Absa Bank, one of Africa’s largest financial groups, has transformed its collections operations working with global analytics software firm FICO.
As COVID-19 hit Africa, Absa Bank was capable of rolling out payment relief initiatives whilst communicating with distressed customers through utilising efficient FICO solutions, allowing the bank to meet its vision of ‘Housing the Nation’ during a time of national and international crisis.
“Recently, Absa embarked on a 3 year journey to transform its collections estate into the best-in-class in the world,” said Sibulelo Ncamani, a change lead in the Collections Transformation Programme at Absa. “We selected FICO as our strategic partner for this journey, focusing mainly on analytics, operations and technology.”
“One of the solutions we chose is the FICO Customer Communications Services, which our Home Loans portfolio implemented first. We sought to achieve a digital, omni-channel capability that will enable 24/7 access to our distressed customers to assist in their time of need. This capability was a crucial component to the Absa Home Loans business vision of ‘Housing the Nation’ and more specifically for Home Loans collections and recoveries”
After three months of deploying FICO Customer Communication Services (CCS) and making process changes, Absa’s self-paying customers nearly doubled from 23% to 43%, and in turn immediately reduced impairment charges, resulting in a three-month ROI of 29:1. For its achievements, Absa Bank has won the 2021 FICO Decisions Award for Debt Collection.
Improving Communications in Collections
Communications is the key to effective collections, and Absa needed to break down siloed communication channels, create profile-specific communication strategies, and execute real-time processes. Automation was important, as was learning from response and interaction data to see what worked and which channels customers preferred.
FICO Customer Communication Services (CCS), integrated with the FICO Debt Manager, enabled Absa to set up different treatment strategies for customers at different risk levels and who had different reasons for being in arrears, including:
- Technical arrears such as delayed inter-bank payments.
- Salary dates that have moved.
- Customers who simply forgot to pay and require a nudge or reminder for payment.
- More severe types of distress such as reduced working hours or even unemployment.
Using FICO CCS’s omni-channel capability, Absa sent customers different combinations of static messages, interactive messages and interactive voice recordings, thereby allowing customers to self-pay before being intercepted by an agent. Customers could also make a payment arrangement without having to talk to an agent.
“We saw fantastic results from our initial trial,” said Ncamani. “Removing accounts from the dialler resulted in a 26 percent reduction in call centre effort, without a reduction in customers’ payment performance. By automating more work, we also saw our team’s morale improve, as more meaningful work was provided to agents.”
Meeting the COVID-19 Challenge
When South Africa went into hard lockdown at the end of March 2020, it placed a severe constraint on the collection team’s operational capacity, at a time of unprecedented distress for customers. “More of our customers than ever were in danger of losing their homes due to non-payment,” continues Ncamani. “Again, FICO CCS was able to accommodate Absa Home Loans. By increasing our capacity through automation, we were able to focus on severely distressed customers and roll our payment relief initiatives as part of our COVID-19 response. FICO CCS also acted as a channel of engagement for distressed customers looking for assistance on managing their bond repayments. FICO CCS enabled us to do ‘business as usual’ collections in a period that was anything but usual.”
Absa plans to expand FICO CCS to more customer segments as it prepares for any future increase in delinquencies following post-COVID-19 stress. The capacity saving expected from FICO CCS will allow the business to promote agents from pre-legal collections to legal recoveries.
“This will further improve the colleague experience and assist our business in the area that is expected to be under strain for an extended period of time post-COVID-19,” said Ncamani. “In addition, we will expand FICO CCS strategies to include automated forbearance offerings and deceased estate management, which are highly manual processes today. And we will use the data generated by CCS to develop interaction models that will allow us to offer the right customer the right solution through the right communication channel.”
“Absa Bank kept more customers in their homes during an unprecedented period of anxiety and financial stress,” said Nikhil Behl, chief marketing officer at FICO. “That is an achievement that goes beyond profit margins — the bank is truly a force for social good. We at FICO are honoured that our technology could play a part.”
“ABSA understands the sensitivity of the collection process and the importance of reaching a customer as quickly as possible,” said Tiffani Montez, Banking Analyst at Aite, and one of the FICO Decisions Awards judges. “They were able to take a manual collections process and automate customer outreach with a high-touch, flexible communication model. In addition, they were able to reduce reliance on having an agent take payment by giving the customer the ability to review options and make payment.”
FICO Customer Communication Services, part of FICO’s solutions for debt collection and recovery, enables businesses to orchestrate communication strategies with different channel mixes, follow consumers if they switch channels, and measure results in a unified approach across channels. Collections teams can conduct any number of dialogues through online and mobile channels with the efficiency, courtesy, and compliance of their best agents.