Predictive Analytics – Taking Your Collections Team From Hero to Superhero Today’s collection team faces a more complex and challenging landscape than ever before. To empower your collections department to increase engagement, build loyalty, and maximize payments you need a technology infrastructure that supports efficiency through automation, and smarter decisions through predictive analytics. To take your collections team from hero to superhero we’ll take a look at actionable ways predictive analytics, supported by technology, can help create more efficient and effective collections strategies that reduce delinquency times, lower write-offs, and minimize loan loss reserves.
1. Proactively Predict Delinquencies
When financial services organizations plan their collections strategies it’s common for collections plays to focus on catching accounts early into the delinquency. They rely on collections teams being able to react quickly to delinquent accounts to help control write offs. Working with delinquent accounts early is essential for the success of all businesses, but by reacting to problems rather than predicting and preventing default issues, financial organizations are missing an opportunity to support clients who are showing the early risk behaviors that lead to missed payments. Ever-evolving technology has opened up the opportunity for financial services organizations to actively monitor accounts for early warning triggers that could signal impending financial trouble, such as increasing line usage, changing payment behavior, decreasing credit scores, decreasing income, etc. Predictive models can be deployed to determine which combination of factors most often lead to customers entering the collections process. Using batch, real-time, or hybrid processing methods, organizations can identify risk early on by using predictive risk scores to show which accounts are most at risk. This allows teams to work with customers and provide resources, such as financial health education or access to auto- enroll tools, to help clients make payments more reliably. By proactively working to reduce the number of customers who enter collections, a business can reduce the collateral needed for loan loss reserves, lower the strain on collections teams, and improve overall efficiency.
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