Now halfway through the year, the collections industry should expect the early changes in 2018 to continue, according to industry experts. New regulations, new technologies, and customer demands promise to pull collections agents in many directions. According to collections insiders on Fico Blog, debt collectors should anticipate the remainder of the year to be one of continued high pressure.
ECB guidelines on NPL management will continue to change the debt-purchase and debt-collection infrastructures across Europe. As a result, collections professionals will spend much of their time adapting to changes. This commitment of resources will increase the risk of falling behind on regulations requirements, as well as delinquency rates.
In addition, the International Finance Reporting Standard (IFRS) 9 is expected to increase workloads. The IFRS 9 made changes to classification and measurement of financial instruments, impairment of financial assets, and hedge accounting. These changes, coupled with the increased volume of accounts serviced by debt purchase companies, have made debt collectors busier than ever.
Demand for faster and lower threshold credit lines have given way to more defaults and higher workloads for the collections industry. Additionally, rising interest rates, increased utilization of food banks, and persistent indebtedness levels have yielded higher default rates so far. As more borrowers face higher payments and prioritize budgets around paying for essentials rather than paying off debt, collectors will likely confront increased resistance to collection efforts and more inability to pay.
Debt Collection Software
Technological innovations are a silver lining to stressed debt collectors, as explained by BusinessWire. As expected, greater collections activity has driven demand for upgraded collections software. Integrated debt collection software provides the most help in easing the volume burden and improving debt-collection effectiveness.
Debt collection mobile apps provide significant convenience for both collectors and debtors. For debtors, they make payments and debt payment scheduling much easier. Collectors, in turn, have benefited from a reduced number of phone calls that result in no contact.
The role of analytics should continue to increase as software makes data easier to analyze. When agencies can hone in on the most effective approaches, their account recovery rates increase. Data collection also helps management determine the most effective use of collectors’ time, which eases the burden of work hours by scrapping inefficient activities.
2018 has been a busy year in the collections industry. Collectors have felt more pressure, but they have also had plenty of work. Technological changes will help them remain current and increase productivity.