The past 20 years have been an incredible ride, growing and positioning QUALCO as a technology leader in the debt management industry, closing new partnerships and working on expanding the company to new markets. In this interview, Miltos Georgantzis, CEO and founding partner of QUALCO, gives the answers to questions about the situation in the European debt market.
What is the status of Europe’s debt market?
Even though the non-performing loan (NPL) stock of the European banks has been officially reduced, those portfolios have shifted from the banking industry to investors and specialised servicers. In practice this means debt portfolios are decreased – not because debtors have repaid their debts directly to the bank, but because those portfolios have changed hands and are now worked out by non-banking organisations that are more flexible and more efficient.
The decrease in NPLs has been achieved partly thanks to regulatory pressure, but portfolio sales also play a significant role in European banks’ deleveraging activities. The NPL stock in Europe is still high, however, with banking sectors in certain countries andindividual banks being particularly exposed. The market for distressed debt through specialised loan servicing speeds up NPL resolution and allows greater flexibility while investors contribute crucial skills and capital to the process of workout and restructuring. These different players are part of QUALCO’s client environment and that gives us, as technology providers, sharp insight into the needs of this expanding market.
While the stock of NPLs is falling the opportunities are growing. Why is that?
Banking debt seems to be shrinking but as market share shifts to investors and specialised servicers opportunities are still high. Such organizations are quite lean and have less cyclicality, leading to a much faster work-out speed and thus bigger workloads. On top of that there is a market segment of non-banking debt portfolios coming from alternative lenders and utilities who outsource the administration of performing and non-performing portfolios.
All these factors bring us to an era of expansion into overall receivables management, the complexity of which requires best-in-class enterprise technology combined with advanced analytics capabilities. QUALCO, with more that 20 years of experience in the field, is uniquely positioned through its unified product offering, that caters to the needs of this large and diverse market.
The combination of increasing globalization, multi-country operations and the rise of organisations that combine debt purchasing, debt collection and servicing of loans are bringing fundamental changes by fueling consolidation. But even though operations tend to be multinational, the collections industry is still very local in terms of regulation, best practices and culture. We are entering an era where the integration of state-of-the-art technology, and the operational implications of regulatory compliance, are accelerating the transformation of the sector, and we are proud to say that QUALCO acts as the backbone that supports a number of the biggest global players in the sector.
What does the collection industry look like in an age that leverages modern technology and Big Data?
In our experience, enterprise-class collections technology has the ability to transform results. In this context our clients are much more demanding than they have been in the past. Strong adherence to regulatory guidelines, enhanced customer experience, the single borrower view, real-time reporting, behavioral mapping and operations automation now tend to be standard requirements.
Every collection situation is different, so modern software must be customised to meet individual needs, and combined with big data and advanced analytics it can radically improve collection rates and drive the successful rehabilitation of customers.
Do you have any advice for the NPL industry?
Collections practices have changed significantly in the past decade, with increasing recognition that the fair treatment of customers, especially those in financial difficulty, is crucial, which is set to continue and spread to emerging markets. Banking and non-banking organisations must ensure they are equipped to deal with customers, especially those in arrears, who are experiencing financial distress. Advanced technology is a great enabler when it comes to treating customers fairly.
What’s the biggest product problem you’re trying to solve? How aligned are your offerings to market demand?
At QUALCO we put client performance at the centre of what we do. We provide solutions that futureproof their business performance and act as their best consultants. Our capabilities and resources are arranged to support the client’s purpose.
We are proud to offer a full- service debt-management software environment that meets global reach requirements, seamlessly adjusts to local behaviours, practices and regulations, and enhances efficiency and consistency, with a strong IT and AI backbone.
What has been your biggest challenge so far as a business?
Like any business QUALCO has come up against challenges. The biggest concern is maintaining flexibility while increasing ac- countability to the client. I strongly believe the real force behind success is rooted in our collective ability as a company to adapt, and to realise that our value chain is only as strong as its weakest link. The fact that we started as a local company that is now able to compete with some of the bigger brands in the marketplace is giving us great drive for the future.
What is the role of the company culture at QUALCO?
Developing software is all about enabling a large and diverse group of talented people to work closely together, united behind a shared vision. Our strong spirit of team- work and collaboration has remained unchanged throughout our more than 20-year journey. We also realised early on that to compete against much larger companies means adapting, in- novating and acting at pace. These are the defining traits of QUALCO’s culture which, together with our singular focus on becoming the leader in the NPL software space, will fuel our growth in the years to come.