Author: Jerry Mulle
What financial organisation can do to help customers with debt management
During December, millions of Brits flocked to their favourite online stores to shop for Christmas and take advantage of “Cyber-Monday” sales. Spending in the UK totalled £720m and Amazon reported average sales of 64 items a second, making it the most successful e-commerce day in history.
Christmas spending and recovery strategies
The Christmas shopping frenzy meant consumers will have racked up almost £5bn of debt over the festive season, with one in ten expecting to run into debt of more than £750 in order to fund Christmas*. So, what can financial organisations do to help their customers manage this debt and ensure they recover as much of it as possible?
According to analytics firm FICO, a successful and effective collections and recovery strategy must be “personalised, real-time and mobile”.
Managing debt online
Our findings definitely support this: 38 per cent of people find current debt collection strategies, such as phone calls and threatening letters, “very distressing”. In fact, a third of people say they would rather manage their debt online in order to view current debt levels, and to identify and plan when this money can be paid back without the pressure of being hounded by calls and letters.
It’s clear online debt management and recovery systems benefit both the customer and the provider. For the customer, digital tools offer a far less intrusive way of managing debt. They also increase visibility of it and provide additional flexibility over methods and timings of repayments.
Debt collection and visibility
For financial service providers on the other hand, these types of platforms offer a significantly lower cost of recovery. Giving the customer better visibility of debt online and at their discretion reduces the number of chaser calls providers and debt collection agencies need to make. It also means customers are more likely to pay back their debts, thereby increasing the amount which will be recovered.
Christmas is a financially challenging time for many people and our research shows current outdated debt collection tactics aren’t helping to alleviate the stress of the holiday season. Allowing banking customers to manage their debt online provides a much less stressful option that enables people to repay their debt in the way which suits them best.
*According to recent research by Intelligent Environments – online survey of 2,000 UK consumers in November 2014