Customer experience is a key enabler for customer loyalty and growth. This aspect is no different when it comes to the banking and financial services industry. The rise of FinTech and digital lenders compelled traditional banks and non-banking lenders to include customer experience as a key priority. As per a McKinsey research, leaders in the banking industry delivered 55% higher total shareholder returns versus organizations with comparatively low CX performance. Over the past couple of years, personalization, digitization, and integrated experiences have emerged as the core themes for transformation.
Transforming and enhancing the customer experience is now at the forefront as a differentiator and a tool for customer retention. A PwC-Equifax Survey revealed that 29% of credit managers and executives highlighted digital transformation as a core focus area while 25% were focusing on customer experience. The banking and financial services industry is working to bring the customer experience at par with other industries where leading players are synonymous with unique customer experience – Google, Amazon, Netflix and others.
Viewing collections from the customer experience lens
Customer experience starts strong while onboarding a client, but is it strong enough throughout the retail loan lifecycle? Debt collections have long been treated as backend and manual operations, where the processes are designed predominantly from the lender’s need and perspective.
Customer experience in debt collections isn’t given its due importance.
For example, the preferred mode of contact with borrowers to get them to repay is an onslaught of harsh phone calls and messages, which is one-sided and may lead to general unpleasantness about the whole customer experience in loan collections.
Today, we must look at it differently.
Lenders need to be proactive with customer experience as that becomes the criteria of whether the customer will remain loyal in the future or not.
Customers may default on loans for a variety of reasons – right from just forgetting to not having enough money in the account and financial challenges to having technical issues due to system processes.
Lenders need to assess each case on its own and address it constructively, rather than following the age-old mantra of bulk treatment applied repetitively.
Approaching the customers in a consultative manner makes them more comfortable to put across their situation clearly. A problem-solving approach makes it easier for the lenders to identify the issues, which are leading customers to default. Accordingly, making them understand the implications and recommending options can help build a trustworthy relationship. For system related issues, implementing mitigatory steps to avoid a recurrence helps cut down on such instances.
Today there are multiple comparable options available for borrowers for availing loans, it all comes down to customer experience and the collections phase can’t be ignored.
It is very difficult to build strong customer loyalty, which at times takes years. However, it can be lost with as little as a few irritating and unprofessional phone calls.
Different approaches to defaulters
Loan defaults hurt borrowers with impact on their credit scores and hamper the ability to get new loans in the future. Unintended defaults can also be embarrassing for customers, and they may want to avoid such situations. There are many ways in which lenders can help their customers in the debt collections phase.
- Educating customers about building a healthy credit profile goes a long way. Explaining to customers that gaps / dips in their credit profile will impact future financial decisions and have long-term implications can help them realize the gravity of the situation.
- Proactively nudging pre-due customers in advance around upcoming payments is tremendously helpful. Studies have shown that customers appreciate this as they can check and iron out any issues to avoid inadvertent loan defaults. A quick notification on the preferred digital channel at a time of their choice is a low-cost and very effective way of communication.
- Studies have shown that customers prefer personalized digital communications. With options to send communications in their native language, without any human intervention, on WhatsApp, Voicebots, SMS, IVR, and calls – there are a wide variety of channels that can be adopted.
- Personalization and facilitation of easy digital repayments include instantly generating payment links with personalized information such as the loan number and loan amount and embedding it in communications apart from facilitating a seamless payment experience thereafter.
As we zoom ahead in the highly evolved digital and analytical era, providing a unique and personalized customer experience must be at forefront of collection strategies – right from the preference of communication channels to tailored messaging and providing ease of digital loan repayments to reminders in advance.
Customer-centric attitude and consultative approach can make a huge difference in setting a differentiator in the crowded marketplace. Focus on customer experience in debt collections will also make a positive impact to their behaviour leading to faster, higher and efficient resolutions for the lenders.
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Credgenics is enabling lenders to reimagine their debt collections and transform the customer experience by harnessing the power of advanced technologies through its market leading, debt collections software platform, that covers the end-to-end collections lifecycle. The SaaS based platform offers multiple modules around digital debt collection, multi-channel communications, calling, dialers, litigation management, digital payments, mobile based field collections, dashboard and analytics.