THE AUTHORITY FOR COMMERCIAL AND CONSUMER CREDIT PROFESSIONALS
www.CreditCollectionsWorld.com
July 2004 Volume 9/Number 7
technolog y
The One-Stop
Collections Package
As the credit bureaus reinvent themselves, at least two are bundling collections
products to ease client workflow and boost performance – and, oh yes,
attract more business. Is the strategy paying off?
By Ann McDonald
hen most people think of the big three consumer
credit bureaus – Experian, TransUnion and Equifax
– the first thing that comes to mind is a credit report.
But in recent years, the companies have been
branching into new areas and expanding their services beyond the
world of credit scores and reports.
One natural outgrowth for the bureaus is expansion of their
collections-related services. Both Experian and TransUnion recently introduced bundled collections products designed to give
collectors the ability to interface
with a single supplier for a variety
of services. Equifax also has been
looking into the collections space,
as it has expanded into offering
pre-collections and end-to-end
credit solutions.
“Many people think of us as credit
reports, and that’s where it ends,” says Fred
Jin, collections solutions product manager for
Costa Mesa, Calif.-based Experian. “But that’s
where we think it begins.”
Recognizing that the debt collections business was
growing rapidly, and a key market for its products and services, Experian decided to package all its collections products into an integrated
offering so clients could obtain them from a single source, Jin says.
Collection Advantage, which debuted at the end of last year, is
designed to provide users easy access 24 hours a day, seven days a
week to credit-based scoring, consumer contact data, and analytics –
all in one place.
W
Collection Advantage has allowed the company to bring
together many different products and improve them to focus on the
needs of collections operations, Jin says. The product can be easily
integrated into a company’s collections account management software to provide a fully automated solution.
The idea behind the product is to allow collectors the ability to
customize Experian’s collections services that best suit their
needs. “[Collectors] can have the flexibility to ask for
only what they need,” Jin says. “Some clients
with large balance accounts may want to
have as much information as possible
for skip tracing, for example.”
Most of the services available
for clients to bundle in the Collections Advantage product were already
part of Experian’s offerings, but some
were enhanced to meet the needs of
collections operation.
For example, Experian always offered location information and fraud checks, but now the company offers multiple methods for a collector to access phone
numbers in order to validate or suppress them. They can compare
phone numbers using Experian’s lists or they can do an Electronic
Directory Assistance, or EDA, search of the Regional Bell Operating
Companies’ databases.
In addition to offering location services, Experian also offers collections operations credit-based scoring in a batch process. General
Audit, a medical collections agency based in Lima, Ohio, uses Collection Advantage’s scoring services to help turn around accounts
faster, says Brandon Lee, systems administrator for the company.
technolog y
Lee says that General Audit uses Collection Advantage for
Experian’s Recovery Score – to identify which accounts have the
best chance of being collected. The agency then allocates its collectors accordingly and recovers accounts faster.
Company executives are impressed with the turnaround time
on accounts using the Recovery Score. “We can turn around 3,000
to 10,000 accounts in less than an hour,” Lee says. “I think Experian
guarantees something like a 24-hour turnaround, but we’ve never
had to wait any longer than four hours.”
TransUnion also recently introduced a service called Collection
Prioritization Service, which packages six products together to help
collections operations identify uncollectible accounts. The Chicagobased firm has worked in the collections space for more than a
decade, says Kathy Madden, vice president of analytic development
services. But the company recently decided to introduce the Collections Prioritization Service to simplify the way customers can work
with Trans-Union, offering a variety of services bundled together.
Collection Prioritization Service is designed to give collectors a
package of recovery solutions that use predictive data and analytic
capabilities to help them manage accounts and reduce the amount
of time and money spent on collections activities. The service, which
offers event-based decision tools and automation, can be integrated
across an entire organization’s business processes. Users are able to
identify uncollectible accounts and rank order accounts according to
which ones are most likely to be recovered, Madden says.
The service was initially developed as a custom solution for a
small number of customers, but it proved so successful that it was
enhanced and offered as a standard product offering late last year.
Although the company markets the product as a bundle of six different services, Madden says that they also take a consultative
approach so clients can tailor the product to their needs.
“Both sets of customers, whether in-house [collectors] or agencies, are driving toward operating more efficiently, so the bundled
product is convenient,” Madden says. “But some customers also
appreciate it when we take a consultative approach.”
Besides offering easier access to its standard collections services, TransUnion has also enhanced its offerings. For example, the
company noticed a trend of employing more event-based analytics to
help in decision-making, so it added more workflow solution capabilities. Through an automated decision-engine, TransUnion delivers strategies that help clients interpret data and apply the
information to an individual portfolio.
Equifax decided to take a different route, focusing more on the
credit cycle to develop models and triggers that help creditors reduce
the need for collections. Synergy with credit reporting data allows
Equifax to create custom and generic analytics that customers can
apply to the entire credit life cycle, says Dana Wiklund vice president of consulting for Equifax’s predictive sciences business. The
Atlanta-based company offers three different scoring solutions,
generic or customized, as well as models that can predict the probability of a consumer migrating from delinquency to chargeoff.
Although risk models are fairly common in the market now,
Equifax was an early innovator in developing account management
risk triggers, which pick a population and examine changes that are
taking place that might be signs of risky behavior a creditor should
keep an eye on, says Wiklund. Equifax’s account management triggers can monitor “slow migration,” which occurs when a customer’s
risk or behavior score drops over a two-month period. They also can
monitor whether a customer has an increase in installment loans or
changes in bankcard utilization. “We’ve seen that a lot of our customers want much more intelligence to manage accounts so as to
prevent collection,” he says. “Once a customer gets into default, it is
much more costly.”
Since there is a correlation between risk models and recovery
models, Equifax is equipped to work in the collections space, Wiklund says. The firm recently introduced Interconnect, a product
that may eventually expand to serve the collections market, Lisa
Fiondella, Equifax senior vice president, product development, said
in the May issue of Collections & Credit Risk. Like the other bureaus’
bundled collections products, Interconnect is designed to be a single platform for several products – in this case, ones that assist in
the credit cycle.
It could be a source of concern to other data vendors that
credit bureaus, a valuable source of information for many skiptracing vendors and collections firms, are competing in new segments
of the collections business. But a number of providers say they are
not concerned.
“It doesn’t really worry us. There is always enough debt to collect on,” says Carolyn Pace, vice president of sales for ChoicePoint,
a data provider for skip tracing based in Alpha-retta, Ga. “Banks and
financial institutions never rely on only one source.”
Similar Offerings
While Pace acknowledges that TransUnion’s and Experian’s new
products are similar to her firm’s offerings, she says that the amount
of historical data ChoicePoint has collected provides a competitive
advantage over other data providers.
James Swift, executive vice president of Accurint, an information provider in the areas of fraud, debt recovery, and location services, says that more competition is always welcome because it
pushes the company to be more innovative and creative in developing new products. New businesses getting into the market, he says,
“keeps us on our toes.”
“We’ve seen everybody changing pricing offers and offering
new bundled products. All of this increases the awareness in the
market, so everyone is talking about new technologies and spending more money,” Swift says. “There is room for everyone. Once
the overall market increases, you have a lot more ways to serve
your customers.”
Both TransUnion and Experian report that customer response
to their new products has been very positive, and they expect to stay
focused on the collections market. “So far the response has been
extremely positive,” Experian’s Jin says. “Most feel that [our product]
is a natural progression of what we already offered.”
With the bureaus expecting to introduce new features in the near
future, the competition-bolstered creativity index is likely to rise. ■
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