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The Credit Services Association (CSA)
Blog: Technology and innovation in credit and collections: ‘Early adoption’ isn’t always the best approach
Steve Preston, co-Founder of cloud-based analytics provider elanev, is an experienced credit risk and collections professional. He is chairing sessions on ‘the evolution of cybercrime’ and ‘blockchain technology’ at the upcoming UK Credit & Collections Conference (UKCCC) 2018.
With an extensive career in collection strategy and recoveries, I am passionate about utilising technology, data scoring analytics, and better working practices to help organisations deliver an outstanding customer journey that is aligned to their risk appetite and corporate identity, and makes a difference to the bottom line. But I also know that to make the best use of new technologies, we need to get past the ‘smoke and mirrors’ and the idea that ‘early adoption’ is always necessary or beneficial.
There is no doubt that technology is rapidly changing the business landscape of the credit and collections sector and will continue to do so in the future. However, often technology is developed before customers and businesses are ready to fully adopt them. The pace at which technology is incorporated into mainstream processes depends largely on the appetite for the consumer to embrace the technology. One such example is Open Banking which became statutory law in January 2018. So far, none of the major clearing banks has incorporated Open Banking data into their main decisioning and assessment processes. It remains to be seen whether customers want to provide collections firms with such a granular view of their data, and if businesses are able to incorporate this data into their assessment and decisioning processes. After all, the Open Banking data provides a historical and current assessment of financial transactions; it does not include all products (such as credit cards) nor does it allow for the customer to present their ’near future’ circumstances.
Technology also only works as well as it is configured and aligned to the risk appetite of each user. Careful consideration needs to be given to the overall business impact and business case of deployment. For example, if an automated chat-bot can successfully process 99% of customer journeys, then there is still 1% which will require manual interaction. Under the ’three lines of defence’ model, this could mean that such technology leads to a channel of communication that is protracted, more expensive, and has a higher conduct risk than a telephone call.
Another key consideration is that new technology could potentially increase fraud and regulatory risks as it is typically now being rolled out faster than the regulations and fraud detection system enhancements.
The aim of the Technology and Innovation stream at the CSA’s UK Credit & Collections Conference 2018 will be to give delegates a clear picture of which technologies currently exist, which are relevant, which are being adopted by originators/customers, and what the potential risks are. We will also be looking at the next big catalysts for change in the short, medium, and long term and what firms can do to prepare for them. This roadmap for the future is one that needs to be fully considered. For example, there are exciting new developments such as blockchain technology which may not yet be practical but will revolutionise the credit and collections industry when they are ready to be implemented in the right way.
I look forward to delving into some of these issues more deeply at the Conference on 13 September 2018. See the full programme here: http://ukccc.csa-uk.com