The UK – EU referendum: An analogy

Posted on June 1, 2016 by Chris Warburton

landscape-644323_1920I don’t normally stray into politics, however there is an excellent article by Alicia Ngomo on FinExtra, who relates some of what she has been hearing regarding the EU referendum.

I have been hearing something similar and agree it is concerning.

It appears decisions being made based on impressions, not facts, with real experts not being listened too and armchair experts given equal airtime. No wonder people are confused.

This is an important decision and important we all listen. Expert opinions matter and we need to fully understand the potential consequence of such a decision. I feel this not the case at the moment.

The story below explains why…

    One morning you are on an airplane. Onboard is an experienced crew. They are all highly trained, have been doing this for years and it is relatively routine.

    Then mid flight some passengers decide they don’t like how the plane is being flown. They are frustrated about being told what to do; when to put away their bags, fasten their seat belts, even when they can go to the toilet….. the route being flown is just too slow.

    They feel there a better way, less rules, less regulations, quicker and at a lower altitude. It should be warmer and everyone agrees they like being warmer.

    The pilots quickly advise there is a reason for the rules and there is bad weather using the alternative route. At a lower altitude their is also the danger of mountains.

    However there is disagreement and a large number of passengers, led by a couple that have had experience flying kites, demand a vote. “We could even open the windows and doors if we fly lower” they explain… cheers erupt.

    So a vote is held. It is a binding decision.

    Strangely some of the passengers don’t seem to be bothered by this. “It’s okay” they say, “the drinks trolley came before, it will come again and I will have another glass of wine, who cares…”

    The rest of the passengers, together with the entire cabin crew, go white with fear. “This is crazy” they explain, “I have flown for years, it is not a good idea”.

    The vote goes through and a majority, 45%, vote for the change. So the autopilot is set, the plane turns, sets a new route and descends into the cloud.

    The storm is quite unlike anything any the passengers have felt before. This is the reason storms are normally best avoided, they now realise… together with the importance of wearing your seatbelt.

    By now, the passengers are now all screaming “change direction”, but it is now too late to return to the old route.

    Despite the heroic efforts of the crew, the plane is now too low….. it is unfortunately not what anyone really wanted that morning.

The moral of the story: Sometimes it is worth listening to trained experts, facts, and fully understand consequences of a decision. Yes there may be niggling annoyances, but it is often less risky to stay the course and make smaller changes more gradually.

9/10 experts say we should remain in the EU.

[Disclosure: For me, the consequences of leaving outweigh any benefits and we should definitely stay in].

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Digital and Customer Centric: The Future of Collections?

Posted on May 25, 2016 by Chris Warburton

IMG_20160511_233601The other week I was lucky enough to be able to attend my first roundtable discussion with Arum at the Caledonian Club in London.  These are held with key individuals across the industry to discuss key trends; with this time being a discussion on “the Future of Collections”.  Great to be part of this and even got to write a piece for the website.

Welcome to the Caledonian Club

The Caledonian club was indeed very grand.  Advertised as a piece of Scotland in London, you do indeed walk in to see stag heads, stone staircases and portraits on the wall.  It certainly transported me to some of my visits with the National Trust for Scotland.  (Although in Scotland I seem to remember consuming more tea and toasted sandwiches than Haggis and Neeps, but can’t complain, it was extremely pleasant).

“The Future of Collections”

The work conversation was engaging and I was struck by a couple of things.

  1. The extent of digital adoption, across all age groups
  2. The normalisation of customer centric collections

Digital adoption:  Beyond the tipping point

We have all got used to interacting online, applying for products, purchasing items, checking balances and statements.  From the conversation it really felt we are now reaching the critical mass of users, where you have to be online and full functionality is expected.  The feedback is now being heard… “many individuals prefer to interact via an app than by person”.

We all have experience of this, with many relatives, who never used computers, now becoming technology adopters.  The fear of computers has largely disappeared, everyone is and needs to be online.  This includes the collections process too and the pressure is on.

Customer centric:  Have we forgotten how to collect?

It has been interesting the last few years in the UK, to watch the massive change in the collections industry that has taken place.  Since 2008, it has turned itself inside out.  It is now much more customer centric and focused in most industries.

This is clearly seen in some of the recent figures from the Citizens Advice Bureau.

Overall the number of problem debt enquiries to CAB is down, and the comment was made that this has been largely achieved without a massive increase in impairment/bad debt charge.  The customer service element is a focus today, and is clearly becoming ever more important.

This is undoubtedly a good thing, but what about if there is another downturn?  Has the financial services industry forgotten how to collect or has the paradigm shifted so much that it no longer matters?

My personal view is the industry has shifted, and been shifted, to having more grown up conversations with consumers.  It has always been about solving issues and if there is a downturn this experience it will still be useful.  The industry hasn’t forgotten how to collect.

However there has been a more fundamental structural change.

The days when a collections process could be relied upon, by force of action, to manually control and manage impairment/bad debt is most likely over…..  extra turns on the dialer are a thing of the past… the control points are now much more subtle.

A new challenge

This presents a challenge going forward.  Ensuring a robust linkage between the front and back end of the customer lifecycle is going to be critical.

Once one of the collections team speaks with a customer, I am confident they still have the tools and sensitivity to handle a situation well.  However what is now crucial is the intelligence from these interactions is gathered and flows upstream, in real time.  Pricing and decisioning criteria are going to have to be adjusted much more dynamically to remain in control.

Collections teams are still a big part of the process, handling what is often a sensitive situation.  The need for them and their data to now become ever more embedded in the decision making process.  It is going to be critical to profitability, especially in a changing economy.

Using an analogy…. “we are now flying a B747/A380, times have changed and the old days of flying by the seat of your pants could get you in a lot of trouble”…

All in all, a thought provoking and interesting evening.  Certainly with useful insight into some of the current changes, thinking and future in the UK.

You can read the rest of my report here.

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The end of outbound calls as we know it?

Posted on May 8, 2016 by Chris Warburton

This week I was chatting with a couple of folks in Canada, as part of my new role at a new company.

Inevitably our conversation turned to contact strategy and in particular reflections on the use of predictive dialers in the UK.

Now, in Canada we were always careful with making calls, cautious with mobile phones, respecting times and timezones.  However the dialer still remained a big part of the day.

It was therefore initially surprising when I returned to the UK and observed just how the how little the dialer was being used.  Legislation I discovered, backed by high fines (up to £2mm) had really changed the industry and the outbound call was on the decline.

UK Rules:  Ahead of the curve?

For those not in the UK, these are the rules that generated the change.

  1. The ‘abandoned call’ rate shall be no more than three per cent of ‘live calls’ over a 24 hour period
  2. In the event of an ‘abandoned call’, a very brief recorded information message must be played within 2 seconds
  3. Calls which are not answered must ring for a minimum of 15 seconds before being terminated
  4. When an ‘abandoned call’ has been made, any repeat calls to that number in the following 72 hours may only be made with the guaranteed presence of a live operator (the ‘72 hour policy’)
  5. For each outbound call a Caller Line Identification (CLI) number needs to be presented
  6. Any call made to the CLI number cannot not be used as an opportunity to market to that person, without consent.  Records are to be kept for a minimum period of six months that demonstrate compliance with the above
  • Additionally, if your dialer thinks it has connected to an Answer Machine, then any extra calls made that day must guarantee an agent

Impact on Collection Operations

Other markets of course have similar rules. However with the high prevalence of answer machines and tough compliance requirements in place, the efficiency of dialers became limited.

And, it has had an impact on efficiency and staff morale.  Afterall staff who were used to talking with people and solving issues were now left listening to answer machines.

Alternatives have been sort and volumes have dwindled.

Customer centric

The regulatory focus in this particular case has been on reducing silent calls, and their impact on society.

Undoubtedly it has benefited many customers, the industry has innovated and the world has not fallen apart.

There are now more self serve options, rapport building and relationship based, focused conversations going on.  In many ways, for many companies this has been an opportunity, a way to offer a competitive advantage, to reboot relationships with customers, and it works.

Broader customer changes

However this also broadly reflects a wider trend of increasing customer influence and this is being seen across the various markets.

Customers are in control, demanding choices and influence.  It is important for us to react and react positively.  Something many leading players are doing already.

So what’s next

For the UK, we are now waiting for the output from the next OFCOM consultation.  Probably more change and it is important to be prepared.

  • There could be more capacity and strategy changes required.  Are these understood, anticipated should the changes come to pass?
  • Is there a plan of action or a checklist ready for when they are published?
  • Are potential impacts calculated and have they been clearly communicated (upwards) in your organisation… avoiding nasty surprises?

For other markets such as Canada, preparing for similar changes is also prudent.

  • Are you being proactive and introducing customer centric processes in the organisation?
  • Are you close to legislation and common practice in other markets?
  • Would you be ready if similar legislation was introduced in your market?

Ideas sharing

We all like to talk across markets and hear about the best ideas from the best people.  It should be no suprise if we see similar regulatory frameworks in a market near you soon.

So are outbound calls finished?  Not quite, there is still a lot of value, but fundamental change is afoot and the nature of the process will significantly evolve.

Time to hold onto our hats and get out in front of that change.

 

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