The annual report found that digital communication innovations were top of mind for all firms in the collections industry, though smaller companies continue to be slow adopters.
12/14/2022 1:30 P.M.
2 minute read
TransUnion and Aite-Novarica’s newly released fourth annual report, “Charting the Course and Steering Towards Success: The Collections Industry in 2022,” examined overall accounts receivable management industry trends, highlighting key challenges and opportunities when it comes to technology.
The report, informed by a survey of 140 third-party debt collection professionals conducted during the second and third quarter of 2022, found that only 37% of collections firms are using text/SMS messaging—a 6% increase from last year—to communicate with consumers. Splitting the data between large firms (100,000 or more accounts) and small firms (fewer than 100,000 accounts), the survey showed that 56% of large firms used text/SMS messaging, while only 17% of small firms did the same.
“The slow adoption of texting and SMS messaging was somewhat surprising, given the limitations Reg F placed on outbound calling and American consumers’ clear preference for text as a communications channel,” said Jason Klotch, vice president of third-party collections in TransUnion’s diversified markets business. “In general, the success of companies in this space will be dependent upon their adoption of digital solutions that create efficiencies and cost savings.”
Thirty-four percent of the large firms surveyed said they plan to add text/SMS messaging to their communications channels within the next two years, while 40% of small firms said the same.
The report also found that large firms continue to invest in solutions to improve compliance efforts with the Consumer Financial Protection Bureau’s Reg F requirements while small firms lagged behind—likely due to constrained budgets.
Further findings from the report include:
- Currently, 31% of large firms are using an in-house or outsourced machine-learning solution, while 45% are considering one or the other. “This tool will likely grow in popularity as the supply of data scientists improves, the technology is further developed, and regulation surrounding its use is shored up,” according to the report.
- The survey found that 55% of business owners agree or strongly agree that they plan to invest in agentless contact strategies, such as chatbots and text messaging. Accordingly, 53% agree or strongly agree that consolidation and technology innovation will lead to fewer jobs in the collections industry over the next year.
- Nearly 80% of respondents agreed or strongly agreed that hiring is much harder than it was two years ago. However, slightly less (67%) agreed or strongly agreed that retention is much harder than it was two years ago.
Read the complete report here.
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