Texting is the most effective way to reach delinquent consumers, but, like all communication methods used in debt collection, it’s not easy to comply with regulations.
What does Jesse Bird, Chief Technology Officer at TCN recommend?
In a word, flexibility.
Some collections departments are “really rigid” in the way they want to use texting, but, according to Bird, “[u]ltimately, it may not work that way.”
“Texting is possible,” says Bird, “but the carriers are the gatekeepers currently. If they are unsatisfied with your policies, your procedures, your controls, your consent management or any of those things, they will ask you to make changes. If you don't make the changes, you're not going to get your messages through.”
What else does Bird recommend when it comes to collections contact strategies?
1 – Identify small wins and take them
Many companies in the ARM space want to embrace technology, but it can be complicated to identify how the technology can be integrated into a collections strategy. Bird says: “[collections departments] shouldn’t neglect things like AI or generative or ChatGPT or machine learning. [They] shouldn't, but [they] have to see how [those technologies] fit into their overall strategy in easy ways first.” He adds: “24-hour payments available via phone, via text, via portal, or data processing automation or agency efficiency tools for agents or these sorts of things,” are all small wins.
2 – Advocate for clearer regulation
It’s a longer game, but Bird says it will be important that the industry “demonstrates that these messages are wanted, allowed, and legal and they're being unfairly targeted.” It’s no secret: consumers prefer to deal with most business matters via text. Collections business is no different. The industry must make that clear to the regulators.
If you're interested in how to get involved in advocating for the ARM industry, check out the Consumer Relations Consortium.
3 – Get a good partner
The ARM industry is a complicated one. Bird recommends finding a partner who can help navigate the regulations and help you decide how to integrate technology to make your business better.
Listen to our Executive Q&A with Jesse Bird from TCN, or read the full text below.
Hello everyone. I'm here with an episode of Executive Q&A. I'm Erin Kerr, Director of Content for Collections and Recovery, brought to you by Auriemma Roundtables, and I'm joined today by Jesse Bird, CTO at TCN. Jesse, can you give us a quick introduction?
Sure. I'm the Chief Technology Officer at TCN. TCN is the contact center of choice for a lot of collections agencies. We have been doing collections work in the ARM space since 1999, almost essentially since we were founded. We’ve been around since 1999, and I've been part of the company since 1999. I've got kind of a long history working in contact centers, especially with dialers and in issues related specifically to what's going on in the ARM world. I try to keep up on this sort of stuff, so I'm happy to be here and spend some time with you.
It's great to be with you, Jesse. I always love our conversations. I’m going to just jump in. What do you think is the biggest challenge the ARM industry is currently facing?
It seems currently there's a mix between a few issues that are front and center regularly. The first one is the new regulatory environment. It's not really the traditional regulatory environment. I'm sure we'll talk about that a little bit. The second one is the migration to digital channels for contact and payment strategies. And the third one is the adoption of new technologies faster and faster. All three of these things I think are pretty intimately related.
Okay. Can you go into why you feel that those are the biggest challenges?
I think it's clear that a lot of customers prefer digital first options for their communications, right? Table stakes with a contact center is a great voice game. You have to do inbound; you have to do outbound, and you have to dial. A lot of times you have to have predictive AI. All of that is the table stakes. And now, [collections agencies] are expected to implement digital channels and [understand] how that integrates with the workflows. There is SMS, email, self-serve portals, chat, and that's just the starting point for how digital engagement should go and how it should work. Each one of these digital channels comes with their own challenges and their own difficulties.
Looking at SMS for starters, SMS is not regulated by the FCC [the same way that] voice [channels are]. Voice is under Title II communication, which is a pretty heavy-handed regulation. SMS is regulated under Title I of the Communications Act. [Title I] is a light touch framework. The endpoint of that is the carriers have a lot of latitude in how they manage their traffic and how they terminate messages on their network. This essentially means that carriers can allow or disallow traffic based on their own rules, their own analytics, and their own understanding of what may or may not be wanted by their end users. Along with that, they've also created some strict rules. They call them the SHAFT categories.
SHAFT means sex, hate, alcohol, firearms, tobacco, cannabis, gambling, affiliate marketing, and high-risk financial services. I have tried to make sense of that acronym. I've not really been super successful. But what that means is they've put blanket bans on those types of services. Unfortunately for the industry, while application to person text messaging is generally allowed, the carriers have been aggressive at bundling collections messaging content into high-risk financial services.
When [collections agencies] want to engage with the carriers, [there are a lot] of rules. They have registration that you need to do, they want you to register your brand, they want you to demonstrate compliance. They want you to demonstrate consent. These are not insurmountable challenges, but they're challenging, right? That’s how the new regulatory environment is starting to emerge: do no harm.
If you do harm, the government's going to come after you. The carriers are being proactive. That’s a totally different approach than saying: “my policies, procedures, and controls are good. And if the government comes and looks, they have them.”
Now, it's proactive. I need to demonstrate my policies, procedures, and controls, and the person I'm demonstrating them to is not the government, it’s a third-party big brother. It’s a totally new way that people have to think about how they're going to start, in particular for SMS. The second thing is there's also some interplay between the CFPB and the FCC.
The FCC is the body that's overseeing communications and regulations generally. In this instance, especially around digital communications, they're a little bit at loggerheads, right? The CFPB has encouraged, and even given safe harbor, to types of digital communications, and it seems clear under those rules that [agencies] can manage consent by opt out, and that should be allowed. There are ways to engage with people and they've given good and specific guidelines, but the FCC via the light touch approach has really fostered a much more rigid stance. There is a complicated regulatory environment, and essentially the much more rigid stance seems to be what's carrying the day, at least around SMS.
When you look at other digital channels like email, there are some challenges around getting messages delivered and around dealing with the big three email providers. You have to learn how to contend with how they might mark and label your emails. You have to set up your SPF, your DKIM, your DMAR, some of the technical things that need to be done in order to get your emails through. As agencies start to develop digital communication channels, it's important that you have some expertise in-house or a really good partner.
The last challenge is adopting new technology. There are some overhanging questions as [agencies] adopt new technology that they are wrestling with: AI, work from home options, how the interplay between the government works, how are they are going to manage the costs because new technology costs a lot.
As we've started to develop AI solutions, I‘ve had a few conversations with people where their eyes get a little big once they realize how expensive some of these solutions are. TCN has always thought about how we are going to democratize this technology, make it affordable and available. We're doing a really good job with that with some aspects of AI, but it's difficult, especially for some agencies that are running on tight margins to figure out. They think: I need to adopt this. I also need to manage the costs. Then they have to think about how they are going to manage productivity. That's a long-winded way of saying there are a lot of challenges, but the biggest one are regulatory, digital channels, new technology, and I think that they're all basically related.
Absolutely. To your point about cost: that upfront cost seems really high. It's really difficult for a lot of agencies to stomach, but at the end of the day, if you don't adopt some of these tools, it won't really matter because you probably aren't going to get any market share. There are cost savings to down the road. Thanks for breaking all that down. Now that we've outlined those challenges, are there ways of getting around those challenges?
One of the things that I say internally from time to time is: you invest or you die. You move ahead or you die. If you stop moving, you die eventually. There are ways to get around these challenges.
My opinion, and this may be a little bit biased, is that first you need to have a good partner. There is a lot of deep knowledge and expertise around the way to handle some of these challenges. You should find a partner that is both committed and invested in the ARM space and knows the industry. Because this industry is not like a lot of other industries, so find somebody that's willing to put up time, money, and effort into understanding these issues and the best way to navigate the challenges.
TCN has been there. We spend a lot of time, money, and effort making sure that we can help people navigate these challenges. We spend a lot of effort interacting with the FCC, interacting with the CFPB, participating in the rulemaking so that we can advocate on the industry's behalf. It's one of the things that we feel sets TCN apart from others in the industry. It’s clear that there are probably some players that aren't interested in some of these challenges as much, and some are even stepping away. We’re not, that's our focus. We're going to help the ARM industry navigate the rules. We're going to advocate at the Federal level, and we've been implementing solutions that work around all of these challenges.
The next thing to get around it is you have to be flexible. I have talked with some agencies that are really rigid in what they want to do, and they have a really clear idea of what they want to do and how it should work. Ultimately, it may not work that way. You may get similar results, but you may not get it done exactly the way that you want it to do. We spent a bunch of time earlier in this conversation talking about texting. Texting is possible, but the carriers are the gatekeepers currently. If they are unsatisfied with your policies, your procedures, your controls, your consent management or any of those things, they will ask you to make changes. If you don't make the changes, you're not going to get your messages through. Agencies have understand how to do that. They have to be flexible and work with them because they are basically the gatekeepers. They are the de facto standard. There are only three [carriers] in United States, you have T-Mobile, ATT, and Verizon. [They are] all running very similar rules that cover more than 98% of all cell phones in America. You have to play by the rules. The FCC has essentially set them up so that they can make the rules. Be flexible.
The second is, especially in the last 12 months, technology has come fast. There have been a lot of cool proofs of concept. ChatGPT and Generative AI has been groundbreaking. For some, there is a desire to reach for the neatest and greatest and best thing. I believe that it's important that [agencies] take the easy wins first. I talk to quite a few agencies, and I've talked to several recently that are looking for some of this [new technology]. They want to put generative AI in their contact center immediately. They think that's going to be the thing. And you start talking to them about their processes and their policies, their procedures, their controls, the things that they're doing now, and [there are quite a few] things that they can grab that are easy, that aren't going to be as expensive and that are right in front of them.
Even if it's as simple as having 24-hour payments available via phone, via text, via portal, or data processing automation or agency efficiency tools for agents or these sorts of things.
[The agencies] may be running down the street after a hundred-dollar bill and forget that they have about a hundred dollars in their pocket. They need to stop and count what they have. Not to diminish the importance of these technologies, because these technologies are really important. What I’m saying is they can’t implement them all at once.
I advise my own IT staff to do this as we were picking features: pick the easy wins, take them, and then do the next thing, and then do the next thing. You may have heard of a guy, and his name is Simon Sinek, he's like a business consultant, right?
He says a lot of times businesspeople forget this: we are not playing a game to win or lose. We’re playing an infinite game. The most important thing is that you're still playing tomorrow.
Sometimes, if you don't take the easy win, you're not going to play tomorrow. I don’t want to diminish how important it; you shouldn’t neglect things like AI or generative or ChatGPT or machine learning. You shouldn't, but you have to see how they fit into your overall strategy in easy ways first. Make it part of your ongoing plans for improvement. Don’t jump right to the end game. You need a consistent plan on how you're going to improve every day, how you're going to get better every day.
This is also a place where I think most agencies would be well-served to have a good partner. TCN has been investing in our AI capabilities. We've been investing in our machine learning capabilities, especially targeted towards the ARM space. We've done a lot with analytics, conversation analytics. We're doing quite a bit trying to improve our bot automation. We’re also doing quite a bit with workforce management and agency efficiency tools. Find a partner that's implementing these things that get you a lot of easy wins with AI without having to do a lot.
Absolutely. I know that [TCN] is deeply involved in a lot of that stuff, and you're obviously involved in our Consumer Relations Consortium, which is doing advocacy on behalf of agencies with those regulators. I agree; it's important for agencies to be strategic especially now, as we're not seeing that forward flow that we thought we would see, and the margins are getting thinner. For a minute, I just want to focus on texting specifically because that’s a huge deal [for agencies]. I want to ask you, what do you see on the horizon in terms of making it easier for collection agencies to text consumers?
I’m not super keen that it's going to get easier in the very near term. I think we're going to have to continue to work with the carriers and be flexible and find the types of campaigns that they're going to allow and work on that. It's possible. There has been an industry-wide ongoing challenge around texting, and it is possible, but you've got to be flexible. The carriers require that you demonstrate consent and that you show them the types of campaigns that you're sending. If you do that, you're going to get your messages out. If you're inflexible in what you send and the messages exactly that you want to send, you probably won't get your messages out. And we've helped dozens of agencies set up can texting campaigns and get their messages out consistently. If you follow the current best practices, and are willing to be flexible, it will happen.
I believe it will continue to get a bit more challenging before it begins to swing the other way. I believe that the only way that it's going to swing the other way is if the industry mobilizes and advocates for some change in the FCC. I think that that's going to be important that [the industry] demonstrates that these messages are wanted, allowed, and legal and they're being unfairly targeted. We have had some conversations that I think are going to be beneficial to that end. I think that's how the pendulum will begin to swing. If we can demonstrate some harm that's going on in a way that resonates with the regulators. If we do that it will start to swing back.
TCN has been active on this front. We do quite a bit of work trying to make sure that we are involved in the rulemaking and engaging with regulators as much as possible. I think that in time, the, the rules will find a way that agencies can work through. I liken this back to when everyone got really frightened about the auto dialer definitions.
There are a lot of solutions that people were starting to come up with around manual calling and human intervention on some of the calls. They’ve eventually found a path that the industry could walk through reasonably.
That makes sense. Part of the Consumer Relations Consortium's mission this year was to engage with the FCC around this specifically. [TCN] was part of those conversations they're ongoing, but I agree, I think advocacy is the industry's best bet to try to get texting to be accepted by the carriers. Well thank you so much, Jesse, for answering all my questions. I’ll turn it over to you for the closing and final thoughts for the audience.
Thank you for your time as well. I enjoy engaging about these sorts of things. As the industry moves forward it may start to seem like there is a lot to grapple with. If you have a good partner, you're going to be able to continue to improve. That’s one of the things that we say: we're going to make sure that we bring the best of breed contact center for the ARM space to bear, for the industry, for customers of all size.
I think with some creativity and some persistence, it's possible and likely to thrive in the current environment, even as you're having to bring on more digital channels, even as you're having to grasp and wrestle with new types of communications, and even as you're asking to make sense of how you're going to walk through the regulatory landmines that are ahead of you. I appreciate the opportunity to talk about all of that.
Thank you again so much for your time today, and thanks everyone for tuning in to this episode of Executive Q&A. I'm Erin Kerr with Collections and Recovery. This is Jesse Bird with TCN. Thanks so much, Jesse, and have a great rest of your day.