By: Andy Beddoes

U.S. consumers are feeling the pain of massive financial strain. Many individuals are falling behind on payments -- particularly for credit cards and auto loans -- with delinquency rates now at their highest levels in 15 years. Recent survey data shows one in three (33%) consumers have trouble managing their debt, and 35 percent can't pay all of their bills on time.  

In the past, wireless carriers and telco providers have been shielded from this havoc, as the vast majority of consumers prioritize paying their mobile phone and internet bills. However, many consumers are now finding it difficult to pay for even the most basic necessities. Take, for example, the fact that 25 percent of Buy Now Pay Later users say they are now using the offering to buy groceries -- up from 14 percent in 2024 and 21 percent in 2023.

Today in the U.S., up to 5 percent of all U.S. subscriber accounts are delinquent at any given time. With more than 450 million post-paid wireless accounts active in the U.S. and an average past-due balance between $200 and $300, this totals nearly $3 billion in past-due payments.  

Given the current era of economic uncertainty, wireless carriers need to take advantage of new innovations in advanced analytics and holistic, cloud-native risk decisioning solutions to execute best-practice treatments before consumers go past due on their accounts. 

These innovations provide carriers with deeper customer insights through seamless data source integration, enabling them to orchestrate behavioral treatment and outcome data. They help improve rehabilitation rates with event- and batch-driven decisioning to reduce rapid roll to write-offs and incorporate embedded intelligence to personalize treatment strategies and communication methods based on behavioral and risk patterns. 

Through the use of technology, carriers can blaze new trails in empathetic and customer-centric collections approaches, thereby improving recovery rates and customer relationships. 

Key Steps for Pre-Collections and Collections

Researching best practices from telco companies around the globe reveals that a collections risk decisioning strategy for wireless carriers should consist of the following seven key steps. Additionally, the platform upon which these components are configured and executed must allow simple, self-service access for business users to arrange, test, and deploy each aspect without adding additional burden to a telco company’s IT department. 

Step #1: The Champion / Challenger Method: A key question for telco providers is whether they can implement independent and in-stream testing of objects that execute further down in a workflow. An unlimited random number generator that divides decisioning down two or more flows allows for complex testing strategies to be executed, which is important for fine-tuning the impact of strategies on collected balances and is a best-practice first step. 

Step #2: Assigning Data Attributes: It’s vital that wireless carriers enable the ingestion of internal and external data to calculate attributes. These attributes could include days past due, debt-to-income ratio, skip trace required, and other variables that provide insight into predicting behavior and best collections treatments. 

Step #3: Capturing Reasons for Collections: The third critical component is being able to calculate internal data that is useful for segmentation, including but not limited to, billing cycle data, promise-to-pay broken, skip trace required, and other attributes.

Step #4: Real-Time Portfolio Segmentation: Executing portfolio segmentation in real-time based on the data the decision engine has ingested is helpful in determining the appropriate collections stage (early, mid, late, or more divisions) and subsequent actions. 

Step #5: Developing Configurable Collections Stages: Ensure the creation of configurable, divided collections stages where distinct actions and treatments can be executed based on the segmentation characteristics that were executed in the previous step. 

Step #6: Scoring Models to Ascertain Best Collections Methods: The ability to test and deploy advanced analytics that drive the treatments are crucial to successfully increasing balances collected. These include everything from behavioral scorecards and roll-rate models to risk grades and proposed settlement amounts, that inform the best communication channels, timing, tone, offers and other actions.