Cape Town, 23 Sep 2013
A recent survey completed by senior managers at South African financial services and retail companies highlights the need for a new and innovative response to the rocketing numbers of indebted consumers.
Current economic conditions combined with increasingly indebted customers mean financial services and utility companies are expecting their consumer debt write-off levels to increase significantly over the next year, a situation which, if left unaddressed, will directly affect their bottom line. The survey highlighted the need for companies to make changes to adapt to their customers' changing profiles and increasing use of the Internet.
The survey was completed by attendees of recent workshops held in Cape Town and Johannesburg by two pioneering companies in the payments and collections field, who have joined forces to help tackle South Africa's growing consumer debt problem.
The Emerging Markets Payments Group (EMP) has partnered with CMC (Collections Marketing Centre) to help companies manage customers in arrears and enable individuals to take control of their repayments schedules through the intelligent use of agent-based collections, customer self-service via the Web and mobile channels. This increased control results in improved collections rates, reduced cost to collect and greater customer satisfaction.
The goal of the research was to gauge expert views on the current state of consumer lending and trends regarding the number of consumers experiencing repayment difficulties as well as to understand the industry's view of techniques and processes being deployed to assist, manage, and collect consumer debt (customer experience management).
As consumer debt in South Africa continues to rise, all lenders are being negatively affected as customers fail to settle their bills and ignore repeated requests to pay. According to South Africa's National Credit Regulator, which is trying to reduce unsecured lending levels, nearly half of all consumers are at least three months behind on debt payments.
The trend toward greater bad debt write-offs and the direct connection to company profitability is emphasised by the vast majority of respondents indicating that the topic receives board level attention.
To help customers in arrears, some companies are restructuring repayment schedules and changing their internal collections processes. However, the survey makes clear that South African companies could increase revenue collection levels by deploying best-practice technologies and systems.
Many organisations in South Africa which extend credit, including banks, retailers, personal loan companies, local government and utilities, are using outdated legacy collections systems to manage outstanding customer debt. The survey shows that in today's rapidly evolving consumer landscape, this is no longer a viable option. Only continual innovation and the ability to address the customer via their preferred channel in an innovative and engaging way will result in reducing exposure to the consumer debt mountain.
EMP and CMC are now providing these types of organisations with the most advanced and innovative arrears management and collections technology available today in order to boost collection rates while improving the customer experience.
Vytas Kisielius, CEO of CMC, said: "Clearly there is an extremely worrying debt problem in South Africa and stories tend to focus on the effects of debt on consumers who are struggling. There has been little analysis of how outstanding consumer debt and increasing levels of write-offs are affecting the bottom line of South African companies. Our survey clearly shows that companies need to get more proactive in their management of customers in arrears."
Mike Crawley, CEO at EMP Southern Africa, says: "Rising debt levels in South Africa are affecting the viability of many businesses which must explore every technique available to recoup payments. Enabling customers to self-cure is a straightforward and proven way to improve collections rates. CMC's FlexCollect brings best-of-breed and proven technology to Africa's lenders."
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