Overwhelming Consumer Debt

The lender’s problem or opportunity?

As debt rises lenders are experiencing more defaulting customers and subsequently suffer from falling profitability, rising costs of bad debt and bad customer experiences when collections are requested. It’s a downward spiral.

Anyone can spot a customer who stops making payments. The trick is to spot the ones who are about to stop making their payments.

It would be great to have a crystal ball to identify those customers that were simply going through a tough time with their finances but long-term would remain high value customers and those that would fall delinquent and become a bad-debt statistic.

How can the retail banking industry work out which customers are likely to get into debt before they start to default and identify and keep those customers who, in the long-term, are likely to spend more money with them? A strategy is needed to deal with this and Pre-delinquency Management is the upcoming methodology.

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