Collections Industry Sees Significant Split Between Large and Small Firms’ Investments in Customer Contact Channels
07 Dezember 2022 - 2:00PM
More than one in three (37%) collections firms are now using
text/SMS messaging — a modest increase from last year when 31% were
utilizing this communications channel with consumers. A different
story emerges when broken out by large firms (100k or more
accounts) and small firms (fewer than 100k accounts). While more
than half (56%) of large firms now utilize text/SMS messaging, only
17% of small firms have adopted the channel.
The findings were revealed today in the fourth annual industry
report by TransUnion (NYSE: TRU) and Aite-Novarica,
“Charting the Course and Steering Toward Success: The
Collections Industry in 2022.” The report examines overall
collections industry trends, challenges and opportunities and is
informed by a survey of 140 third-party debt collection
professionals conducted in Q2 and Q3 2022.
The report found that large firms continue to invest in
solutions that create efficiencies within their compliance efforts
for the Consumer Financial Protection Bureau’s Regulation F
requirements. Meanwhile, small firms, likely constrained by
budgets, are lagging this trend.
“The slow adoption of texting and SMS messaging was somewhat
surprising, given the limitations Reg F placed on outbound calling
and American consumers’ clear preference for text as a
communications channel,” said Jason Klotch, vice president of
third-party collections in TransUnion’s diversified markets
business. “In general, the success of companies in this space will
be dependent upon their adoption of digital solutions that create
efficiencies and cost savings.”
Despite slower momentum in adoption of digital solutions, the
industry appears to recognize the importance of utilizing new
solutions and approaches. Overall, 34% of companies plan to add
text/SMS messaging—among other tools—to their communications
channels within the next two years. Again, this looks different
when broken out by firm sizes. Larger firms appear poised to
accommodate consumers’ preferences for communications channels, as
well as their desire for on-demand, self-service capabilities.
Top
Communications Investments Over The Next Two Years |
|
Text/SMS Messaging |
Automated Communications Using Artificial
Intelligence |
Chatbot or Digital Assistant |
Large Firms(100k+ Accounts) |
34% |
44% |
34% |
Small Firms(<100k
Accounts) |
40% |
7% |
12% |
Machine-learning on the horizonFurther down the
list of priorities are machine-learning technologies. Currently,
31% of large firms are using an in-house or outsourced
machine-learning solution, while 45% are considering one or the
other. This tool will likely grow in popularity as the supply of
data scientists improves, the technology is further developed, and
regulation surrounding its use is shored up.
The primary reasons companies want these solutions are the
ability to predict the communication channel most likely to get a
consumer’s response; evaluate an account’s past activities to
prescribe a next course of action; and to answer inbounds and take
the consumer as far as possible.
“Right now less than a quarter of the collections industry is
using some type of machine-learning solution, which makes sense
because it’s a considerable investment,” said Klotch. “However,
given this technology’s ability to help firms maximize efficiency
and increase revenue, we’ll likely see it become an essential tool
in the near future.”
A changing workforceIn line with this focus on
new technology and solutions, collections firms indicate resources
will shift accordingly. The survey found 55% agree or strongly
agree that they plan to invest in agentless contact strategies,
such as chatbots and text messaging. Relatedly, 53% agree or
strongly agree that consolidation and technology innovation will
lead to fewer jobs in the collections industry over the next
year.
While the cause is not clear, nearly 80% of respondents agreed
or strongly agreed that hiring is much harder than it was two years
ago. A small silver lining: slightly less (67%) agreed or strongly
agreed that retention is much harder than it was two years ago.
“This report really demonstrates a sea change as the industry
evolves to meet regulators’ demands and consumers’ preferences.
Larger firms will be able to more broadly leverage emerging
technologies that reduce their reliance on direct contact by
collections agents, while smaller firms will need to judiciously
choose solutions that best augment their strengths for right-party
contacts,” concluded Klotch.
About the reportInsights on the challenges,
trends, and innovations occurring in the third-party collections
industry are informed by a quantitative survey of 140 third-party
debt collection professionals conducted late Q2 and early Q3 2022.
Survey results are representative of the market at a 95% confidence
interval with an 8-point margin of error. Any differences noted
between survey respondents, such as breakouts by company size,
collection footprint, or changes in year-over-year survey results,
are significant at an 85% confidence interval. This is the fourth
annual survey of the third-party collections industry conducted by
TransUnion and Aite-Novarica Group. The full report
is available here.
About Aite-Novarica GroupAite-Novarica Group is
an advisory firm providing mission-critical insights on technology,
regulations, strategy, and operations to hundreds of banks,
insurers, payments providers, and investment firms—as well as the
technology and service providers that support them. Comprising
former senior technology, strategy, and operations executives as
well as experienced researchers and consultants, our experts
provide actionable advice to our client base, leveraging deep
insights developed via our extensive network of clients and other
industry contacts. Visit us on the web and connect with
us on Twitter and LinkedIn.
About TransUnion (NYSE: TRU)TransUnion is a
global information and insights company that makes trust possible
in the modern economy. We do this by providing an
actionable picture of each person so they can be reliably
represented in the marketplace. As a result, businesses and
consumers can transact with confidence and achieve great things. We
call this Information for Good®.
A leading presence in more than 30 countries across five
continents, TransUnion provides solutions that help create economic
opportunity, great experiences and personal empowerment for
hundreds of millions of
people.http://www.transunion.com/business
Contact |
Dave
Blumberg |
|
TransUnion |
|
|
E-mail |
david.blumberg@transunion.com |
|
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Telephone |
312-972-6646 |
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