Collections and recoveries can often hinder business and damage ROI. Using a managed service can reduce this burden and lead to more effective strategies.
Managed services bring significant security benefits to collection and recovery (collections and recoveries) processes. In doing so, they reduce reputational risk while enhancing the relationship between financial institutions and their customers.
Imagine an organisation that has many retail and business customers; a utility or telecoms provider, for example. It is likely that a proportion of its customer accounts will be past due at any moment in time and so its collections and recoveries process must be permanently engaged in stemming potential losses. Its concerns will be to protect not only its financial performance but also its brand reputation.
However, for such businesses collections and recoveries will probably always be a secondary consideration. First and foremost, they will be in the business of delivering their services to their customers, which will therefore account for the bulk of their investment in systems, processes, people and time.
Improving collections and recoveries with better technologies
Many businesses maintain their customer data on their own systems and servers. These may be old legacy systems, patched up from time to time to address operational, regulatory and security issues that have arisen.
Financial institutions will always be exposed to risks of downtime, inadequate, mismatched, incompatible or out of date customer data and vulnerable to cyber attack. They may also fail to sufficiently invest in expert staff and staff training, which exposes their business to further inefficiencies and even lack of competence.
Yet the demands of regulation, greater efficiency and improved financial performance as compared with some of their peers, are now leading them to consider using a managed service approach to their collections and recoveries process. This gives institutions access to specialists and more up-to-date technologies.
The benefits of managed services
A rival organisation already using such an approach, perhaps also incorporating software as a service (SaaS), enjoys a number of significant advantages. Its spending on servers and continual updates, upgrades and patches to them has been substantially curtailed. Its data is now held in the cloud by a specialist organisation whose sole business focus is secure data hosting.
Their technology will be state of the art and superior. Their economies of scale will facilitate reduced cost to their customers. Security will be of the highest order, not least because of the regulatory requirements placed on them for FCA certification, for example for the UK, and also their ISO27001 accreditation, which many customer facing utility firms will not have. Services will be seamless and continuous because they will be able to instantaneously switch between several data sites should a need arise.
Moreover, in terms of the collections and recoveries operation itself, whether this is retained in-house or entirely sourced from outside providers, the benefits that up-to-date technology and processes are demonstrable. Multiple levels of authentication significantly increase security.
Where collections and recoveries services are sourced from managed service providers (MSP), in addition to the technology platform, staff will be highly competent specialists drawn from across the collections and recoveries market with high levels of training and experience.
A business that employs a managed service has the ability not only to protect its reputation but also to enhance it. It can evidence three lines of defence, firstly that, whether it retains its collections and recoveries operation internally or outsources it, it has strong operational controls. Second, it will have the ability to produce high levels of management reporting to those in the management structure who require it. Thirdly, an independent internal audit operation will be able to access high quality data and report to the board and management of the organisation when required.
Christian Jacob, Qualco UK’s managing director, summarises the security benefits provided by a managed service approach:“Debt holders need a highly resilient, scalable and available system. It will always be available and always be available to their collection agents to work on as well. This means you end up with a much more robust, secure environment, which ultimately is a key piece of the collections and recoveries puzzle… Furthermore, organisations are able to enhance their brand and reinforce their reputation because they provide consistently optimal levels of security and efficiency to their customers.”
Legacy systems and processes can be expensive and insufficiently secure.
Managed services provide higher levels of security.
MSPs are specialists in data security and have the economies of scale to invest in state of the art technology.
Using an MSP therefore lowers investment costs and delivers better security outcomes.
MSPs deliver services that are robust, continuous and scalable.
The result is that a debt holder gains superior levels of security, efficiency and financial performance which in turn serves to enhance its reputation.
Our Blueprint outlines how you can benefit from a smarter strategy for your collections and recovery operations. Download The Debt Portfolio Blueprint: How data can ensure better governance, compliance, and credit management to treat customers more fairly and ethically.