The benefits of debt management system modernisation

In one of our latest articles, Michał Kaleta, Director of the Financial Services business unit, discussed why the modernisation of IT systems could bring many benefits, including cost reduction, better customer experience, and effective debt management, to financial organisations.

In this post, we’d like to focus on some of the challenges and the proposed solutions that could improve the processes and workflows in the debt management sector.

Enabling customers to access and manage their reliable debt data in one place, anytime

These days, customers opt for using digital channels instead of visiting the office in person. The significant rise in consumer debt underscores the need for accessible digital solutions. Debtors want to see all their liabilities on one dashboard and be able to determine their payment schedule by themselves, make an online payment, contact customer service or change their personal data without leaving their homes.

In this case, the answer to customer needs is to modernise the current solution that debt management companies use and adapt it to a digital, customer self-service era. A cloud-based customer platform integrated with internal systems would be our recommendation to satisfy the current customer expectations and optimise a company’s operational costs.

It’s worth noting that traditional call centres for customer service take up a big portion of a company’s annual budget. An online customer service channel is a cheaper alternative or at least a way to reduce those expenses. Cloud gives flexibility in scaling the solution to the growing needs and allows the organisation to monitor the costs easily. With a microservices architecture, the platform can be developed fast. Also, since each microservice runs independently, further improvements can be done without disrupting other services. Access to accurate data and insights empowers teams to make more informed decisions regarding financial reporting, budgeting, and overall debt management.

Integrating your solution with other systems that your clients already use

What matters to your customers is to use your platform with as little effort as possible. That’s why giving them the flexibility to use their preferred payment method or ensure an easy registration process is a must these days. You should be up to date with your customers’ preferences and ensure that your solution is integrated with the current system and other tools and apps they use, for example, Google Pay or Apple Pay.

Enabling access to your software through a mobile application

Mobile applications allow your customers to access your service from anywhere, 24/7, easily. It’s literally at their fingertips. Managing debt service payments effectively through mobile applications is crucial for accurate recording and timely payment projections, which helps in meeting debt obligations and mitigating reputational risks. Building a mobile application is an investment that will pay off in higher customer satisfaction and retention. It doesn’t mean it has to be a big expense, though.

Progressive Web App (PWA) is a type of application delivered through the web and built using common web technologies, such as HTML, CSS or JavaScript. Its big advantage is that it’s intended to work on any platform with a standards-compliant browser, on desktop and mobile devices. It’s a cheaper alternative to native applications. Developers can simply publish the web app online and post it on the Apple App store or Google Play.

Modernising the debt management system architecture

Many debt management companies struggle with outdated public debt management systems and obsolete technologies from the early 2000s that inhibit their growth potential. Back then, the systems weren’t built using three-layered architecture as it is now and the technology behind it is no longer supported. This is a significant obstacle for introducing changes and updates to the system, because many parameters are hardcoded and any modifications require programming work. Inefficiencies caused by manual processes further complicate data management. In practice, it means that even creating and managing the reports or debt collection processes must be done by the IT department. Modern debt management software can address these challenges by streamlining internal processes and enhancing collaboration. Modernising these systems is crucial for supporting the operations of a debt management office, ensuring accurate record-keeping and reducing operational risks.

The solution to this problem is to modernise the system in a more business-friendly way that allows for introducing more dynamic changes faster. Also, it should be flexible and give the business more autonomy to reduce the IT department’s involvement in the process. Other benefits of modernisation include adding new features in order to improve the effectiveness of debt collection processes, optimise the costs and meet changing customer expectations. The bottom line is gaining a competitive advantage in the market.

Some debt management companies are afraid that the debt management system modernisation will cause disturbances to their business processes. In order to minimise this risk, the modernisation works should be done in iterations, covering individual areas of the business. The first stage of modernisation should eliminate all possible bottlenecks in the shortest possible time and at a low cost. The most sensitive modules of the systems should be modernised at later stages. Such an iterative approach ensures continuous operation of the most critical parts of the system.

Implementing AI for data modelling

The World Bank plays a crucial role in guiding debt management strategies and the use of AI to enhance public financial management and ensure comprehensive and reliable information systems. Debt managers can leverage AI to support effective debt management by selecting and implementing robust systems that ensure accurate records of transactions and meet debt obligations efficiently.

To improve the effectiveness of debt collection processes and to optimise the costs, the collected data should be analysed. AI and machine learning allow the creation of advanced data models that result in better decision-making and could save time and money. Data modelling can truly transform big data into smart data that drives business impact.

Data modelling techniques could be used to better manage the debt portfolio and optimise the company’s operations. AI can predict payment patterns and identify at-risk customers, as well as proactively suggest strategies for restructuring debts to enhance customer satisfaction. Building the right architecture (including a feature store) that provides a holistic, 360-degree view of customers can facilitate the deployment of AI models on a large scale and be fundamental for building a deeper understanding of customers and business processes.

Optimising the debt collection processes through decisions backed by data results in recovering more debts in a shorter time.

Make debt management system modernisation a priority

We’ll help you with debt management system modernisation to optimise your workflows and help you recover more debts. Visit our financial services page for more information or contact Michal Kaleta via the form below.