© Experian Limited 2009. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Limited. Other product and company names mentioned herein may be the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian Limited.
Experian Public Sector
Making effective use of data to aid collection
Agenda
Issues and trends
Key challenges
What Experian can do to help
Summary
© Experian Limited 2009. All rights reserved.
3
Changing face of debtors
2008 serious financial difficulty i.e. decrees and bankruptcy
Young, Working Class
29% increase
Over burdened
Up 18%
Low income
Changing face of debtors
Significant change in debtor profiles.
Professions
50% rise
Well educated, Law, media,
Investment banking
Jet Set
40% increase
Highly affluent, dependent
on global economy
Corporate Chiefs
36% rise
Very wealthy, corporate
executives, metropolitan
suburbs
Just Moving In
153% CCJ/Decrees,
65% BR
Go-getters, highly
leveraged, aspiring
wealthy
© Experian Limited 2009. All rights reserved.
5
New Spread of Debtors Annual Income
UK Consumer Credit Total Outstandings (£bn)
0 20 40 60 80 100 120 140 Ja n-06 Fe b-06 Ma r-06 Ap r-06 Ma y-06 Jun -06 Jul-0 6 Au g-06 Se p-06 Oct-0 6 No v-06 Dec -06 Jan -07 Fe b-07 Ma r-07 Ap r-07 Ma y-07 Jun -07 Jul-0 7 Aug -07 Se p-07 Oct-0 7 No v-07 De c-07 Jan -08 Feb -08 Ma r-08 Ap r-08 Ma y-08 Ju n-08 Jul-0 8 Au g-08 Sep -08 Oct-0 8 No v-08 De c-08 £ bn un s e c ur e d 0 200 400 600 800 1000 1200 1400 £b n se cu red / t o talPersonal Loan
Credit Card (Active)
Mortgage
Total
UK Economy – Lending Overview
Consumer Credit encompasses Unsecured Retail Credit, Credit Cards (limit), Personal Loans, Overdrafts, Unsecured Bridging Loans, Hire
Purchase, Budget Accounts and Credit Sale Agreements. Source: Bank of England, the value of outstandings from September onwards have
been affected by businesses restructuring and the transfer of a company. adjusted number not available. Outstanding at End of Period, New
Lending during period
Outstandings for
secured mortgages are
levelling as remortgage
new business continues
to decrease. More
consumers are now
paying off capital.
Personal Loan
outstandings have been
relatively stable, despite
a reduction in approval
rates and average loan
terms/values, with a
reduction in recycling
and topping-up.
Credit Card
outstandings (on active
cards) continued to rise
throughout 2008 with an
acceleration in H2.
Mortgage
applications
declining
sharply
Individuals
resorting to
increased use
of CC/Overdraft
Cure rates
declining
rapidly
© Experian Limited 2009. All rights reserved.
7
Direct Debit research
DD volumes on the increase (4% increase YoY)
Attitudes to DDs positive (74% positive)
Recession impact
5% using less (mainly in utilities)
3% stopped using
27% using it more !
Some evidence that DDs failing (insufficient funds) across all
Trends in the UK finance industry
Financial institutions are tightening up on new business
assessment, however, this is being offset by increased customer
management (preventative) & collection (remedial) activity
Collections now being seen as a more competitive environment
Public sector payments seen as low priority by many customers
Investment in strategic approach to collections is becoming key as
the increased “manpower” approach fails to tackle the problem
Investment in automation tools for collection strategies
Intelligent use of data and better segmentation required to target
appropriate collections actions
© Experian Limited 2009. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Limited. Other product and company names mentioned herein may be the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian Limited.
Surge in consumer
indebtedness increases
the risk of non payment
with increased numbers
of customers requiring
attention
Surge in consumer
indebtedness increases
the risk of non payment
with increased numbers
of customers requiring
attention
Huge growth in
number of
accounts
1
Current settlement requires
a saving of 3% per annum,
will future demands require
increased cost and
resource savings?
Current settlement requires
a saving of 3% per annum,
will future demands require
increased cost and
resource savings?
Demanding
efficiency targets
2
Changing demands &
influences require
speed of response
Changing demands &
influences require
speed of response
Compliance &
public
scrutiny
5
Court, admin & sheriff
costs all add to the debt
burden
Court, admin & sheriff
costs all add to the debt
burden
3
Recovery vs
social
responsibility
Key challenges for Local Authorities
Fails to address the
individual needs &
behaviours of the customer
reducing recovery
effectiveness
Fails to address the
individual needs &
behaviours of the customer
reducing recovery
effectiveness
One size fits all
processes
4
Increasing Corporate
debt burden impacts
upon revenue
availability for other
core services
Increasing Corporate
debt burden impacts
upon revenue
availability for other
core services
Revenue
protection
© Experian Limited 2009. All rights reserved.
11
Who are you competing with for payment?
First come first served is more true than ever
All industries are suffering from non-payment in one
form or another, its just not called “collections”
Insurance
Cancelled or missed
premiums
Telcos
Increased
attrition
Public Sector
Revenue
protection
Utilities
De-priotisation of
payment
Automotive
Increased
shortfalls
Financial
Services
Delinquency
How can local authorities respond ?
Reduce the problem
Rapid warning of risk & indebtedness changes
Ability to interpret results
Early collections activity
Rapid warning of risk & indebtedness changes
Ability to interpret results
Early collections activity
Initiatives
• Who is at risk
• What actions
• When to take them
• How to deploy
•
Who is at risk
•
What actions
•
When to take them
•
How to deploy
Specific
prevention
© Experian Limited 2009. All rights reserved.
13
• Who is at risk
• What actions
• When to take them
• How to deploy
•
Who is at risk
•
What actions
•
When to take them
•
How to deploy
Specific
prevention
activities
• Who they are
• Where they live
• How to contact
• Personal status
•
Who they are
•
Where they live
•
How to contact
•
Personal status
Know
their
customer better
Better quality and use of internal data
Exploitation of external intelligence
Increased accuracy & value of tracing
Better quality and use of internal data
Exploitation of external intelligence
Increased accuracy & value of tracing
Initiatives
How can local authorities respond ?
• Who is at risk
• What actions
• When to take them
• How to deploy
•
Who is at risk
•
What actions
•
When to take them
•
How to deploy
Specific
prevention
activities
• Who they are
• Where they live
• How to contact
• Personal status
•
Who they are
•
Where they live
•
How to contact
•
Personal status
Know
their
customer better
• Total exposure &
indebtedness
• True ability to pay
• Propensity to respond
•
Total exposure &
indebtedness
•
True ability to pay
•
Propensity to respond
Deeper
understanding
of debtor
behaviour
More predictive collections & indebtedness scores
Incorporate external view at point of interaction
More predictive collections & indebtedness scores
Incorporate external view at point of interaction
Initiatives
How can local authorities respond ?
© Experian Limited 2009. All rights reserved.
15
Who is at risk
What actions
When to take them
How to deploy
Who is at risk
What actions
When to take them
How to deploy
Specific
prevention
activities
Who they are
Where they live
How to contact
Personal status
Who they are
Where they live
How to contact
Personal status
Know
their
customer better
Total exposure &
indebtedness
True ability to pay
Propensity to respond
Total exposure &
indebtedness
True ability to pay
Propensity to respond
Deeper
understanding
of debtor
behaviour
Increased granularity
of segmentation
Individualised &
differentiated
treatment strategies
Increased granularity
of segmentation
Individualised &
differentiated
treatment strategies
Forensic
Targeting
of
customers
New profiling techniques
Data-driven segmentation
Champion challenger
New profiling techniques
Data-driven segmentation
Champion challenger
Initiatives
How can local authorities respond ?
© Experian Limited 2009. All rights reserved.
16
Who is at risk
What actions
When to take them
How to deploy
Who is at risk
What actions
When to take them
How to deploy
Specific
prevention
activities
Who they are
Where they live
How to contact
Personal status
Who they are
Where they live
How to contact
Personal status
Know
their
customer better
Total exposure &
indebtedness
True ability to pay
Propensity to respond
Total exposure &
indebtedness
True ability to pay
Propensity to respond
Deeper
understanding
of debtor
behaviour
Increased granularity
of segmentation
Individualised &
differentiated
treatment strategies
Increased granularity
of segmentation
Individualised &
differentiated
treatment strategies
Forensic
Targeting
of
customers
Automated decision making, assessments, treatment definition and execution
Automated decision making, assessments, treatment definition and execution
Automated,
informed
Interactions
Driving informed, context sensitive conversations
Driving informed, context sensitive conversations
Initiatives
How can local authorities respond ?
© Experian Limited 2009. All rights reserved.
17
What Experian can do to help
Components of a collections system
Tactical (CitizenView) to strategic
Proof of concept/trials
Core components of an effective collections system
Test & learn / adapt to changing circumstances
# Accounts Score payers Non payers
Scores
Data
Internal
Data
External
Data
Decision systems
automated
Workflow
manual
MIS
© Experian Limited 2009. All rights reserved.
19
Core collection components - Data
Data issues
R
ig
h
t
P
a
rt
y
C
o
n
ta
c
t
Traced
Promise Rate
Cleansed
Customer
data
Customer
data
Single
customer
view
Single
customer
view
Old or
missing
customer
data
Old or
missing
customer
data
Data access/
extraction
Data access/
extraction
Data quality
& integrity
Data quality
& integrity
Compliance
Compliance
Data
security
Data
security
Changes in
customer
situations
Changes in
customer
situations
General principals
Invest time and resources to ensure customer data
quality is of a high standard
Verify and validated data
Augment data with focussed cleansing routines
Use all available, including that specifically legislated
for Local Authorities, e.g. Citizen View credit stress
Periodically review data held and flag issues or trigger
cleansing
Data capture a combination of internal processes, staff
awareness and external enrichment
Data Driven Services
Single Person Discount Reviews
Utilising up to date
data sources
Validates residency
status and household
make-up
Instantly identifies
potentially inaccurate
and fraudulent claims
Paperless
Timely
Cost effective
339 million linked
addresses
5.7 million
deceased
records on the
Mortality File
Up-to-date
Electoral
Register
200 million
searches
each year on
previous credit
applications
Creating a picture of the residency make up at an address
1 billion records on the UK adult population
420 million
Credit
Account
Informatio
n Sharing
(CAIS)
accounts
© Experian Limited 2009. All rights reserved.
21
Forwarding
Forwarding
Address
Address
Identify a
forwarding
address
Living As
Living As
Stated
Stated
Establish they are
living as stated
Address
Address
Monitoring
Monitoring
Constant review
Data Driven Services
Core collection components – Scoring
Prioritisation and segmentation
Propensity to pay indicators
Monitoring for future
compliance
Identifying customers with
worsening debt
Monitoring for key risk events
to identify changes in key risk
variables
Risk
Allocation to collections
resource
Prioritisation of debt collection
Optimal message and tone to
communicate to the customer
Optimal tool for
communicating with the
customer, e.g. letter,
telephone, text
When to litigate or enact
enforcement
Collections
Property equity
Monthly arrangement amounts
Lump sum calculations
Affordability
The implementation of scoring systems is now universally recognised as the key
to optimised collections
© Experian Limited 2009. All rights reserved.
23
# Accounts
Score
payers
Non payers
At reminder stage the collection strategy
could also be tailored to the individual
Pre Summary Warrant Strategy =
Remind
SMS
Standard
approach
Standard
approach
Concern
approach
Collections Score – collates data into predictive metrics
Recovery Rate by Score
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
<=100
101-200
201-300
301-400
401-500 501-600
601-700
701 +
Score
Reco
v
e
ry
Rat
e
Summary Warrant Payment Arrangement made No Forwarding Address for customer
Small balance letter
Make no payment, or Fail to pay as arranged
Sheriff visit Costs added to bill Pay as
arranged Default Letter
Internal trace Address found Address not found Result depending On circumstances External trace Costs added to bill
Pay in full or Arrangement made Consider write Off depending On circumstances Address not found Debt less than £100
Means enquiry Letter warning of
Recovery action
Utilising prioritisation and segmentation within
council tax debt recovery
Score used to
determine
collections
action
Score used to
determine self cure,
hardship case, or
enforcement case
© Experian Limited 2009. All rights reserved.
26
Collections proposition
Council tax debt recovery – current practice
CT/ NDR Billing System
sheriffs
sheriffs
1
stPymt/
2
ndPymt
Reminder
1
stPymt/
2
ndPymt
Reminder
Summary
warrant/
14 Day ltr
Summary
warrant/
14 Day ltr
Pre sheriff
Pre sheriff
Customer
Understanding
Customer
Understanding
Liability
Assessment/
Bill
Liability
Assessment/
Bill
Finance
Finance
Recovery/
Committal
Recovery/
Committal
Summons
Summons
CitizenView Debtor Tracing
CitizenView Debtor Tracing
CitizenView
Telephone
Numbers
CitizenView
Telephone
Numbers
DD Review
DD Review
CitizenView
Full Financial
CitizenView
Full Financial
SPD
Review
SPD
Review
CitizenView
Debtor
Tracing
CitizenView
Debtor
Tracing
CitizenView –
Telephone Numbers
CitizenView –
Telephone Numbers
Enabling Public Sector Decisions
From this…
© Experian Limited 2009. All rights reserved.
28
Collections proposition
Council tax debt recovery – future ‘vision’
Operational
Review
Operational
Review
Collections
Business
Review
Collections
Business
Review
CT/ NDR Billing System
sheriffs
sheriffs
1
stPymt/
2
ndPymt
Reminder
1
stPymt/
2
ndPymt
Reminder
summary warrant/
Notification/ 14
Day ltr
summary warrant/
Notification/ 14
Day ltr
Pre sheriff
Pre sheriff
Customer
Understanding
Customer
Understanding
Liability
Assessment/
Bill
Liability
Assessment/
Bill
Finance
Finance
Recovery/
Committal
Recovery/
Committal
Summons
Summons
Data cleanse
Data cleanse
Customer
Comm
Preferences
Customer
Comm
Preferences
Benefit
understanding
Benefit
understanding
Single
Person
Discount
Single
Person
Discount
Empty
Properties
Empty
Properties
Business
Risk
Business
Risk
Debtor Tracing
Debtor Tracing
Debtor Tracing
Debtor Tracing
Contact Data Appends
Contact Data Appends
Contact
Data
Appends
Contact
Data
Appends
Scoring & segmentation codes
Scoring & segmentation codes
Scoring & segmentation
codes
Scoring & segmentation
codes
DD Review
DD Review
Decision Support
Decision Support
Decision
Support
Decision
Support
Property
Valuations
Property
Valuations
DD
Promotion
DD
Promotion
SPD
Review
SPD
Review
Empty
Properties
Empty
Properties
DD
Verification
DD
Verification
Which accounts
will miss or
struggle to pay &
how can I help
them?
Which accounts
should I prioritise?
Where is the
customer & what
is the best way to
contact them?
What actions do I
take, at what time
& with what
intensity?
How do I manage
my sheriffs &
when should I cut
my losses?
How could I
improve my loss
provisioning?
Core collection components – Workflow
Decision Support
Informing the conversation between the
collector and the customer with:
Up to date information
Intelligence and analytics
Delivering & developing best practice models
and routines that can help to introduce
consistency and maximise recovery rates
Avoiding the need for substantial IT
© Experian Limited 2009. All rights reserved.
30
Core collection components – Workflow
© Experian Limited 2009. All rights reserved.
32
Tactical Help
Trace debtors
Understanding of individuals/households
Informing debt recovery action at point of contact
Distinguish between can’t and won’t pay = efficiency, front line support
Provide employer contact details = Attachment
Provide Bank Account details = Arrestment
Provide Property valuations + Mortgage debt = Charging Order
Identify benefit fraud = release cash
Verify SPD claims and empty properties = release cash
Direct Debit campaigns
Target new potential DD payers
Develop loyalty/retention schemes
Strategic/Operational Help
Business process review
Collection scores
Collection systems
Closed User Group (Scotland Summary Warrants)
Proof of concept/trials
© Experian Limited 2009. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Limited. Other product and company names mentioned herein may be the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian Limited.
