Why digital collections is good for lenders?
Are they pros and cons or only pros? Let’s dive into the digital transformation of debt collections..
Are they pros and cons, when it comes to digital collections like any other process or does it weigh down mostly to pros alone?
To know and understand what is the answer to this, let’s dive into the journey of a customer to repay. Also understanding what it means to the lender taking this digital route, transforming the age old method of traditional collections that involves door step collections and or a person contacting the customer over a phone.
These could still be envisioned as a professional approach much far from the brutal reality wherein customers are threatened, and in some scenarios even hijacked to repay their dues.
Legal implications do not define clear boundaries of permissible acts, and most of it is left to the interpretation of the lender. That is where the undue advantage of the customer is taken.
These instances leave the customer with bitter memories, not always will their ability to repay be bad, circumstances change and needs of customers to borrow still remain, or rather increase exponentially as inflation comes into play months and years down the line.
By now you must have got a fairly decent idea of why there is a depurate need for a revolution, a game changing dynamics for the lenders to engage with their customers.
If they are targeting a near term goal, they can go on with their shenanigans, however the cream and the cherry on the pie undoubtedly is in maintaining a good long term relationship with the customer. On an average the customer’s borrowing life span is 20-25 years from the time they start their first earning to the time they retire.
With unsecured loans like personal loans and credit cards and lines of credit to secured loans like mortgage based repayments, lenders would be losing their customer to their rival if they do not shift their focus from mere recoveries of debts or so called collections to enhance the overall customer experience.
By doing so, the customer is treated the way he/she expects to be treated and remains in the lenders sphere for a longer duration, hopping and jumping from one product to another. It’s a win-win for everyone involved.
Most of the lenders are realizing this impact and adopting technology for a personalized and curated experience that gets the customer coming back to borrow more.
Now which lender wouldn’t want this outcome?