Online Collections Solutions: Morphing to Intelligent Interactive Cardholder Servicing

NEW RESEARCH REPORT BY MERCATOR ADVISORY GROUP

This report examines the fast-emerging solutions segment for online collections in the credit card industry. These applications are internet-based solutions offering a differentiated environment for delinquent cardholders to self-cure their delinquency based on full payment, partial payment and a promise to pay over a mutually agreed time period, or through a negotiated settlement. A variety of solution approaches are available that meet these criteria, as well as providing interfaces to live collectors and the established collections workflow.

• In the current credit environment, concerns about credit card portfolio risk and collections performance raise the importance of new collections solutions.
• Conservatively, 11 million credit card account holders per year might naturally be serviced through these solutions.
• Only about one third of the top 20 issuers have an online collections solution, a situation that appears to be rapidly changing.
• Accountholder communications is a key success factor in driving online collections success. Typically, issuers have email addresses for fewer than one in five accountholders, driving reliance on other communication channels such as automated voice messaging.
• Leading providers offer quickly-implemented collections and communications solutions that can be customized to an issuer' s portfolio and workflow needs. Solutions from Apollo Enterprise Solutions, Debt Resolve, Inc., Global Collections Solutions, Online Resources Corporation, and SoundBite Communications are described.

Ken Paterson, Director of the Credit Advisory Service at Mercator Advisory Group and the author of the report comments, “In today' s declining credit quality environment, credit card issuers are more motivated than ever to make incremental, if not quantum improvements in their collections tools and practices. If a current cardholder can manage other aspects of their card relationship online, why shouldn' t a delinquent customer be able to do the same - especially if that is the preferred, most effective channel to interact with that cardholder?”