Payment morale is a bone of contention in many sectors, including the financial sector – if customers get behind on their payments, it normally has a negative impact. It has a negative impact on credit reports, which can also influence the bank’s own credit rating. For companies like banks, fintech startups and others in the financial sector, a defaulted payment means a reduction in liquidity. Only when the defaulting customer makes a repayment by mutual agreement between both parties can the customer remain with the financial institute after the debt is settled.
By mutual agreement, with modern communication methods and no changes in media format – it is a simple summary of the 100% digital debt collection system for banks and finance companies from PAIR Finance. Solution strategies which allow both debtor and creditor to continue the business relationship after the repayment are the aim of the digital claims management system from PAIR Finance.
Reminders to “pay within … or else …” or similar are a thing of the past, you could say the “dismal past”: the business of fear to trigger psychological processes. And if payment demands are written by a solicitor or with the visible involvement of a solicitor, then the debtor’s anxiety can go through the roof. Receivables management from PAIR Finance is based on a completely different approach. We use data records which are easily available in the digital age. Previously, debt collection was all about taking a standard approach. All debtors are the same. There was no categorisation. The debtor was given a number. But behavioural research shows that not everybody reacts to a specific approach in the same way. What works really well for customer A and will probably work for customer B, will fail completely for customer C or, at the very latest, customer D. This achieves the exact opposite of what they set out to do.
Debt collection gets expensive when solicitors get involved. Of course, every company going to court against a debtor must be represented by a solicitor. But does it need to come to that, could the repayments not be made before legal proceedings become necessary? Things do not have to come to extremes and start generating disproportionate levels of costs. PAIR Finance enables consumer-driven debt collection solutions which are different to the previous industry standards not only through the targeted way they address the customers, but also through the use of the latest behavioural research findings and psychology. This means payment reminders can be completely redesigned.
A streamlined cost structure is also important here. The cost-effective use of digital methods and banishing the traditional intimidatory measures that have dominated debt collection for many years add up to low levels of additional costs. The individual approach takes the threatening element out of payment reminders and sheds light on individual background stories. In many cases, making threats can produce the exact opposite of what is intended: the settlement of a justified claim arising from a contractual relationship between the finance or credit company and the customer. An individual approach from the creditor based on behavioural research, psychology and data-based optimisation, takes away the threats and makes the debtor more inclined to settle outstanding debts.
Of course, the declared objective of receivables management is to maintain the liquidity of the creditor. However, it is a pleasant side effect when the bank customer is retained as an existing customer of the finance company after their outstanding debts are paid. This is exactly what the personalised PAIR Finance process aims to achieve: settlement of the debt and continuation of the existing business relationship.