Most of the lenders over a period of time have built in a Great Vendor network for catering to their collections needs.
Their network is a combination of Few Large Central vendors, some very strong Regional Vendors and with a long tail of multiple local vendors which are able to provide the last mile reach across the 18000+ lending pincodes in the country.
This vendor network has been performing effectively for the last 2-3 decades and has seen multiple cycles of Lending Growth, Higher NPA’s, Lockdown, transformation from Field to Central calling, Introduction of Digital Collections and many more.
This network also has survived multiple shifts such as mandate of DRA training, Call recording, Call time restrictions and more stringent regulatory compliances.
With all that they have been through the question is the current vendor ecosystem equipped to handle the Future needs?
Before we answer that question lets estimate how the future in Collections looks like;
- Stronger Regulatory control from RBI
- Customer Data Protection – Impact of DPDP
- Deeper Lending Penetration
- More pressure on Cost of Collection
- More aware customer data base & Impact of Social Media
- Lower supply of skilled manpower for Collections
- Smaller loan size with large volume distributions
Are few of the many challenges that Lenders may face depending upon their Lender category, products & business models.
Keeping in view the above challenges, the current Collections agency does offer a solution which is partial.
Large Vendor partners are capable of scale but have challenges around local controls, deeper geo penetration and cost
Regional and medium size vendors are good with local controls but have challenges to scale and are not cost friendly.
Smaller Players do offer good cost advantage at times and significant local control, but are lower on compliance and would find it difficult to adopt to new rules and impacts created by DPDP
With all this the current Vendor ecosystem does solve for most of the current challenges but seems significantly weak in terms of the Future Challenges.
For this the lenders may have to redefine the whole Vendor ecosystem, the selection criteria, and revaluate reason for working with the same vendor every month.
Unless there is a significant Push from the Lender side the vendor ecosystem is not changing for the future, but the question is Does the current Lender ecosystem feel the need for Change?
Would love to hear your opinion on this..
The Author has Worked in Collections for over 20 Years as a Banker with ICICI & HSBC, with Conneqt Business Solutions one of largest Collections Vendor & with Spocto Solution India Largest Collectech Player. He is Currently is working as Co-Founder YuCollect, Unified Collections Infrastructure.
