Collection Tech Vendors See Slow Down Continuing

The first half of 2008 marked the continuation of the credit crunch, increasing delinquencies and chargeoffs and a weakening economy. How does the second half of the year look? InsideARM spoke with several industry executives to get their take on the economy and the receivables business. This article, which examines the views of call center technology industry executives, is one of a series of articles looking at the next six months.

“We think that the economic trends that we saw in the first half will continue in the second half of the year,” said Brian Moore, executive director of executive solutions for Seattle-based Varolli Corp., a hosted communications services provider. “We will continue to see an increased use of hosted services among lenders, creditors and [collection agencies].”

Moore also expects to see an increased use of analytics as collection firms seek to maximize their collections by going after those accounts expected to provide the best results. Analytics will help firms be more effective in deciding the accounts to pursue as both the number of accounts rise, and the value of balances increase.

“Collectors have to be able to isolate those customers that need temporary assistance to get them through a difficult time,” Moore said. “I don’t think the consumer is throwing in the towel. Many are amenable if you get to them early and offer them payment arrangements.”

The environment will be challenging for collectors, and some will exit the business, Moore predicted. Those that survive will be the ones that keep in close and early contact with the customers.

Darrin Bird, executive vice president of Global Connect in Mays Landing, N.J., also sees the economy slowing in the second half of the year. There should be recovery some time in 2009, but credit will likely remain tight until well into next year, said Bird. He expects the economy will weaken again before 2009 following the artificial lift now in the market due to the economic stimulus checks.

Therefore, collection firms will need to see how they can keep costs down while continuing to make increased contacts, not only for new accounts, but also for those debtors who will be looking to make smaller payments over a longer time period, Bird said. Collectors who can leverage technology can make more contacts with fewer people, providing better performance now and setting the company up for a future economic rebound.

“Once they leverage technology and the economy starts to turn around, recovery rates will increase,” Bird said. “They won’t get rid of [the technology].”