Principa has delivered a number of advisory and analytical projects throughout the African continent over the last 20 years. With recent work at two large regional lenders who have adopted our collection software, CollectSmart, we share some of our experiences working across 18 countries.
“It is important to have a good understanding of the environment in which our clients operate. One must have a good grasp of the day-to-day operational requirements, and the legislation that may be relevant to each territory. This has allowed us at Principa, to provide our clients with products and solutions that can successfully deliver the necessary business value, and optimise the return on investment” – Vanessa King, Principa Head of Sales
There are key themes that have driven our regional lending clients towards adopting collection sophistication through a collection management system. Here we explore four of them:
1. Multi-language capability
Most collection management systems (CMSs) are available in a single language (typically English). This poses a challenge to many African countries that are multi-lingual. Not only do customers insist on engaging in their home language, but some country’s legislation requires lenders to offer legal contracts and letters in multiple languages. This means that for ease of engagement, CMSs should offer multi-language functionality.
This means two things. Firstly: sending automated messages (SMSs/emails) to a customer in their language of choice (in Kenya this might mean Swahili, English, Kikuyu, etc.; in Nigeria this might mean Yoruba, English, Hausa, for example). Secondly: enabling collectors to utilise the collection system in their preferred language.
For regional lenders multi-language is essential as even if they choose the primary language in each country, the countries in which they operate may have different primary languages. A regional lender we are working with, operates in countries such as Tunisia (Arabic), Senegal (French), and Nigeria (English).
Another critical function required by our regional lenders is the ability to facilitate multi-currency. Not only does this incorporate the ability to set different currencies by country, but many countries run multiple books in local currency and US dollar, and require at book level to set different currencies on the same system. Furthermore, running multiple books over multiple countries leads to an additional requirement of reporting in a single currency regardless of book or country. Some regional lenders require a US dollar view of, for example, their yield forecasts.
3. Data-driven solution
Using data to drive your collection segmentation allows for more effective collections. Many of the pan-African organisations we have dealt with are becoming more sophisticated when it comes to building a collection strategy.
Some of the key features of a best-practice data-driven collections strategy include the following:
a.) Use of internal collection data, dialler data (if available), and external credit bureau data within the collection strategy.
b.) Looking at current status of accounts, but also historic performance considering historic missed payments and changes to balance.
c.) Utilisation of a collection score to better prioritise accounts to collect.
e.) Allow the collection strategy to define scenarios/groups of account for which specific risk-tilted treatments can be defined (SMSs, emails, letters, telephone calls, field visitations etc.)
a.) The calculation of the following scores:
- payment projection,
- predelinquency scores
all require a scoring engine to feed the collection management system. These scores allow for enhanced segmentation and prioritisation of accounts based on the likely,
b.) Calculations of fields such as “payments made over the last 3 months as a percentage of month due” requires a sophisticated calculation. This should be done with a DMP.
4. Field collector app
Through Principa’s 20+ years in existence, we have delivered projects in over 45 countries. In key regions such as Central America, Southern Asia and throughout much of Africa cradle-to-grave relationship lending is very common. We found this to be the case in many of the African countries where we are working. This relationship lending begins at originations and extends to collections where field agents are sent out to find the customers of delinquent accounts.
“Relationship management forms the cornerstone of early stage collections within most African regions, with the emphasis on maintaining customer relationships, and focusing on the rehabilitation (regularising) of the account” – Rory Kew, Principa Principal Consultant.
For our rest-of-African clients there has been a significant requirement for developing a collections field agent app to link directly into the collection management system (CMS).
Principa have developed a CMS field agent app that functions in both on-line and off-line mode.
This application (CollectSmart App) now provides the field agent with the capability to receive his/her daily workload, in order to visit the customers and log actions against each account. The App also makes the collection of information and documents easier, through capturing images and uploading them against the customer account. All actions taken are not only date/time and user stamped for auditing, but also geo location stamped.
In our next blog, we will illustrate how our collections management system, paired with our decision engine transformed the capability of a manufacturer and provider of solar powered products in East Africa.
Author: Perry de Jager, Head of Collections and Recoveries Solutions
Perry has been with Principa Decisions since 2015 dealing with Collections and Recoveries solutions for clients within South Africa, Africa and the Middle East.