The Use of Data Within Collections

Using data in the collections cycle

By Beth Whelan, Head of Debt Services Products

The power of data to drive competitive advantage in all stages of the customer lifecycle is widely understood; however, data quality is often worse the further it travels downstream in the customer lifecycle, as it has to pass through multiple systems before reaching the point of collection.

At TDX Group we see our clients, across all sectors, facing similar challenges within their collections function around financial performance, operational complexity due to regulatory requirements and cost challenges. In addition to these challenges, the organisations are trying to continuously improve customer experience and protect their brand reputation.

Leading the way

Businesses who effectively use data and analytics to predict the likelihood of debt recovery and can model the most appropriate and cost effective strategy will resolve customer accounts more quickly and deliver an improved net return.

The leaders in the debt collection space will undoubtedly be those who use a vast and rich pool of data from many kinds of internal and third party sources in order to develop their recovery models and strategies. These data sources could include customer demographics, previous collection and account activity, geographic data, financial profile and risk ratings which, when combined, drive powerful insight and deliver a better picture of the customer profile.  For example, advanced models can be used to determine the most valuable accounts to focus collection efforts on, the best contact channel, preferred sequence of communications and ideal timings for each customer or segment of customers to maximise right party contact rates to improve financial performance and minimise costs.

By integrating analytics into the collections function itself, and by creating a feedback loop to capture customer outcome data, businesses can ensure they quickly identify and adapt to deliver strategy changes that not only optimise performance but also improve outcomes for customers. This feedback loop can also be a great way to show outcome and decision information to demonstrate that they are treating customers fairly.

Improving customer experience

If a business understands the customer’s situation and presents it effectively to the collection agent they can drive better customer conversations and outcomes that are more realistic and sustainable. Not having a clear and accurate view of the customer’s profile can put a collection agent at a disadvantage and may result in a poor customer experience during what is often a difficult and stressful time.

Many businesses struggle to create a single customer view as data is held on different systems and different products are managed across different departments that work in silos. Within the utility sector, for example, a customer who has left a debt at one property may still be a customer at another property but these accounts may be seen and treated as two different customers in two separate processes.

For the utility sector specifically, there is the additional challenge of occupier debt, an instance where a party can consume services without registering their account or officially becoming a customer. This happens when a new person moves into a property and there’s a period of time where the utility provider doesn’t know who’s the occupier, making it difficult to know who's liable for any services used or debt accrued. Using data to trace and track customers can deliver a better service for both previous and new occupiers as well as reducing the need for recovery processes, saving business resources.

A rich single customer view along with verified up-to-date customer information is the foundation of creating a good customer experience and can be key to protecting vulnerable customers. A better understanding of the customer’s situation enables collection agents to setup more sustainable payment arrangements that are based on a more realistic and complete picture of the individual’s situation. 

Gathering up-to-date information can be difficult and sometimes time-consuming but technology solutions are available. Open Banking, for example, adds transaction data into the collections process and has the potential to deliver more accurate information and significant time saving benefits for both the customer and collection agent as it enables the part population of income and expenditure statements.

Barriers to fully utilising data in collections

Technology has a critical part to play in the evolution of data driven and smarter decision making to improve and personalise customer experiences, however, it does come with an investment price tag, which can be challenging with overall cost pressures.

Businesses who rely on out-of-date legacy systems may be unable to fully realise the benefits of data and analytics as they are unable to effectively integrate them within the collection strategy or have difficulty in pulling together data from multiple systems. Collection functions who invest in data, technology and analytics, whether internally or through an outsourced third party could find that they can meet today’s and tomorrow’s challenges, increase their margins and improve overall customer experience.


Beth Whelan, TDX Group
Beth Whelan, Head of Debt Services Products.