Consumer debt is at an all-time high. As a result, according to officials of CRM and other business technology vendor SAS, financial institutions are reportedly being pressured to reclaim unpaid debt to rebuild cash reserves in a tightening market. 

 

Now collecting this debt requires resources to execute the collection process. And it's not as easy as sending Vito and Guido around to inquire about the health of someone's knees and use the opportunity to show off their nice new Louisville Slugger. Things are much nicer these days. And probably as effective.

 

“Financial services institutions must re-gear their analytic techniques to adapt to a new playing field,” said Brian Riley, research director of bank cards at TowerGroup. “Rising unemployment, coupled with a protracted recession and increased credit costs make existing tools obsolete. Successful lenders that apply advanced analytics to optimize their strategies experience particularly strong results.” 

Debt collection, according to SAS (News - Alert) officials, is "delicate. Customers are sensitive to how, when and why they are contacted." In their view, most debt collection approaches fail to identify who best to contact or which channels to use. 

First Coffee knows what you're thinking: "Call centers." Yes, that is often the most effective communication method – are also the most expensive. SAS said using predictive analytics helps companies make effective use of their call centers and alternative methods of communication, such as SMS, IVR, e-mail that may also achieve successful results at low costs. 

SAS officials said that using their approach, collection managers can plan and prioritize outbound communications, "balancing the organization’s capacity with the likelihood that customers will respond."