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05 July 2022
Debt market integration is not new, but it is growing both in the collections market and beyond. So, what is it, what are the benefits of taking an integrated approach, and what does the future hold? Let’s take a look.
What is a market integrator?
In its simplest form, it is an IT platform that takes in client debts and allocates them to one of a panel of debt collection agencies (DCAs).
At one end of the spectrum, you have a flat panel manager, which simply cuts up the package of debt and allocates it out with no special rules. At the other end, you have Managed Service Providers (MSP), which can enrich accounts with fresh contact data, segment them through an analytics engine and place the accounts with one of a panel of debt collection agencies – typically the ones who perform best on the available segments. Complaints handling, Champion Challenge and SLA monitoring are also common in the MSP world.
The benefits of market integration
Procurement – especially for public sector clients – is fraught with risk. There is nothing to stop a losing bidder challenging on the grounds of a small procedural error in a complex process (and rightly so), but this can lead to delays or even the collapse of the procurement process, resulting in sunk costs for all . Selecting an MSP from a pre-procured framework, such as Debt Resolution Services, eliminates this risk.
Why manage a dozen contracts when you can manage one? This allows you the time to concentrate on delivering real value out of the contract without needing to have multiple conversations to achieve the same goal.
Any contract changes will be implemented by the MSP on your behalf, to exactly the same standard.
The MSP can add agencies to the panel without the client needing to re-procure, meaning that over the lifetime of the contract, the best-in-class performers are always available.
To manage both seasonal fluctuations and longer-term increases in debt volumes (e.g. because of the cost-of-living crisis), the MSP will be able to scale capacity across all agencies, bring in new agencies as necessary and ensure that there is always enough supply to match your demand. This would also be the case if one of the agencies had to cease trading for any reason.
What does the future hold?
You only need to look at the government’s Debt Resolution Services framework to see the potential. From the first iteration of this contract (the Debt Market Integrator, set up in 2015), we have gone from a single-supplier MSP framework to the current position:
In a previous LinkedIn article, I wrote about how DRS’s Managed Enforcement Services lot was one of the most novel of all; it is this innovation in the marketplace that gives clients access to the best that the UK has to offer in this space.
By applying market integration to the enforcement industry, Just has been able to leverage data and deliver improved outcomes for both customers and clients. Its innovation has led to Virtual Enforcement Visits that are less intrusive to customers and result in lower fees, making it more likely that the customer will be able to repay the principal debt owed – a win-win delivered through an integrated approach.
Steve Coppard Group Director of Debt Policy and Strategy Just and Arum