Banks can improve debt collections with tailored communications



Consumer debts are a growing problem in the UK. The Financial Conduct Authority (FCA) sounded the alarm in July 2017 when it revealed that approximately one in six people with consumer credit debt are in moderate to severe ‘financial distress’. Although lending slowed in November, the Bank of England reported that the amount of consumer debt nationally had risen to more than £205bn.

With high debt levels pushing more consumers into collections, banks and their collection agencies need to push hard to get back what is due. But their success may be hampered by their communication techniques. Our recent survey of 415 UK adult consumers reveals that banks are not always contacting customers in the ways they would prefer, potentially impacting their collections performance.

Improving communications

Based on the survey’s findings, there are a number of ways banks can improve communications with customers.

UK consumers want to receive a greater proportion of late payment reminders via text message and mobile app notifications than they currently do. Thirty-one percent of respondents said their credit grantors are still sending these reminders through the post, making it the most-used channel. However, only 14 percent preferred traditional letters. Instead, text messages came out as the favoured choice at 42 percent, followed by email at 23 percent.

Notifying delinquent customers through mobile app notifications has yet to take off, with only 5 percent of customers receiving late payment messages through this platform. As mobile-only banking continues to become more popular, it is inevitable that established banks will adopt a mobile-driven approach.

When asked what would make them most likely to respond to a debt repayment reminder, 48 percent of respondents said they would do so if the collection message is friendly, helpful and is delivered through a trusted source.

This is more than twice the number of people that said they would respond because they were contacted directly by a bank employee (22 percent) and four times those that would respond because their lender reduced or restructured their debt (12 percent). Tone and phrasing is critically important, and is key to improved collections performance.

According to the survey results, websites and online portals were the preferred channels for making debt repayments – they were chosen by 30 percent of consumers over phone calls and mobile apps, which were a distant second (18 percent) and third (17 percent), respectively. In addition, an overwhelming 76 percent would rather pay by direct transfer or debit card than via credit card (10 percent) or PayPal (11 percent).

Recently, the ubiquity and popularity of social media has given rise to talk about its potential use in the collections process. Among the UK survey respondents, 94 percent said they use social media regularly, with Facebook, Facebook Messenger and Instagram the most popular social platforms.

However, two-thirds of respondents said they would be “not at all be comfortable” with late payment reminders showing up in any of these channels. Banks looking to diversify their communications channels with delinquent customers should not be prioritising outreach via social media.

Improving collections performance: the next steps

A key takeaway of the survey findings is the spread of opinions contained within it. There is no one best way to communicate with delinquent customers. Different people have different preferences, and they expect lenders to know that and treat them as individuals. Making data-driven decisions can help banks understand customer contact preferences and thus improve both the efficiency and effectiveness of the collections customer contact process.

Delivering tailored messaging with analytics

In practical terms, what do data-driven communication strategies look like? In analysing existing data, improvements in both the customer experience and the collections performance can be delivered by: (i) varying the tone of the voice or SMS message being delivered by segment, risk or even number of times the customer has been in arrears; (ii) increasing the likelihood of contact with the customer by identifying previous successful contact methods and timings; (iii) using SMS to signpost to customers that they will be receiving a call from the bank at a particular time; and (iv) ensuring access to a ‘live’ agent for those customers with the highest risk of non-payment.

Best practices

Besides drawing on analytics, there are five other best practices that can help banks streamline their communications with delinquent customers: (i) make early contact on late payments; (ii) avoid bombarding delinquent customers with payment messages; (iii) design automated channels that are conversational to get the best response rates; (iv) have all popular channels of communication as options customers can choose from; and (v) have an ongoing feedback loop to ensure that strategies keep pace with current regulations.

Above all, banks should remember that the channels customers prefer are those that are most likely to generate results. Although having tailored communications channels is the first step to improving collections performance, banks also need to prioritise maintaining a frictionless customer experience during the collections process. Ultimately, this is the key to differentiating your business and creating opportunity from risk.


Russell Robinson is the managing director of CCS EMEA at FICO. He can be contacted by email at

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Russell Robinson


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