Roll Rates and the Pandemic –

a lesson for the future

Why?

During the pandemic, delinquency levels reached an all-time low, and several factors contributed to this:

  1. With people working from home and staying indoors, their spending primarily focused on essential items. As a result, discretionary spending decreased, and the savings were allocated towards paying off outstanding bills.
  2. The government implemented stimulus and relief packages, which helped individuals sustain their livelihoods. Maintaining active credit cards was crucial in an increasingly online environment, and a portion of the relief funds were used to pay off credit card debts.
  3. It’s important to note that the COVID-19 situation was exceptional, and the lessons learned during this period may not necessarily facilitate better model building during normal times.

In terms of credit card and retail collection initiatives, they typically cover approximately 25 to 40% of customers, as most individuals regularly make payments or minimum payments to keep their cards active. Delinquency rates can vary depending on the classification of borrowers, with sub-prime customers experiencing higher delinquency levels compared to prime customers.

Consumers have ongoing financial obligations across multiple segments, such as credit cards, mortgages, and auto loans, all of which are paid from the same pool of funds. With limited resources available, there is a possibility of defaulting on some creditors. However, a well-designed collection strategy and skilled collectors can secure a larger portion of the consumer’s funds. This requires objective analysis of data and continuous refinement of strategies to enhance performance.

Achieving optimal collection efficiency and effectiveness relies on various strategies, including dialer and file management, effective call control at the collector level, and strict adherence to compliance regulations.

What?

The customer spectrum ranges from the upper end, where credit cards are primarily used as a convenience tool, to the bottom end, where credit cards are primarily used for credit purposes. It is important to recognize that the strategies applicable to the upper end cannot necessarily be applied to the lower end.

Who?

Our close collaboration with clients and call centers has allowed us to enhance customer acquisition and improve customer service effectiveness. By leveraging data-driven insights, we minimize unnecessary efforts and optimize our services. If you are interested in similar solutions, please reach out to us at info@cclyticx.com.