Debt Collecting Trends as a consequence of the Covid Pandemic

The value of non-performing loans in India is expected to increase exponentially which will force collections departments to improve their operations and stay on top of the latest debt overdues and accounts receivables. There has been a marked change in Consumer behavior especially as a result of lockdowns. Some examples include the adoption of digital banking methods rather than traditional banking channel.

Some banks have even recorded a marked increase in incoming calls, indicating that serving consumers through the digital mode on a large scale is more crucial than ever. Let's take a look at some of the emerging debt collection trends in 2021with a view to help your firm capitalize on these trends in days to come.

Second & Third Wave Inflation

In India, the spread of the second wave and the re-imposition of lockdown measures has stifled economic activity and mobility, delaying the country's recovery. We currently expect negative sequential economic activity to be restricted to the April-June quarter, with annual real GDP growth of 9% in the fiscal year ending March 2022 and 7.9% the following fiscal year.

Longer-term risks to India's economy would rise if the second wave of vaccinations continues at a lower pace than expected especially in semi urban and rural areas where vaccine availability is at its lowest as compared to urban areas.

This could wreak havoc on the economy by resulting in long-term job losses and business closures.

A bigger debt burden will arise from a slower than expected recovery due to the second wave and a fiscal deficit.

We estimate the virus's resurgence to result in income shortfall and a shift in spending to healthcare and virus response, compared to what the government had projected in February 2021. As a result, we now project a central government budget deficit of around 11.8 percent of GDP in fiscal 2021, up from our previous forecast of 10.8 percent and an estimated 14 percent in the fiscal year that ended in March 2021.

Contactless and self-service collections:

It's been a few years since the contactless revolution began. It's not surprising that it's having a big impact on collections right now.

Customers serving themselves can help collections departments be more productive, especially for low-complexity, high-volume operations (such as making a repayment).

Since the outbreak, the use of self-service channels has climbed by 20%, and this trend appears to be continuing.

For example, 13% of customers in Germany had enrolled for their bank's online self-service at the time of COVID-19, and the majority (80%) of them had given positive response. The self-service movement has also gained traction in the United States, the United Kingdom, and Italy.

When done correctly, self-service portals improve both the consumer and employee experience while also saving businesses time, money, and effort spent on the phone with customers. Self-service is certainly the more efficient alternative out of the two, with a claimed 45 percent of all call time being "dead air" (i.e., the consumer waiting for the agent to locate the appropriate piece of information).

• How to capitalize on this trend

1. Identify time-consuming, high-volume, low-complexity tasks. Is it truly necessary for customers to communicate with a human, or is there another option?
2. Create self-service portals to assist clients in resolving these difficulties on their own (such as repayment landing pages).
3. Request regular consumer feedback and act on their suggestions to make the experience as seamless as possible.

Digitisation And Changing Customer Behaviour

Throughout the world, millions of businesses have had to close their businesses physically.

This does not, however, imply that they had to cease operations entirely; rather, they had to relocate their operations online.

Although COVID-19 alone is not solely responsible for the rise of digital channels, it has undoubtedly accelerated their acceptance. In the future, 70% of European consumers intend to use digital services as much as they do now, if not more frequently.

Surprisingly, many study shows that the older generations have been the most enthusiastic about digital adoption, with a 37 percent increase in digital payments among those aged 61 to 65 and a 33 percent increase among those above 66.

This necessitates the digitization of collections. You're making it needlessly difficult for past-due clients to pay you back if you don't provide them with a digital method of maintaining, repaying, and questioning their outstanding debt.

• How to capitalize on this trend

1. If at all possible, its critical to make all of your services available through digital channels. Customers should never be forced to call an agent if they don't want to.

2. Make sure your digital platforms are "elder-friendly." When it comes to technology, don't assume that you know what you're doing. Make it as simple as possible to navigate your digital channels by providing clear directions.

3. Use digital platforms to reach out to an elder demographic segment (instead of merely targeting younger segments).

When it comes to collections, customer service can mean the difference between successfully recovering payments and spending weeks chasing down past-due clients. You'll shorten your repayment time, improve your repayment rates, and boost brand loyalty if you get it right.

Software and API integration are becoming increasingly important.

We are increasingly living in a world where remote access is the norm. Even after COVID-19, it is anticipated that a third of all work in Europe might be conducted fully remotely.

As a result, the collecting process must become digital—not just for customers, but also for staff. As a result, it is critical that you choose cloud-based collections management software that staff can access from anywhere. Working remotely on cloud based platforms offers flexibility that would otherwise not be available.

• How to capitalize on this trend

1. Choose a cloud-based collections management system that connects effectively with other apps.
2. Provide initial staff training to get them up to speed, as well as help manuals for easy reference and trouble shooting.

Increased debt, a growing reliance on digital media, and the emergence of a remote-first society have all occurred in the previous year. Consumers have had to modify their behavior, and businesses have had to follow suit in order to give the level of service that consumers have grown to demand.

There has been a lot of change, but one thing remains constant: The need to change. Collections departments who embrace these changes, will most surely triumph in future as these changes focus on technology making the processes more productive, efficient and seamless which is what customers have now grown to accept. One of the ways you could prepare for more effective collections is by keeping track of rising debt collection trends to monitor in 2021.

As previously stated, we anticipate the general government debt burden to reach roughly 90% of GDP in 2021, up from 72% in 2019. In the near future, we do not expect the debt burden to drop to pre-pandemic levels.

The likelihood of reducing the debt burden in the medium term has dwindled, and will be heavily reliant on nominal GDP growth trends. We estimate debt to stabilize at roughly 92 percent of GDP under average nominal GDP growth of around 11.5 percent, which we project as the baseline for the four years through the fiscal year ending March 2025.

India's huge domestic private savings pool, which can be used to finance government debt, helps to alleviate some of the fiscal risks associated with high government debt and poor debt affordability.

A Positive Change Catalyst

The closure of physical stores and branches has resulted in a significant increase in the use of remote service channels from the customer's standpoint. Banking customers' calls to contact centres in the United States have climbed by 14%. The use of web and app self-service tools by these clients has increased by 20%. In contrast, since the start of the crisis, 22% of US consumers have utilised their bank's online self-service capabilities for the first time, with 80% of them reporting a positive experience. (Exhibit 1 is a good example of this.) For at least the past ten years, businesses have attempted to persuade customers to embrace digital self-service, with mixed results. It's now being adopted at a rate that's never been seen before.

Consequently, business owners make decisions quickly about issues that may have been on the table for months or even years. Because their leaders are working together to attain similar, and often ambitious, goals, cross-functional crisis teams have been able to make decisive decisions. In ten days, one company, for example, created, staffed, and fully operationalized a 650-seat virtual contact centre. In many circumstances, a business can capitalize on this momentum to become more responsive, stable, and efficient. But simply remaining in crisis management mode and reacting to each new obstacle isn't enough. In order to handle the challenges of the new reality and pursue competitive advantages in the recovery when it comes, customer service leaders must design and build fundamentally more resilient, dynamic operations.

We believe that leaders must devote time and management bandwidth to three imperatives in order to position customer service operations and contact centres for the future: embedding structural resilience, switching to a more responsive and flexible operating model, and preparing to lead in the recovery.

Structural Resistance Embodied

The COVID-19 crisis response is putting traditional business continuity strategies to the test, with backup operations frequently failing to work properly under lockdown conditions. Leaders require the flexibility to deploy capabilities dynamically in reaction to supply restrictions and unforeseen demand fluctuations in the face of persistent uncertainty.

The idea is to include structural resilience into new ways of working as a permanent component. This necessitates those businesses comprehend the nature of future customer service demands on two levels: demand prediction and resolution complexity.

The capacity requirements will be determined by the predictability of demand.

The level of expertise required and the possibilities for automation will be determined by the intricacy of the problem.

Automate digital self-service for predictable, low-complexity inquiries. Companies should take advantage of this opportunity to encourage a long-term move to digital self-service channels.

Self-service for high-volume transactional demands like paying bills, explaining product features, and checking account balances would free up human capacity for more complex and sensitive tasks.

Many businesses run targeted marketing initiatives to increase digital sign-ups (through email, SMS texts, and recorded messages while callers are on hold with the contact center). Companies should follow up with a persistent marketing campaign when lockdown limits are removed, stressing the speed, convenience of use, and security benefits of self-service.

Consumers react well to smart communications that stress how people can help alleviate staffing challenges and ensure that high-priority cases are handled quickly.

Enhance teams with bionic powers for predictable, high-complexity needs. Customers who do not use digital self-service are more likely to be dealing with financial or emotional difficulties. Customer service employees must be sensitive and empathic in order to appropriately manage these situations.

Businesses can help secure their attention for these difficult interactions by reducing the time they spend wrangling with multiple IT systems and looking for information.

This indicates that procedures and processes are interfering with representatives' ability to provide high-quality service.

Companies can employ bionic technologies that seamlessly mix human and computer support to decrease complexity for reps. Natural language processing is used in these technologies to grasp the customer's intent and apply the appropriate solutions. They can assist you with:

Knowledge: giving appropriate responses based on the situation

Automating repititive tasks, such as data entry into numerous systems, is referred to as a process.

Providing real-time assistance and coaching to improve quality and performance

Companies claim that integrating AI-driven knowledge base tools increased first-contact resolution by five to seven percentage points, reduced handling time by 20% to 30%, and cut new-hire training time by 25% to 40%. These enhancements improve customer satisfaction while also allowing a more flexible workforce to respond to less predictable situations.

Not only are bionic surgeries important on the front lines, but they are also important in the back. Because they rely less on big interdependent operations teams to execute processes, organisations that invested extensively in automation of middle- and back-office services have had an edge in handling lockdown conditions.

Customer support processes will be fully digitalized from beginning to end, resulting in cost savings and, more importantly, increased resilience. For example, a worldwide bank that invested in middle- and back-office automation was able to sustain stable operations throughout the lockout better than its competitors. Instead of scrambling to locate the nee, the bank's officials can concentrate on long-term strategy.

Flex human capacity using new workforce models for unpredictable, low-complexity requirements. The ability to deploy resources more flexibly is a critical prerequisite for responding to volatility. To a considerable extent, this requires a partial shift away from the old contact centre paradigm, which requires staff to commute to large-scale, densely populated "human factories" for eight-hour shifts five days a week. A flexible workforce will work from a number of locations in the future, including call centres, regional offices, branches, and homes.

The virtual contact centre model is not new, and it has become the short-term norm for most firms throughout the crisis. Many firms have quickly solved difficulties relating to information security, network stability, employee engagement, performance management, and support for distant executives, driven by the requirement to maintain operations.

Shift To Remote Model

Companies claim higher employee retention, more flexible shift rostering, and the flexibility to acquire talent from a larger pool when employees work remotely. It can also contribute to cheaper facility expenses when done at scale. 95 percent of contact centre employees at one North American airline work from home. Members of the team might work shifts ranging from 15 minutes to 8 hours. For managing personnel remotely, supervisors have a complete range of quality monitoring, coaching, and communication tools. All staff also live within 90 minutes of a service centre, which they visit once a month for training and encouragement.

Control with asynchronous processing for uncertain, high-complexity queries. The most difficult problems to anticipate are those that need specialized knowledge, such as debt refinancing for small firms. Flexible part-time or temporary workers, who often lack the necessary skills and expertise, cannot successfully address such difficulties.

A frontline team of flexible workers communicates with consumers in real time, doing basic triage and prioritizing cases, in a strategy that has been effectively used by many health care systems to manage with COVID-related demand surges. This team is backed up by a second-line team of more seasoned employees who handle the most difficult issues off-line. As digital self-service adoption increases, frontline personnel can be educated to handle more difficult jobs without having to pass tickets off to their offline colleagues.

Change To A More Flexible And Responsive Operating Model

To handle the full spectrum of possible demand in customer service operations, businesses need a cohesive operational model. They must carefully choose and mix a number of solutions in order to strike a balance between the flexibility required to deal with uncertainty and the experience required to deal with complexity.

Companies should think about the following to guarantee that teams are set up for success:

Leadership styles that have been revitalized in order to guide and motivate more scattered teams

Dynamic workforce management ensures that resources are properly deployed to meet future demand.

Benefits and incentives tailored to each group's responsibilities and expectations

Incoming contacts can be spread across multiple sites thanks to a virtualized architecture.

Systems that allow dispersed working, such as learning management, coaching, and quality assurance tools that don't require face-to-face interaction, have been upgraded.

Analytics and insights that allow the model to be adjusted as needed to satisfy service goals.

Teams are given the authority to seek out and implement additional chances for improvement.

Be Ready To Take The Leadership In The Recovery

Companies will face a compelling need to return to pre-crisis performance by restoring sales and customer relationships as life adjusts to the new reality. Physical branches and stores will take a long time to fully recover, thus contact centres will play a key part in the recovery process as a human-assisted channel.

We don't sure when or how fast this recovery will happen, or whether any further lockdowns will slow things down. Nonetheless, there are steps that customer service directors can do right now.

Encourage the expansion of e-commerce. For people who like to shop from the comfort of their own homes, digital has become the preferred method of purchasing necessary goods and services. However, many are first-time users who require assistance in using the technology. Human-assisted digital journeys are more likely to succeed. For example, when combined with proactive web chats, one store saw a threefold boost in shopping basket conversion.

In order to guide consumers toward completion, representatives must be supplied with the appropriate tools (such as co-browsing) and training. Consumer behaviours and preferences will be permanently altered as a result of these efforts. After launching a proactive live chat and co-browsing capacity to augment web sales, one European luxury goods firm saw e-commerce sales value grow by more than 400%.

Develop expertise in the area of service-to-sales. Customer care teams already function as a sales channel in service industries like telecommunications, delivering targeted upgrades and new goods as part of the customer support engagement. These interactions (which can number in the thousands or even millions) can be a great sales opportunity in the post-lockdown world.

Tonlaity Of Speech Must Be Enhanced

As life returns to normal, firms will need to reclaim customers by demonstrating high levels of integrity, transparency, and empathy. Customer support encounters that are heavily planned risk appearing tone deaf and may even harm a company's reputation.

Customer service leaders have had a difficult time managing the disruptions produced by the pandemic's initial wave over the last few months. They've worked long hours and shown remarkable inventiveness and dedication in the face of enormous pressures on their operations. The job of the leader will be more crucial than ever in the future.

Performance necessitates being at ease with uncertainty, comprehending complex client requirements, and, most importantly, demonstrating compassion for coworkers and customers who are all dealing with their own set of problems.

Now is moment to start thinking about the future. Customer service leaders can help their companies not only survive the worst days of the crisis, but also prosper in the post-COVID era, by actively finding advantage in the new reality.