Collection optimization & recovery

For Financial Institutions

Banks and other lending institutions are experiencing continual stress in their loan portfolios as a result of the financial crisis and an economy that is proving slow to recover. The continued high levels of unemployment, coupled with the long duration of unemployment and forecasts for weak GDP growth (if not recession) all point to the conclusion that financial institutions will continue to experience high rates of delinquencies and net charge-offs in their loan portfolios.

As a result there is growing pressure on organizations to reclaim unpaid debt to address increasing default rates in tightening markets. But although in many cases these institutions increased their traditional collections capacity and efforts (more staff, more letters, more calls) the result was raise of spending and discontent clients while collections were not improved respectively, the reason being the delicate nature of collection processes. Customers are sensitive to how, when and why they are contacted. Unfortunately, the systems that organizations currently use for debt collection aren't able to help determine the best customers to contact or which channels to use for that contact (phone, letter, SMS, etc). And there are other factors to consider, including channel capacity. Optimizing the collections process can have a dramatic positive effect on profitability while greatly improving customer experience.

Analytical View, through SAS solutions, approaches the problem by delivering software and services to help Financial Institutions:

  • gain a complete 360-degree view of their customer relationships using advanced data management capabilities to access, cleanse and integrate data from all source systems,
  • create an enriched credit score that provides better predictability of loans in danger of default and the resulting losses to the institution using proprietary credit scoring models
  • optimize collections department activities to maximize recovery amounts and minimize recovery costs.

For Social Security Institutions

In recent years the Social Security Institutions are recording increased losses in their portfolio arising from policyholders who are unable to repay their obligations. In such a financial environment which is mainly characterized by constant change and uncertainty, especially in countries in crisis and amid recession, it is imperative that SSIs and their agencies responsible of collecting arrears, obtain the ability to recognize and forecast at an early stage those insured that will most probably not be able to repay their obligations. The same time they have to develop ‘survival rafts’ for these troubled policyholders so their accounts remain active both for their own good and for the SSI itself. In this way SSIs will be able to minimize damages while leveraging their inflows from their debtors.

Because of the economic crisis Social Security Institutions are facing delayed payments at record levels. This drives them to evaluate and many times adopt solutions that provide faster and more efficient ways of evaluating future transactions compared to the isolated systems and simple outsourcing solutions used in the past.

The solution Analytical View provides uses SAS portfolio for Collections Management and Recovery which completely cover these needs, combining the most appropriate technologies (data integration, data mining, collections predictive modelling, collections scoring algorithms, statistical & forecasting algorithms, model monitoring, advanced reporting), and operational knowledge that is incorporated in the solution which is based on SAS’s multi-year experience in the financial sector (retail banks, commercial banks, insurance funds, p & c funds, life insurance, etc. ) . The solution of SAS is recognized as the top one in this area by all International Analysts (Gartner, Forester, etc.).

Through the solution of SAS and specific statistical methodologies SSIs may forecast (using predictive modelling) the amount of debt which is likely to be paid per insured (collection scoring) and the likelihood of debt repayment per methodology planned to be used ("mode/channel" of communication with the insured, settlement procedures, etc.). In this way SSIs can carve a policy that will bring maximum results in debts collection but also in the calculation of arrears that are forecasted to be accumulated at a given point-in-time point. And this will be done with precision for both the risk and the amount of arrears.

Since the design of SAS Collection Management & Recovery is the result of many of years of experience of SAS in the financial sector, it covers the entire process of evaluating the ability of the insured to repay or default, from the development of the relevant data mart, the specific statistical analysis, the models and their validation to their presentation on the web. The solution combines advanced analytical capabilities, data mining techniques and optimization, thus enabling fast implementation, reduced project risk and higher return on investment (ROI).

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