Pre-Delinquency Management Approach


Debt is rising, and the portion of bad debt is getting wider. This is the nature of the markets we are in, and it won’t be changing anytime soon.

Pre-delinquency indicators are vital in assisting financial services companies in their risk and control processes.  Off-the-shelf software provide such features, however every business is different and this is where outsourcing custom software development can contribute to the development of intelligent debt management systems.

Although financial services companies are in the business of issuing debt, their role is to maximise profits and shareholder value from the services they offer, however bad debts erode these gains.

Whilst a solid operational strategy to debt management and collection is key, the right tools can provide help and direction in managing exposure, and where possible mitigating the risk of out of control debt cycles.

As customer incomes are stressed due to various payment commitments and rising living costs, financial services companies would benefit from features that help with reducing levels of delinquency by identifying customers at risk at an early stage, and this is where Predictive Delinquency comes into play.

Smartlogiq risk tools have predictive capabilities that help our financial services customers identify potential risks in their portfolio and raise early warning signals and reports of customers who would be affected by stress in economic conditions.

With such tools, financial services companies can create strategies to manage relationships, offer alternative products or re-structure ahead of a default or delinquency event.

Proactive approach to credit default or delinquency management benefits both the customer and the lender, resulting in lower long term credit losses and hence improved profitability.

At the core of your debt management strategy is getting as much data as possible from customers, it may not be perfect at the start, but as you grow and harvest your data then your predictive analytics becomes more effect.

Predictive Analytics augments data from across the Smartlogiq suite of software, credit agencies and repayment histories, merged into proprietary algorithms that help identify potential pockets of customers within the lender’s portfolio.

There is no one-size-fits all, but with the balance between strategy and tools, a multi-approach can be devised for different buckets of risk groups coupled with a communication approach and workflow actions.

For a fair and realistic approach to delinquency management, financial services companies have to adopt efficient collection systems with pre-delinquency measures and predictive analytics that ensure effective debt collection whilst increasing customer engagement practices as well as adhering to regulatory guidelines.

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