Four very real challenges are growing and becoming more difficult to overcome as the global economic downturn continues to worsen:
1. First and foremost that being cost reduction
2. Then fraud prevention
3. How to address arrears handling; and
4. Considering hosted Contact Centre BPO solutions
Introduction
It is now becoming clear that the global economic situation is going to take some time to recover and the impact will be felt far and wide. We will be forced to rethink how we all manage both our personal and business finances in order to manage our exposure and access to credit. As we lead up to the festive season and winter sales, the lack of access to finance and the potential for low cost bargains may cause many consumers to turn to their plastic – the credit card could enjoy a period of intense growth as everyone looks to preserve liquidity.
So, this seems good for card issuers at first glance. But is it?
In a recession, consumers tend to tighten their spending and save money. If they expect to be made redundant for example, they don’t want to spend and will use all means to preserve access to their savings and cash balances – usually through increased use of credit cards and in particular where access to overdrafts or re-mortgaging has become restricted.
Additionally, as interest rates continue to fall, the stimulus to spend is increased and there are of course many distressed businesses, from retailers through to car manufacturers, that are doing everything in their power to encourage consumers to maintain spending by making increasingly attractive offers.
There are four very real challenges for card issuers during this global downturn:
1) Cost reduction
Particularly in banking and finance, staff reduction will make servicing of the consumer base more difficult than ever. Added to this, tightening of margins from lower lending rates will put pressure on operational efficiency at the same time as there will be predicted increase in volume.
Making more of the telephone channel
Even with the introduction of low cost channels such as the web, for many people the telephone is still the preferred method of communication. The telephone channel can now benefit from sophisticated self-service solutions that previously seemed only possible over the web. Today’s integrated voice response systems are able to deliver truly personalised and highly dynamic customer interactions over the telephone, allowing callers to navigate menus, obtain and provide information using the power of their voice.
The UK Contact Centre Operational Review (6th edition - 2008), a recent major study of over 200 call centres carried out by ContactBabel, has found that although only 6.5% of inbound calls are dealt with entirely through self-service, rather than a live call centre agent, the savings to the UK call centre industry amount to over £1.6 billion per year. That’s an impressive figure based on a small percentage of inbound automation and clearly illustrates the potential savings for the cards business sector.
2) Fraud prevention
Although a lesser problem than arrears, the losses from fraud have been increasing recently and issuers need to take any steps they can to shut down the range of possibilities for fraud, without losing their most valued customers.
Speech self-service can help tackle fraud
Speech automation can be successfully introduced to tackle fraud at all levels of card use. All card issuers use intelligent risk and habit-based modelling systems, which profile their cardholders based upon historic transactions and locations. These systems flag warnings when a potentially fraudulent or out-of-character transaction takes place. They work in ‘real-time’, so that when a customer enters their card details, either at a POS (point of sale) machine or on a website, the transaction is scrutinized. If it is then identified as a potentially fraudulent activity, this information can be passed to an outbound interactive voice response (IVR) system, where an automated call is placed to the cardholder to confirm whether the transaction is valid. This has huge benefits for card issuers as they can elect to make far more transaction checks and further reduce fraud particularly for “cardholder-not-present” transactions or transactions that do not benefit from the security of chip and PIN.
3) Arrears handling
In the current climate, poor credit rating is topical enough and card issuers are already taking steps to limit new card issue and more rigorously control to whom they lend. However, the growth in arrears and delinquent accounts is now going to become uppermost for 2009. Although written with the UK market in mind, it is clear that this White Paper reflects the challenges on a global scale.
Automating the awkward calls
Being an arrears-handling agent is about as socially acceptable as being a traffic warden. It is a critical function of any business, but it is also one of the most challenging for lots of reasons. It takes a special kind of character to ask a cardholder or any customer, to pay off their outstanding debt. They must withstand a sometimes-alarming level of stress and verbal abuse and, as a result this is quite often the highest churn area of a contact centre.
This is an area that intelligent, cost-effective telephone-based technology can help. For example, sending a SMS payment reminder to cardholders ahead of time can act as a gentle reminder before they become delinquent. Prevention of debt at the cost of a SMS message - clearly this makes sense, and if well timed can be appreciated.
4) Hosted solutions
Managed hosted solutions are rapidly growing in popularity and should be considered, at least for speed and effectiveness. A surprising number of financial institutions are looking at hosted options, as these can be an effective way to deliver cost savings. Managed Service Providers (MSP) can today provide securely hosted solutions where it is still possible for the customer organisation to control the process locally on their premises. It is interesting to see many companies now sarting to put the efforts into doing their core business rather than trying to build up their own technology stack and this too is providing a key move towards hosted BPO services. The key thing is to check that the hoster has coverage in the countries that you need the services and that they have the language and infrastructure capabilities.
Reduction of costs with centralised control centres
As an example of hosted services one of the UK’s leading contact centre and back office processing providers, Teleperformance, recently invested in a state-of-the-art mission control centre that significantly increased productivity and reduced costs for its customers.
The mission control centre allows activity to be centrally monitored in real time across its network of contact centres. The technology intelligently puts together clusters of similar campaigns to allow shared services, identifying the best agents, skills required and time frame required. For example, it can intelligently forecast that a certain morning is busy for a particular campaign and identify that a similar campaign has the same agent profile and skills available. A sudden demand of calls can be shared across similar campaigns and across different sites where necessary. All this reduces costs as a result of agent skills based pooling.
Summary note
With a global recession card issuers are under greater pressure than ever to reduce their operating costs. They are expected to maintain a high level of customer service, protect cardholders from fraudulent attacks and improve their collections process - all with eroding budgets and slow growth.
It will be the card issuers that act now by streamlining their business processes and introducing more innovative automated solutions that will come out on top. By proactively avoiding fraud before it happens and reaching out to their customer base to collect outstanding balances before they become write-offs, card issuers will become the brand preference for consumers, since they will able to earn their long-term loyalty.
It is vital to remember that practical innovative solutions do not have to cost the earth, or be overly complicated. It all starts with a simple analysis, identifying which gaps need to be filled in order to deliver on business goals and finishes with the right solution delivering an impressive return on investment – or a value based return for every transaction. This is seldom a technology driven exercise it’s a business solution led exercise.
If you are interested to discuss any aspects of the content of this blog then contact Craig Ashmole at craig@ashmole.com
