The credit clock is ticking along toward full-blown crisis, if it isn't already there. The table is set for technology firms looking to win business from creditors who are hungry for new debt collection and management solutions.
One of the early movers is Online Resources, which is partnering with Fair Isaac to make its Web-based collections tool available to hundreds of collection agencies and debt buyers via Fair Isaac's ScoreNet network.
The partnership will allow ScoreNet users to access an Internet connection product while providing an easier exchange of account data between the two firms. ScoreNet is one of the largest communications platforms in the collection industry and provides managed access between more than 1,300 creditors and third-party business providers. The two firms' connection links all parties in the debt collection chain.
Online Resources' suite includes its Virtual Collection Agent, a 24/7 web product that works to reduce losses from delinquent consumers accounts and CollectPay, an integrated online payment service that increases consumer options while lowering processing costs. "Online Resources provides us with a rules-based decisioning point, where a debtor can set up a payment, or set up frequencies of payment," says Jerry Arehart, client partner of business services for Fair Isaac, which counts the market's 100 largest credit issuers among its client-base. The idea is that centralizing will increase collections plus increase adoption of lower-cost automated channels among debtors.
Online Resources' Virtual Collection Agent has been available for two years, and is used by five of the largest 25 card issuers in the U.S. The firm says that according to the product's past performance record, a client with $50 million in delinquent outstandings showed a loss reduction improvement of 310 basis points, or an annualized savings of about $3.1 million.
Another user, a national collection agency, experienced liquidation rates of three times greater than the portfolio average compared to traditional collection methods. And that user's Website visitors also paid at a rate four times greater than the average. Additionally, debtors that use the Web to "self-cure" their delinquent status had a 57 percent higher balance than users of other collection methods. Almost half of the Web site users had never been contacted manually and two-thirds were "late stage" accounts. The firm believes the partnership with Fair Isaac will be of particular benefit for subprime lenders, since many of these lenders do not have right-party contacts for their delinquent accounts, and thus rely on self-use channels such as the Internet.
The collecting of overdue and delinquent bills may be the one time that most people prefer the impersonal anonymity of the Internet to a one-on-one personal customer service session.
Beyond its function as a collector of delinquent debts, the systems works like a CRM system. Debtors log-in to a creditor's Website, identify themselves though an account number and are able to access information that's commonly sent through a collection letter or phone call. "You can see what strategies have been deployed for your account, such as an offer to pay over a set number of periods or if offers were made to you at a discount," says Bob Craig, evp and general manager of the electronic commerce unit at Online Resources. "There's a great opportunity for people to cut their debt and settle obligations, as well as negotiate those obligations, in a remote channel that's depersonalized," Craig says. "There's a fair number of folks that prefer that kind of independent interaction."
(c) 2007
