By Arjun Mitra – President of Global Collections, Firstsource Solutions.
getty
There is no doubt that buy now, pay later (BNPL) providers are disrupting consumer credit. The low barrier to entry and familiarity at the point of sale have made their growth inevitable, and BNPLs now set a different kind of expectation for consumers.
Much has been written about the need for more traditional creditors to adapt, but something much less covered is where BNPLs should follow the lead of established players. And here I think on the other side of credit; not acquiring new customers – BNPLs prove to be incredibly adept at this – but recovering money. In this regard, the credit card industry has a huge advantage, as it has accumulated vast amounts of data over many decades to understand consumer behavior.
This matters because underpinning consumer credit is a simple, universal truth: Not everyone can afford it or is willing to pay back what they owe when it’s due. Therefore, the way creditors proceed to recover money is not only important to the provider’s balance sheet, it also plays a vital role in driving repeat business. As competition intensifies, finding the right balance between revenue and customer satisfaction becomes critical to their commercial success.
Credit card acquisition has fueled competition over APR rates, balance transfers and loyalty programs for years, but providers also know that the refund experience itself plays a critical role in retaining customers and driving future use of their services.
The challenge for BNPLs is that they don’t currently have the years of experience or amounts of data on customer habits, as they are still in a nascent stage of development. Therefore, I see a relative lack of focus on the collections experience – especially when compared to the refinement of the acquisition and onboarding processes – that needs to be addressed if BNPLs are to retain customers to use their services again in the future.
Think how shocking the refund experience can be right now. BNPL credit is easily accessible at the point of sale, onboarding is smooth and, before you know it, you’ll have the goods in your hands, facilitated by an intuitive, almost entirely digital journey.
But if you don’t make the payment in month two, and we know it could be for several reasons, what happens? Are you entering a smooth, intuitive and flexible digital experience that allows you to tailor your repayment plan to your circumstances? Or do you receive unsolicited phone calls or letters from creditors, leaving you with a rigid payment schedule?
It’s almost always the latter, an approach that drives consumers to channels they often don’t want to use, and is likely to cause them unnecessary stress and disruption. knowing that the next BNPL will be readily available to consumers, the question every provider should ask themselves is, “Will this experience encourage consumers to use our service again?”
Credit card providers already know the answer, and it has shaped their approach to collecting debt for years. Some are, of course, light years ahead of others, using the vast amount of data they’ve collected and analyzed over the years to understand the subtle differences and the nuanced changes they can apply to maximize revenue without alienating the customer.
Delivering this scale, of course, not only requires them to use data to their advantage, it also means putting digital at the heart of the collections engine, automating large parts of the journey and delivering through the channels where their customers feel most comfortable. feel at ease On.
This is transforming collections activities across the industry, driving a shift from outbound calling to digital self-service. Strategies such as inbound calling options give customers the flexibility to choose how and when they settle their debts.
Debt Collection Strategies in the Age of BNPL
Collection agencies can improve their inbound call strategies by facilitating smooth interactions of technologies involved in caller identification and routing. It is important to put customers in touch with an employee immediately, because a quick response helps to resolve outstanding debts more often and more efficiently.
Providing consumers with a wide variety of payment options, orchestrating full omnichannel with varied channel mixes, understanding which channels you use most, and measuring results with an integrated approach can also speed up collections. It is worth noting that compliance with Regulation F of the Consumer Financial Protection Bureau requires specific opt-in/opt-out processes prior to texting or emailing a customer. To initiate omnichannel outreach, you must first have permission to opt-in based on previous communications, as well as an easy way to unsubscribe from a particular channel.
Final Thoughts
With increasing regulatory scrutiny and media coverage of BNPL providers, it is more important than ever for BNPLs to make sure their customers feel valued and supported. Putting empathy and customer experience at the heart of business operations and managing collections with tact, sensitivity and digital-first tools can create a win-win situation for both BNPL providers and their customers.
Taking this approach will serve the consumer better, create a more efficient, profitable service for the creditor, and make critical aspects of regulatory compliance easier to manage.
And while it’s regulation that I suspect will make a lot of effort to improve the BNPL collection experience, it will be the providers leading the way that will differentiate themselves in terms of service. And when collections are even the focus of the front-end BNPL experience, everyone involved benefits.
businesskinda.com Business Council is the leading growth and networking organization for entrepreneurs and leaders. Am I eligible?
Janice has been with businesskinda for 5 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider businesskinda team, Janice seeks to understand an audience before creating memorable, persuasive copy.