Pre-charge off /Front-end collections in BFSI

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A robust Risk-Operations framework is an advising body to the credit reporting
bureau of the country. It remains fair to its customers to drive net promoter and
financial growth while ensuring adequate risk mitigates are in place to reduce
charge-offs and stress on backend collections (Mid-Late stage 91-179 days past
due). Risk Operations enables a smooth operating mechanism, driving the focus
on High risk inventory through modeling and predictive analytics.
Collections operating model is where the rubber hits the road, every day on each
call with customer. It is a delicate balancing between maintaining a high degree of
customer experience while ensure collection of the amount due from the customer.
Assertiveness, empathy and a solutioning approach are critical in maintaining this
balance. Understanding of Hardship tools likes “Change in Terms”, 3 MP (3
monthly payment leading to a cure), Settlements and credit counselling solutions
go hand in hand with a clear analysis of customers debt to income ratio.
Dialer strategy plays a pivotal role in reaching the customers first before
competitors and thereby gaining the first right to resolve customers debt situation.
Certain key components of the Dialer strategy are critical from a resource
optimization and to direct resources towards high risk inventory. -
Developing a Robust Risk Operations Structure
Building Blocks – A Robust Operating Model

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 Best time to call is a critical component of dialer strategy and this analysis is
key to building the dialer framework.
 A robust dialer framework based on BTTC (Best time to call) analysis is
always consistent and does not vary from week to week. It is critical to
ensure adherence to the framework by dialer TSA’s.
Example: Day 1 of the week
 High to low balance starting with inventory closest to billing
 High risk inventory first and then Medium and finally low
 Noon primetime – Business- Home chain only for certain regions
(Eastern and Central in U.S. usually constitutes 80% of delinquent
inventory)
 Dialer pacing of 1:3 in prime time and reduce to 1:2 in non prime
time.
Day 2 of the week this may be changed to Medium balance first
while keeping a few other components consistent.
All dialer strategies are based on risk segmentation of inventory and measures of
success need to be reviewed at all points of time.
Some of the key measures of success that need to be first base lined and then
reviewed frequently are;
 Month on month and year to date Ops-loss including (Bankruptcy, fraud,
charge-off and inventory sales post charge-off)
 Roll rate by inventory segregation
 Daily delinquency reports
 ACR health-checks
 Collection efficiency
 Dialer stats
 Resource utilization
 Customer complaints and regulatory adherence
A robust Risk Ops strategy engine driving the operating mechanism can bring in
huge reductions in roll-rates and also enable cost optimization. Focus on front end
collections not only reduces the pressure on backend, it also enables backend
teams (Mid and Late) to drive down repeat high risk inventory through payment
plans and settlements.
The key to bringing in a change lies in incorporating a metric driven culture.
 Building robust Risk operations mechanism through data mining.
 Enabling executive decision making through key diagnostic reports
 Ops loss dashboards – Assist in forecasting to Actuals
 Roll rate (Delinquency movement matrix)
 Daily delinquency reports
 Collections Performance dashboards
&
 Knowing the pulse of customer – Developing a customer advocacy
framework
Summary