FinTecSystems Trends

4 Ways Open Banking Can Digitalise Debt Collection Services and Increase the Willingness to Pay

12. August 2020 / in Open Banking, Collection Services

According to a study conducted by the Federal Association of German Debt Collection Companies, 5.8 billion euros are channelled back into the economic cycle each year thanks to debt collection agencies. The economic importance of debt collection agencies is great, but the lack of payment morale among many consumers still poses a major challenge. The most pressing issue facing debt collection agencies today has to do with how they can persuade customers to settle outstanding invoices.

Thanks to Open Banking, debt collection agencies have new opportunities to improve the customer experience and thus their chances of success. In this blog post, we explain how the services offered by Account Information Service Providers increase the repayment rate and how Payment Initiation Service Providers make it easier for customers to pay. You will also learn how Open Banking can help you reduce the workload on your team and how you should be approaching customers in the digital age.


1. Better Customer Experience with Bespoke Solutions

Treating existing customers well, even in the event of payment difficulties, is absolutely worth it! This is because acquiring new customers is very expensive for companies. In this respect, companies should rely on debt collection agencies with a strong customer focus. But how can a debt collection agency develop this customer focus? The answer lies in the services provided by Account Information Service Providers (AISP) that help you take into account the individual situation of the debtor and find a solution that works for all the parties involved.

How does it work? The debtor is provided with a login to their online banking system so that they can accurately display their financial situation. Using the Digital Account Check, debt collection agencies can then view the income and expenditure situation together with the customer and devise a tailor-made solution.

Perhaps it is sufficient to postpone the payment date a little or arrange for the payment to be made in installments? This can mean postponing the deadline, rescheduling a debt or even getting the customer to take out an online loan.

Here it is crucial that you speak to the payer to understand why the claim has not yet been settled. This way, you will be able to arrive at a solution that benefits all parties and significantly increases the chance of the overdue payments being repaid.

The result: A better image for the debt collection agency, satisfied customers and higher chances of settling the outstanding invoice.

The Digital Account Check helps you to understand the customer’s situation and increases the chances of the debt being repaid.

2. Innovative Payment Methods Increase the Success Rate

In order to achieve better results, you should not only take into account the individual situation of the customer. Innovative invoicing solutions should also be used to improve the chances of success. Within the framework of Open Banking, attempts are always made to make the payment of the invoice as simple as possible. Payment Initiation Service Providers (PISP) assist debt collection agencies by enabling new payment methods.

How does it work? Payment Initiation Service Providers offer innovative payment methods that make payment easier than ever before. With a payment process devoid of media disruptions, the payer is guided through the payment process in the best way possible. To initiate a payment, a customer simply needs to log into their online banking and approve the transfer (e.g. via a TAN procedure).

OnlineUeberweisen is an example of a TÜV-certified online bank transfer that does not require registration. This payment procedure can also be implemented as a white-label solution in the look & feel of the debt collection agency.

PISPs now offer innovative payment concepts not only online, but also on paper. For example, a pay code is printed on a conventional invoice, which the customer then only has to scan in order to pay directly online. Whether on paper or digitally, in both cases the customer is redirected to a landing page for payment, provided by the Payment Initiation Service Provider.

The result: A seamless payment experience without manual steps that make it unnecessarily difficult to pay using paper or email invoices.

 Infographic Payment Solutions

3. Open Banking Shortens Internal Work Processes

With the new payment methods, Open Banking also makes work easier for your employees. The error rate during the payment process is significantly reduced, which means that enquiries, corrections and reminders for the accounting department are no longer necessary. What’s more, the payment methods are so maintenance-free for the debt collection agency that your team hardly needs to invest any of its own time and energy. The Payment Initiation Service Provider handles the process right from development to settlement.

How does it work? For new payment methods, the customer is redirected to a landing page. Since the invoices are digital and already pre-filled, errors caused by manually typing or copying the IBAN and intended purpose are avoided.

FinTecSystems also offers debt collection agencies an easy onboarding process for new payment methods. The payment method appears in the look & feel of the debt collection agency, but the complete payment process is hosted and managed by a PISP. This means that you and your team do not waste time on development and administration and can fully concentrate on your core competency. 

The result: Less susceptibility to errors and a new payment option without any development work.

By the way, Account Information Service Providers also save debt collection agencies from performing unnecessary work. With the digital account view, you can assess the success chances of a new reminder and even predict the optimal time to send out the payment reminder. In case of doubt, the Digital Account Check itself helps you decide whether going to court is worthwhile.

Infographic Social Media

4. New Contact Options for Debt Collection Agencies

In the past, debt collection agencies usually wrote letters or called the payer. However, it is often difficult to reach young customers by email or post. Meeting the debtor where they are most often found improves the success rate considerably.

How does it work? By using digital and social communication channels. There are many options: personalised voice calls, landing pages and/or WhatsApp and Facebook Messenger. Best of all, these channels not only increase accessibility, they also greatly enhance interaction possibilities.

The result: Interaction as equals, contemporary, promising customer contact and a better image.

The motto of tomorrow’s debt collection agencies? Collecting debts with the customer in mind. In the future, the classic debt collection image will set the stage for a better image and a digital customer experience. Open Banking is a supportive tool for enforcing payment claims and making the debt collection process more pleasant for all the parties involved.

“Open Banking is necessary, banks are not”? Open Banking goes far beyond the banking sector. Read our overview to find out how and where Open Banking is already being used.

CTA Customer Experience

Schlagworte: Open Banking, Collection Services

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