There’s no way around it: the core focus for fintech lenders is acquiring new customers.
Necessarily, then, the focus cannot be on collections.
However, the experts at 2nd Order Solutions recommend viewing collections as “a critical insurance policy” to avoid credit problems and compliance issues in the future.
Here are three ways they recommend structuring a collections agenda for fintechs.
Get good (enough) at segmentation
“At the core of every well-designed collections strategy is an effective segmentation,” advises 2nd Order Solutions. Fintechs must be able to customize their contact strategy to meet consumers where they are, including considering time, channel, and messaging.
But a fintech’s segmentation strategy doesn’t need to look like that of a traditional bank’s, according to 2nd Order Solutions. They recommend using a simple, risk-based segmentation model to “elevate your existing strategy and allow your to reduce both losses and operational expenses.”
Focus on digital first, not digital only
Customers of fintech’s typically only engage with the brand online. That doesn’t necessarily mean inbound and outbound phone calls have no place in a fintech collections strategy, at least for the foreseeable future, according to 2nd Order Solutions.
For a holistic collections approach, move away from using digital contact strategies to drive inbound calling and invest in 2-way communication via email and SMS, plus a robust suite of self-service options.
Have an offer strategy
After 60 days of delinquency, it becomes difficult to reach customers, and then seemingly impossible to get a payment even after contact. That’s why 2nd Order Solutions recommends an offer strategy.
For a good offer strategy, consider concessionary and non-concessionary offers, including settlements, fee waivers, and payment plans. Segmentation is also key here; offers should consider risk and follow a settlement waterfall.
For more on 2nd Order Solutions’ collections advice for fintechs, click here.
Bonus reading: Fintechs: It’s Time to Focus on Recoveries. Here’s How.
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