Digital self-service collections has become a new frontier for financial institutions in the age of COVID. But could there be downsides to moving a traditionally high-touch, human process online?
Consumers still prefer agents?
Recently, as part of our COVID 19 Financial Health Check, we had the opportunity to ask consumers a bit about their preferences when it comes to resolving their late payments. Our findings align with what others have observed. Online channels yield much higher payment rates, as shown in the findings from a McKinsey study presented below. Our sample (representative of the US population) mirrored this finding: 49.25% of consumers said they are likely to answer a collections e-mail. By comparison, 36% of consumers said they are likely to answer a phone call.
However, one piece of data from our respondents (participants in the COVID 19 Financial Health Check) surprised us.
We asked consumers to imagine they missed a payment. Would they prefer to speak to a customer service rep about their options, or to review these options via a website or account portal? Surprisingly, we found that consumers generally preferred speaking to a human.
This flies in the face of the common wisdom that digital channels are inherently more effective—a view that has become axiomatic in the industry. The truth is while more efficient and perhaps convenient, self-service portals are also less human.
Why consumers might prefer speaking with humans
Industry literature regularly uses words like “embarrassing” and “anxiety inducing” to describe collections phone calls. While these may be true for some consumers, speaking to a live collections agent may provide some benefits for other consumers.
When they speak with an agent, late payers can:
- plead their case and perhaps catch a break, such as having a fee forgiven
- ask unlimited questions about resolution options and their consequences
- gauge how much the institution cares about them.
The person-to-person collections process holds tremendous potential. The question becomes: how can we take the best aspects of a collections phone call, and marry that with our more efficient digital tools?
This question, and the overall goal to make collections processes more human, is not just about protecting brand reputation. In an industry that still relies heavily on aggression and repetition, it is easy to forget about the immediate value of a soft touch. But the data speaks for itself.
A 2018 McKinsey study found, for instance, that 20% of respondents withheld a payment after having an upsetting call with a collector. The study explains that when consumers feel a lack of agency they are more likely to exhibit reactance, or the tendency to rebel against a perceived authority. In this case, consumers who had negative interactions with collectors exhibited reactance by withholding payments.
Even though many organizations have built efficient self-service functionalities in collections, the most sophisticated lenders are taking those tools to the next level. They want to achieve efficiency by scaling the empathy an operator can demonstrate. This task is not just about achieving effective email cadences or serving up best next actions. It’s about the content that populates these and the tone we use to deliver them.
This is where we come in.
When we built our our collections tool, BackOnTrack, we set out to replicate the experience of talking to a kind friend about a tough situation. In fact, well before McKinsey’s findings on the role of agency in collections, we designed questions and interactions that affirmed the user and reminded them of their power and their agency. We ask consumers, for instance, to describe why they missed their payment in their own words. Through short videos and interactions, we remind consumers that everyone misses payments– what counts is how we react.
Asking the right questions, developing the right messaging, and interpreting consumers’ overall mood is worth its weight in gold (or in the case of BackOnTrack, at least $11 million for every new billion dollars entering early stage collections.) Doing it well also requires the expertise of behaviorists and creative product leaders.
BackOnTrack takes the work out of humanizing your self-service portal or even your more traditional collections workflow, getting more late payers to engage and providing them a better experience—at a relatively low cost.
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