full.Settlement: Lump sum repayment (as per the NPV calculation) in full and final settlement.

No payment was received on your <Brand> account which is now in arrears. Pay <Arrears> tomorrow to avoid being handed over to an External Debt Collector.

Pre Write Off (HP SMS 3) Post Write Off (HP SMS 4)

Despite previous SMS your <Brand> account is <Arrears> in arrears. The credit bureau will be notified unless an immediate payment is received.

You have failed to respond to our SMS regarding your <Brand> account which is <Arrears> in arrears. Your account has been handed to an External Debt Collector -

costs for your account.

Pre Write Off (HP SMS 5) Post Write Off (HP SMS 6)

Despite previous SMS your <Brand> account is <Arrears> in arrears. The credit bureau has been notified. You must pay immediately to remove the

credit bureau notification.

You have failed to respond to calls and SMS’s regarding your <Brand> account which is <Arrears> in arrears. Your account has been identified for legal action and will be

handed accordingly to an Attorney - costs for your account.

Pre Write Off Medium Propensity Call Script 3 Pre Write Off (MP SMS 1) Post Write Off Medium Propensity Call Script 6 Post Write Off (MP SMS 2)



Consequences:Credit score compromise.Ability to access future credit.External Debt Collector costs for clients account.

Payment options:Repayment: Up to 6 months to settle in full.Settlement: Lump sum repayment (as per the NPV calculation) in full and final settlement.

Your <Brand> account is <Arrears> in arrears. You need to pay immediately to prevent your credit profile being compromised.



Consequences:Credit score compromise.Ability to access future credit.External Debt Collector costs for clients account.Credit Profile compromised and listed at the Bureau. Attorneys will be engaged if there is further default - cost for debtors account plus judgement and potential attachment of movebale or immovable property.Payment options:Repayment: Up to 8 months to settle in full.Settlement: Lump sum repayment (as per the NPV calculation) in full and final settlement.

No payment was received on your <Brand> account which is now in arrears. Pay <Arrears> tomorrow to avoid being handed over to an External Debt Collector.

Pre Write Off (MP SMS 3) Post Write Off (MP SMS 4)

Despite previous SMS your <Brand> account is <Arrears> in arrears. The credit bureau will be notified unless an immediate payment is received.

You have failed to respond to our SMS regarding your <Brand> account which is <Arrears> in arrears. Your account has been handed to an External Debt Collector -

costs for your account.

Pre Write Off (MP SMS 5) Post Write Off (MP SMS 6)

Despite previous SMS your <Brand> account is <Arrears> in arrears. The credit bureau has been notified. You must pay immediately to remove the

credit bureau notification.

You have failed to respond to calls and SMS’s regarding your <Brand> account which is <Arrears> in arrears. Your account has been identified for legal action and will be

handed accordingly to an Attorney - costs for your account.

Trace SMS

Your <Brand> account is now being traced using data from other credit providers. Call <ACS (External Debt Collector) to prevent legal action and further costs.

Pre Write Off Low Propensity Call Script 4 Pre Write Off (LP SMS 1)



Consequences:Credit score compromise.Ability to access future credit.External Debt Collector costs for clients account.Potential for Attorney Litigation, legal costs and judgement.Payment options:Repayment: Up to 9 months to settle in full.Settlement: Lump sum repayment (as per the NPV calculation) in full and final settlement.

Your <Brand> account is <Arrears> in arrears. Your account will be placed on record with the credit bureau profile being compromised.

PTP SMS 1

Confirmation that you have agreed to pay <PTP Amount> by <PTP Date> on your <Brand> account. Your account is being monitored to confirm payment.

Pre Write Off (LP SMS 2)

Despite previous SMS your <Brand> account is <Arrears> in arrears. The credit bureau has been notified. You need to make an immediate payment

to withdraw this notice.

PTP SMS 2

Reminder that you have agreed to pay <PTP Amount> by <PTP Date> on your <Brand> account. Your account is being monitored to confirm payment.

Pre Write Off (LP SMS 3)

Despite previous SMS your <Brand> account is <Arrears> in arrears. The credit bureau has been notified. Your account will be handed to an External

Debt Collector for collection - costs for your account.

PTP SMS 3

Thank for for your payment. You have taken the first step to rehabilitaing your account. If you maintain your agreed payments, we will remove your Credit Bureau notification.

HP/MP LETTER 1

Dear Mr/s (Customer Surname)

(Division) Account number: (account number) – IN ARREARS

(Division) advises that your account is currently R (amount) in arrears and that the last payment received from you was credited to the account on the (date).

As you will acknowledge, this is not the first time (Division) has had to discuss arrears on your account with you and unfortunately, unless we receive a payment of R (amount) by (date) we will instruct an Attorney to recover the outstanding balance as well as attachment of any assets you might own.

Not only could you lose important assets, your credit profile both with (Division) and the Credit Bureaus will be negatively impacted and you will not be able to raise credit for the foreseeable future. In addition your credit profile with your other credit providers will be negatively affected You also need to take note that these constant arrears are adding additional interest and costs to your outstanding balance.

(Division) requires that you repay R (amount) by (date) and should you fail to meet this repayment commitment, we will we will instruct an Attorney to proceed against you with immediate effect.

Yours faithfully

(Division)

PRE DELINQUENCY SCRIPTS & SMS

EARLY STAGE SCRIPTS, IVR &

SMS LATE STAGE SCRIPTS, SMS &

LETTERS

Doing the Basics Brilliantly: Treatments


CALENDAR MONTH

Campaign Description Treatments 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Broken PTPs

Accounts with broken PTP in effect

Calls CALL SCRIPT 1

SMS BROKEN SMS 1

High Propensity

to Pay

Pre Write-Off (Status 4 - 5)

Calls

CALL SCRIPT 2

SMS HP SMS 1 HP SMS 3 HP SMS 5

Medium Propensity

to Pay


Calls

CALL SCRIPT 3

SMS MP SMS 1 MP SMS 3 MP SMS 5

Low Propensity

to Pay


Calls

CALL SCRIPT 4

SMS LP SMS 1 LP SMS 2 LP SMS 3

High Propensity

to Pay

Post Write-Off (Status 6+)

Calls

CALL

SCRIPT 5


HP Letter 1

Medium Propensity

to Pay


Calls

CALL

SCRIPT 6


MP Letter 1

Pre - Trace All accounts that have not been

contacted during preview phase of

campaign

Calls

SMS TRACE SMS TRACE SMS TRACE SMS

In Effect PTPs

PTP Confirmation SMS PTP SMS 1

PTP Reminder SMS

PTP SMS 2

In Effect PTPs

PTP Acknowledgement

SMS

PTP SMS 3

Campaigns Treatments Timing Tone

Profile:

Declining collection and recovery yields.

Wanting to optimise strategy and

operational execution.

Wanting to link Dialler campaign effort

and potential yields.

Wanting to optimise capacity to work

those components of the portfolio

which will yield the best relationship in

terms of effort

Wanting to optimise the cost and

investment in telephony relative to

expected/required portfolio yields.

Doing the Basics Brilliantly: Campaign ManagementDialler Campaigns


Doing the Basics Brilliantly: Campaign Management

Benefits:

Enhanced collection and

recovery yields.

New Dialler Campaign

insights and reporting

platform.

Capability to maximise

effort/yield equation.

Knowing what accounts

to work and when to

stop working accounts

beyond a declining effort

threshold.

CALENDAR MONTH

Campaign Description Treatments 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Broken PTPs

Accounts with broken PTP in effect

Calls CALL SCRIPT 1

SMS BROKEN SMS 1

High Propensity

to Pay


Calls

CALL SCRIPT 2


Medium Propensity

to Pay


Calls

CALL SCRIPT 3


Low Propensity

to Pay


Calls

CALL SCRIPT 4

SMS LP SMS 1 LP SMS 2 LP SMS 3

High Propensity

to Pay


Calls

CALL

SCRIPT 5


HP Letter 1

Medium Propensity

to Pay


Calls

CALL

SCRIPT 6


MP Letter 1

Pre - Trace All accounts that have not been

contacted during preview phase of

campaign

Calls

SMS TRACE SMS TRACE SMS TRACE SMS

In Effect PTPs

PTP Confirmation SMS PTP SMS 1

PTP Reminder SMS

PTP SMS 2

In Effect PTPs

PTP Acknowledgement

SMS

PTP SMS 3

Campaigns Treatments Timing Tone

Dialler Campaigns


Portfolio Financial Tactical

• Portfolio size• Value (balance)• Volume

• Delinquency construct• Recency construct• Roll rates• Collections performance

• Amount collected• Payment as % of total

due• Policy groups

• Volume• Recovery performance

• Early warnings• Vintages• Risk classification• First payment defaulters

• Third party management• Value/volume per EDC• Recovery amount/rate

• Bad debt provision (balance sheet)

• Write-offs• Post write-off recoveries• Bad debt provision (income

statement charge)• EDC commissions paid• Total cost to collect R1

• Penetration (worked)/Activation (paid) stats

• % of accounts• % of payments

• Dialler performance• Total online time• Active time• Call intensity (calls per

account)• RPC rate (call/account

level)• PTP Rate

• PTP performance• Value/Volume due• Value/Volume kept rate

• Restructure performance• Value/volume of

restructures• 3M/6M performance

• Debit order tracking• SMS tracking• Trace statistics

Portfolio Financial TacticalDoing the Basics Brilliantly: Intelligent Insights


From Good to Great: Data Consumption

Credit Bureau 1

Credit Bureau 2

Credit Bureau 3

Other 3rd party

Collections Management System

Dialler

Internal Behavioural Data

• Dead/alive?• Married?• Home/business owner?• Paying elsewhere?• Income estimation?• Contact details?

• Collector actions• PTP data• Kept/broken promises• Special statuses• Legal data

• Campaign details• Telemetry data• Contact details• Productivity

• Payment history• Behavioural scores• Other products held• Customer details

Collection Leaders are making use of decision and data service hubs

These hubs are able to connect to 3rd parties, internal systems and able to store structured data

Many of these systems are used also in the originations and account management spaces too

Creates risk segmentation insights Propensity to roll and pay Right time to call Litigation warranted? Economic Outsource Point? Portfolio activation rates Portfolio penetration rates


Understand your current capability and maturity.

Confront dominant logic about this industry!

Develop a roadmap to ensure that the basic’s are done brilliantly.

Create a culture of ‘test and learn’.

If it moves, measure it!

Consider what will take your organisation from ‘good to great’.

Be prepared to make mistakes!

In Summation

THANK YOU!

John GardeHead: Collections and Recoveries Solutions

solutions to recover and collect from the consumer safari into consumer credit – october 2015 john...

Documents

principa decisions pty

predictive risk variables

strategy risk segmentation

existing risk scores

differing risk profiles

predictive capability

pswork wonders

capability maturitydoing