"Your money or your life."
That's the message people in debt hear when banks deploy the stereotypical collections process, often a hash of stern automated messages, threatening calls from live collections agents and excessive penalties. Anyone who has ever been owed money can empathize with the banks, but the perceived meanness of the procedures still costs the institutions the moral high ground.
BBVA Compass has another idea. The Birmingham, Ala., bank is using technology to create a "kinder, gentler" system that's also far more efficient and cost-effective. It has built a self-service website that delinquent borrowers and cardholders can use to ask for help, schedule a payment, or make a promise to pay (calling off the collections hounds for whatever time period the customer specifies).
"We began having conversations several years ago about how we could leverage convenience in terms of how the customer wants to interact with us," says Mark Tuggle, executive vice president and director of collection and recovery at BBVA Compass. "Sometimes banks make the mistake of building a process down to the customer. We felt the best approach would be to build it from the customer view."
Tuggle's team thought about how they would want to interact with a bank in the case of a delinquent account.
"Some customers would prefer to handle the transaction by going online and making a payment or making a promise that they'll make a payment at another time or schedule a time to talk to us," Tuggle says. "We built all of that into our Web Promises application."
Online, customers are directed to authenticate themselves, are shown the current status of any overdue accounts, asked to provide current contact information, and offered several options. They can make an ACH payment from any bank account, they can send the bank a note, they can make a promise to pay at a future date or they can ask to be called back at an appointed time.
The bankers originally expected that most of the users of the app would be early stage delinquent accounts, 15 to 30 days past due. But they're also seeing a fair amount of usage on more chronic delinquent accounts. "We are happy to see both," Tuggle says, although he would not share any usage numbers. Adoption is increasing, he says.
"Just because a customer is delinquent doesn't mean we don't value them," he says. "They're a customer like any other customer, we want to take care of their needs."
BBVA Compass built the customer interface for this application. The engine that takes the customer's input and feeds it in real time to the bank's collections system is software from CGI called Web Promises; CGI also provides the ACH interaction that enables payments to be made from the site. The system used by the bank's collections agents, CACS, is also a CGI product. The transactions are all real time, so if a customer promises to make a payment in two weeks, that information is immediately provided to the collections agent handling that account and the record shows that that customer should not be called until after that date, plus a few grace days.
The setup of the new site and integration with collections operations and ACH took about nine months.
"This had a fairly high level of difficulty, it was uncharted territory at the time, at least from a collections perspective," Tuggle says. There was also an authentication piece to be built in (the bank ended up extending software it uses elsewhere for fraud detection), to ensure the bank was talking to the right people, and it also took time to get signoff from the legal and compliance departments.
The bank has not yet seen a drop in delinquency or chargeoff rates from using this tool.
"We'll know more as usage rates increase," Tuggle says. "The true value is the efficiencies gained internally on the cost side. The more customers want self-help, we want them to have that capability to do that.
"Those customers that need personal assistance, we want to talk to see if we can help them. There's efficiency for us, but moreover for the customer there's the convenience piece. Some customers just want to make a payment and they don't want to talk to us. We want to facilitate that."
One benefit the bank is seeing: while regulations restrict the hours outbound collections calls can be made, the website operates 24/7.
The next step for this project is to add other pieces of multichannel contact. Text alerts, chat and loan portals for loan modification assistance are all being looked at. Some of this is constrained by the regulatory environment right now, he says.
"The whole idea of kinder, gentler collections is the right thing to do," Tuggle says. "There is a fair amount of regulation around how to interact with the customer. We think by providing communication channels for our customers that they are comfortable with, our results will be better. There's the old school and the new school, and we've signed up for the new school."