What you'll learn:
- The collections industry is starved for talent and are overwhelmingly turning to remote work as a retention strategy, according to a new TransUnion study.
- SMS / texting use in collections is spiking
- Collections / receivables firms plan big investments in compensation and new digital collections technology implementation in 2022.
Finding talent is suddenly not so easy for collections companies.
In fact, over sixty percent of collections companies say that finding and retaining talent is “very challenging” - a huge jump from 2019, when only 80% of companies considered finding and retaining talent “not at all challenging.” That's according to Transition to the Next Normal, a new, state-of-the-collections-industry report from TransUnion and Aite-Novarica Group.
This situation is not unique to collections. Staffing is a challenge across most industries, as the monthly quit rate hit 2.9% in 2021, a level not seen since 2000, when the US Bureau of Labor Statistics started the current Job Openings and Labor Turnover Survey. Clearly, the collections industry is not an exception.
What are agencies doing to differentiate themselves and attract talent? The main answer, according to the report, is remote work. A whopping 71% of companies indicated that they are allowing remote work in order to attract better applicants.
A whopping 71% of companies indicated that they are allowing remote work in order to attract better applicants.
Despite the shift, collections executives are still not sold on the value of remote work options. From a management perspective, 69% of respondents indicated they have concerns about employee self-management and productivity. Employees had concerns about remote work, too. 13% of respondents reported concerns about career stagnation for employees who choose to work remotely.
All signs indicate remote work, or at least a hybrid schedule, is here to stay. It will be up to each company to determine how best to incorporate remote work into their strategy. This will also almost certainly call for some innovation from ARM companies and their vendors.
Companies moving to a permanent remote work strategy should consider the following questions:
- How do we allow for remote work, while also ensuring employee productivity?
- How do we ensure remote employees feel valued, and that they have access to opportunities?
Solving this equation will be key to succeeding in the ARM industry as we move into 2022 and beyond.
Two More Big Trends: SMS use is way up and collections firms plan to spend big on tech and comp in '22
More collections companies are using SMS - a lot more
31% of respondents are currently using SMS as a means of communication - a nearly 50% jump from 22% just last year 2020. Only 16% of collections companies admitted to using SMS in 2019.
38% of agencies that are not currently using SMS responded that they are likely to add SMS capabilities within that time frame.
94% of companies still rely on letters as a communication method, while only 13% of respondents are using chatbots or other AI to communicate with consumers. The types of communication methods also vary widely based on the size of the company. Based on the findings in the report, medium sized agencies are currently focused on telephonic methods of reaching consumers (like autodialers and ringless voicemail drop), whereas larger agencies are focused on credit bureau reporting and SMS as means to reach consumers.
It’s clear that SMS as a form of contacting consumers will be on the rise for the foreseeable future, especially as more information is available about the success of the channel in collections. With Regulation F providing some guidance around SMS in collections, more companies, even those who have typically been risk-averse, might be willing to integrate SMS into their contact strategy.
Collections companies plan big investments in employee comp and new tech in '22
Unsurprisingly, the two biggest areas companies plan to make investments in 2022 are employee compensation and technology solutions. As outlined above, both of these areas are going to require significant attention going into 2022 and beyond. Agencies, especially smaller ones, will have to prioritize their needs from a technology perspective and decide which area makes the most sense to invest.
93% of larger agencies and 97% of medium agencies have adopted an online consumer portal, while only 53% of smaller agencies have done the same. Consumer portals aren’t just about allowing consumers to make one time payments anymore, either. Live agents are a company’s most expensive resource, and a really effective self-service portal can be key to reducing collection costs and increasing liquidation. For smaller agencies who are looking to prioritize their investments for 2022 and beyond, an effective, user-friendly consumer portal may be the quickest win.
Erin Kerr is the Director of Content for iA Strategy & Tech - a digital resource for collections strategy executives - and the Executive Director of the iA Innovation Council. She is a seasoned receivables management professional, with recent experience in digital strategy and a passion for crafting digital solutions for a better customer experience.