FICO Survey Finds Rise in UK First-Time Delinquencies
UK businesses are dealing with a sharp rise in late payments, coupled with slow adoption of technology to manage collections and recovery, according to a new report by FICO and Marketforce. In this survey of over 180 UK executives with responsibility for debt collection and recovery, six out of 10 respondents reported rising levels of non-payment in the past 12 months. For public sector organisations, this number rises to eight out of 10. Almost two-thirds (65 per cent) reported an increase in the number of debtors experiencing delinquency for the first time.
Despite the increase in collections queues, UK collectors representing financial services, utilities and water companies, telecoms providers, public sector organisations and debt collection agencies said that they are not using data and technology to their full advantage. Fully 87 per cent agree that a lack of historical data on the behaviour of debtors experiencing delinquency for the first time makes it vital to analyse other types of information to predict behaviour.
However, 81 per cent are not analysing data from payday lenders, an early warning system of financial distress, and 74 per cent have no plans to use the potentially valuable data held in social network profiles and social media sites. Furthermore, 44 per cent are not analysing recordings of calls collectors have with debtors, 28 per cent are not analysing call centre notes and 22 per cent are not analysing correspondence from the debtor.
“Too many UK organisations have a collections and recovery strategy that is stuck in the pre-digital age,” said Nick Walsh, director of Global Business Consulting for collections at FICO. “This could prove costly, as a better customer experience can lead to higher recoveries and, as personal circumstances improve, win repeat business. An effective collections and recovery strategy is fundamental to not only limiting losses but also retaining indebted customers, and to be truly effective that strategy must be personalised, real-time and mobile.”