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Articles

Going Digital in Collections to Improve Resilience Against Credit Losses

Going Digital in Collections to Improve Resilience Against Credit Losses

Household debt is at an all-time high, delinquencies have been rising, and forward-looking macroeconomic indicators are softening. As a result, lenders are reexamining their capacities for handling delinquencies. Part of that reevaluation for heads of collections involves taking into account changes in the consumer landscape. For example, consumers increasingly communicate with financial-services providers through text messaging and prefer self-service digital channels. They do not respond to repetitive collections phone calls—an approach further complicated by stricter regulations against harassment.

As the evidence for a deteriorating credit cycle mounts along with increasing losses, lenders can take steps to increase institutional resilience. By strengthening collections capabilities and embracing digital communications, they will be better prepared to address any further increase in delinquencies that may occur.

This McKinsey article outlines how going digital can improve resilence against credit losses.