Mike Cassidy, Managing Partner at M&G Solutions, breaks down the Q2 trends in collections & recovery strategy in less than 3 minutes. You'll hear about how:
- The economic environment is driving investment in servicing;
- Fintechs and newer lenders are focused on getting their operations in order for the inevitable regulatory review;
- Expanded digital capabilities are key, both for consumer experience and the cost/labor savings.
Click to watch, or read the full transcript below.
Trend #1 - The Economy Put Collections and Recovery Front-and-Center for Lenders
We have a pretty interesting [economic] environment right now, which is certainly impacting the what and where fintech lenders, certainly in the servicing space, are focused.
You have the backdrop of inflation, [plus] adjusted consumer spending is declining, while spending on credit cards has increased, at least through May. The balances consumers are carrying are higher than they were a year ago.
At the same time you see unsecured personal loan originations have increased through May. Plus, consumer sentiment and confidence [is] plunging, the stock market [is] reeling, and talks of inflation continue. Then, the CFPB announced that they're going to begin using their supervisory authority over the non-bank consumer financial fees, which will certainly hit the fintech space.
Trend #2 - Regulatory Pressure to Assess Fraud Controls and Credit Dispute Processes Is Working
Of course, with the activity [the CFPB] is already doing within Buy Now Pay Later, a lot of this really stacks up and, and really does drive what we're seeing. A lot of the fintechs are focused right now on the regulatory side. We're seeing a heavy emphasis on ensuring there are adequate fraud controls, credit credit bureau reporting, and dispute [processes]. Fintechs are also making sure their operations are operating under control and fee structures that are adequate.
[Not if, but when your organization is reviewed by the CFPB], you need to feel comfortable and confident on the servicing side of things.
Trend #3 - Contact Center Staffing Challenges Are Leading to Expansion in Digital Debt Collection Capabilities
We continue to see an aggressive expansion in the digital capabilities, not just to meet the consumer where they want to be where they want to converse, but as an offset for the challenges everyone is still seeing in staffing contact centers.
For the first time in 18 months, we're starting to see a real shift back into outsourcing and staffing. The fintech lenders who traditionally kept servicing in-house or domestic are starting to go to an outsourcing model, and for the first time, really adopting a nearshore and offshore strategy.
I think it is a sign of the times as far as uncertainty for the future, but it looks at that growing book and that growing debt footprint that consumers are handling and the challenges that they're having both internally and domestically to staff.
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