Challenged to do more in a difficult environment
In the midst of an economic crisis, a major Italian consumer financing company, Consum.it, needed an overhaul of its approach to collections in order to improve collections performance while also lowering costs.
"The management of collection processes has been traditionally an area of excellence within our organization" explained Andrea Poletto, General Manager of Consum.it. "However, at a certain point in our continuous search for improvement of performance and efficiency, we faced infrastructure limitations and operational inflexibilities which were difficult to synchronize with our objective of credit adjustments and cost optimization for the operation of collection process, generated by the dynamics of the changing economy".
Where to start?"In collaboration with CRIF we analyzed and re-engineered our debt collection processes including a complete review of the organization of teams involved", continued Poletto, "and a thorough identification of the existing procedures and tools and benchmarking our own performance to those of the industry. This led to the recognition of improvements both in the short-term (quick wins with low investment and minor technological impact), as well on strategic choices developed over a medium-term by using advanced technology".
The analysis showed that the level of the overdue amount and loan installment related to late payments were significant variables affecting the collection performance of external collection agencies. "Collection rates with a medium-high value were more or less in line with those of our leading competitors", explained Poletto, "meanwhile on the lower end of the scale, we were affected by a skewed selection of collectors facing a variety of loans and favoring the accounts with higher value at the expense of smaller ones".
Need for an innovative, customer-centric approach
“What's more, the growing number of customers with multiple lines of credit caused a change at the management level, with a shift from valuation processes and tools focused on the individual 'account' to segmentation and operational workflows designed to apply on the customer as a whole, due to the 'dragging' effect of the loan with the most serious default on the other payable practices of the same borrower for the purpose of credit valuation adjustments, together with the potential synergies that can be achieved in terms of cost and effective communication by aggregating the variety of loans".
This represented a real shift in the model we were using, leading to innovate the collection management from various perspectives, both on strategic-valuation and operational-organizational level; from the implementation of two distinct process chains based on customer value (big and small ticket) to the introduction of new KPI indicators for collection agencies, more in line with the financial impact for Consum.it”.
An important change which could not have been achieved by using the existing technological platform.
This represented a real shift in the model we were using, leading to innovate the collection management from various perspectives, both on strategic-valuation and operational-organizational level; from the implementation of two distinct process chains based on customer value (big and small ticket) to the introduction of new KPI indicators for collection agencies, more in line with the financial impact for Consum.it”.
An important change which could not have been achieved by using the existing technological platform.
CRIF’s CLever, a strategic lever to enable debt collection performance improvement
According to Poletto, "We chose CLever, CRIF’s debt collection management solution, because it fully meets the requirements identified during the re-engineering process including:
- customer-centric management
- flexibility in implementing new segmentation rules and behavioral scorecards
- simulation and testing of process changes under ‘controlled conditions’ through champion-challenger tools
- and performance monitoring reports integrated in the solution.
This integrated solution is allowing us to expand into paralegal management which is a project under-way.”
Key benefits
- Complete integration with the core servicing system
- Better customer management, with greater flexibility and support of outsourcing
- Flexible use of the acceleration clause to boost collection on small ticket cases
- End-to-end management of the allocation process to external collection agencies, from the creation of batches to the calculation of commission.
Collections performance results achieved
"The roll-out of the new processes and collection management philosophy led to greater consistency in the activities of Consum.it and its external partners", concluded Poletto, "enabling us to take advantage of synergies in the operating cost plan and establishing a virtuous circle which starts from the analysis of monitoring the KPIs produced by the strategic reporting and moving to the periodic recalibration of strategies, that brought continuous improvement in collection rates and positive impact on provisioning".
Today CLever is used on daily basis by more than 30 collection agencies, many involved in different types of processing, with a total of more than 300,000 collections cases processed up to now for a portfolio of 700,000 customers, with more than 2,400 accounts managed by external collectors, and with more than 140 million euros collected across the various phases.
CLever is CRIF’s debt collection solution, available to lenders and energy, utilities, telco and media firms to achieve efficient and complete management of collection processes. The solution offers an advanced support for a proactive and efficient management of the entire collection cycle, through the automation and control of all its phases: from the analysis of the data to the segmentation, from the processing of the strategies to the implementation of the actions up to the monitoring of the obtained results.
"The roll-out of the new processes and collection management philosophy led to greater consistency in the activities of Consum.it and its external partners", concluded Poletto, "enabling us to take advantage of synergies in the operating cost plan and establishing a virtuous circle which starts from the analysis of monitoring the KPIs produced by the strategic reporting and moving to the periodic recalibration of strategies, that brought continuous improvement in collection rates and positive impact on provisioning".
Today CLever is used on daily basis by more than 30 collection agencies, many involved in different types of processing, with a total of more than 300,000 collections cases processed up to now for a portfolio of 700,000 customers, with more than 2,400 accounts managed by external collectors, and with more than 140 million euros collected across the various phases.
CLever is CRIF’s debt collection solution, available to lenders and energy, utilities, telco and media firms to achieve efficient and complete management of collection processes. The solution offers an advanced support for a proactive and efficient management of the entire collection cycle, through the automation and control of all its phases: from the analysis of the data to the segmentation, from the processing of the strategies to the implementation of the actions up to the monitoring of the obtained results.
For more information please contact: info@crifdecisionsolutions.com
