The recent Sedric webinar hosted by Mike Gibb, titled “How Data Can Boost Your Compliance” featured three ARM industry experts who shared their insights into how compliance platforms can help collection agencies reduce compliance risk as well as enhance their performance.
- Daniel McCusker, General Counsel and Chief Compliance Officer for the First Financial Asset Management family of companies.
- Jeremy Nixon, VP of Third-Party Collection and Business Intelligence for Frost Arnett.
- Nir Laznik, Sedric’s own CEO and Co-founder.
It was a lively, informative discussion that is well worth an hour of your time to watch. But because we know that a spare hour is hard to come by, we’re sharing a quick summary of some top takeaways from the discussion here.
1. Today, data is essential for managing compliance and mitigating regulatory and legal risk.
There was strong consensus among all our panelists that data already plays a crucial role in managing compliance and providing non-biased information. They all agreed that as the field matures, data will become even more critical.
Post Reg F, systems that collect data and enable it to be pulled out with just a few clicks provide value in a number of ways. First, in case of a consumer complaint, they allow compliance and legal teams to see exactly what happened or what was done so that disputes can be addressed quickly and accurately, before they reach litigation. In the event that it comes to a lawsuit, data can be rapidly provided to meet discovery requests and provide important information for the defense.
Beyond managing litigation risk, in a true paradigm shift, the CPFB is encouraging agencies and creditors to use IT solutions for compliance purposes.
2. Data from speech analytics is valuable for performance optimization and training, as well as compliance.
As Jeremy Nixon says, “Random sampling isn’t enough. Speech analytics can give better insights. Data from speech analytics systems can be used in a dual way: to ensure FDCPA compliance, but also to improve agent performance.”
In addition to being used to detect violations, the speech analytics data can be leveraged to identify effective communication strategies and apply those findings in agent training, especially for onboarding.
It’s no secret that training new agents is a costly process, with uncertain success. Speech analytics can be used, for instance, to analyze what makes tenured associates better negotiators and to share the findings so new hires can learn from them. Insights can help with optimizing RPC utilization or more broadly, to identify the turning points at which a good call goes bad, so strategies can be developed for handling those points.
Fine-tuning communication strategies to be effective as well as compliant impacts the business at multiple levels. In addition to reducing regulatory risk, compliant and effective interactions protect the company’s and clients’ brand images and, importantly in this era of declining commissions, generate positive ROI by increasing collection success.
3. Introducing and ramping up use of a compliance platform is simpler than you probably think.
Today’s compliance platforms are designed to be used by professionals like you – not data scientists. Still, becoming data driven is a big change for organizations and that change must be managed. Sedric’s Nir Laznik recommends starting small: “Work with the data you already have available and integrate it into your processes to create an appetite for more insights. Then gradually unleash the power of the full data treasure.”
User friendly interfaces make it easy to get started with basic functions like discovering violations during phone calls, which are more likely to involve high-pressure interchanges than emails or chats. Once your users are familiar with the system and multiple stakeholders have experienced the insights to be gained – and especially their potential to help reduce exposure and optimize performance – expand platform use to additional areas where violations are likely to occur, or areas in which missteps are most likely to result in litigation.
4. Size – your agency’s -- matters when choosing a compliance platform.
Compliance is as challenging for small agencies as it is for their larger counterparts – or perhaps even more so, since they often have fewer resources for quality control and monitoring interactions yet face similar legal risks. And, as Daniel McCusker reminded us, “A single case can sink an entire agency.”
He therefore recommends that every agency, small or large, look for tech solutions that can help them protect their business. Having any compliance platform in place benefits smaller agencies by immediately enabling monitoring of 100% of calls while eliminating repetitive manual tasks in favor of higher-level analytics or staff coaching.
To reduce start-up efforts and speed time to ROI, smaller agencies should seek platforms that have guidelines built in, or easy customization mechanisms that can be implemented with minimal effort or technical manpower. Many vendors offer free trials and assist agencies in getting started and scaling. Don’t hesitate to ask about what implementation involves and what qualifications are required to get the most value out of a platform.
Larger agencies that are able to dedicate more resources to data collection and analysis may be able to leverage compliance platforms to optimize operations more broadly. Compliance platforms can help them monitor all interactions and rapidly integrate safeguards based on current litigation and enforcement trends, as well as gaining insights for improving agents’ communication skills and personalizing training.
5. Data and privacy protection
No conversation about implementing a digital platform is complete without discussing how the sensitive data your agency collects will be secured and your customers’ privacy protected. In addition to being a significant responsibility, data privacy is increasingly becoming a regulatory priority.
While it is the responsibility of agencies like yours to ensure that data is housed and processed in a compliant manner, compliance platforms can help. Nir Laznik recommended looking for these features when choosing a compliance platform: “PII reduction, flexible architecture to support data residency requirements and end-to-end encryption.”
Bonus takeaway: How to choose a compliance system
Compliance platforms vary widely in both which activities they cover, what functions they offer, the degree to which they integrate various external data, and the value they provide. A good rule of thumb to keep in mind is that integrating more data enables more comprehensive risk assessment as well as increasing the ways in which data can be analyzed and findings applied to enhance productivity and performance. As such, an end-to-end platform that covers the entire compliance cycle --monitoring, scoring, mitigation management, training, archiving and reporting – is likely to yield the greatest ROI for agencies of all sizes.
To wrap up, our speakers recommended looking for these features and capabilities when choosing a compliance system:
- Multi-channel – essential for agencies that use two-way digital channels (text/email) as well as voice, since failing to monitor all channels creates a risky blind spot
- Archiving – look out for e-discovery and data retrieval capabilities for investigations and audits
- Multi-language – important for agencies that do collections in languages other than English. Some systems automatically transcribe in the language in which the conversation took place and then translate to English to allow QC for all interactions.
- Hybrid operation – to support both inhouse and outsourced collectors
- Data privacy and security support (see Nir’s recommendations in takeaway #5)
- Accurate detection of violations and key moments and minimal false positives. Ideally, the solution offers a feedback loop to continuously finetune accuracy
- Tech support and SLAs - especially important for smaller agencies
“Training and monitoring of consumer-facing employees will be critical to ensure that an organization is compliant. Technology will support and help the credit and collections industry meet demanding obligations with ease and efficiency, in order to produce the outcomes a regulator wants to see.”
Consumer Financial Services Regulatory & Compliance Group
“Our challenge going forward is to position our industry and our companies as desirable places to work. We must implement diversity, equity and inclusion in our workplaces, and get the word out that we have changed. Ask your newest employees for feedback—what would make our workplace desirable for their friends and acquaintances? In this post-pandemic world, getting people to crawl out of their comfortable cocoons may be difficult, but it can be done!”
“In the last few years, the buzz of the call centers faded away. Now that many people still have the opportunity to continue to work from home, performance directors need to pivot their focus. We need to ensure that the training is effective in this new environment. The move is from hours in a classroom setting to immediate, personalized micro-learning units that enforce the corrective behaviors.”
“The digital collections movement continues to be in full steam and we are excited to see all of the new technologies that are coming into the ARM industry to help drive enhanced collection performance in a compliant manner. We anticipate additional M&A consolidation globally in the ARM industry, as more digital ARM companies look to accelerate market entry and obtain blue-chip clients and deploy digital-first solutions.”
“Digitization will be critically accelerated in 2023. Recovery organizations may be required to furnish consumers’ account data through consumer-selected platforms that will likely be different from organizations’ traditional payment portals. Organizations should start preparing their technology and operations for that contingency now to harness the trend to their benefit.”
“Data is the new oil, and extracting data from all sources, especially voice, will be a must-have in 2023. We are in the age of machine learning, and ML runs on data. Getting ALL the data and getting it into one place for the ML to do what it can are the key differences between organizations that will make it and those that don't.”
“In 2023, collectors and creditors will be required to work closer together. Reg F oversight requirements have created a new reality of shared compliance responsibility. Servicers and creditors can better collaborate by using new data-driven compliance platforms that provide all parties with critical insights and generate the transparency and trust needed to succeed in a tightening regulatory climate.”
As Gen Z enters the workforce, you’ll have up to four generations in your agency. Everyone learns differently. Young people learn from TikTok videos, and there is a professional term for this: micro-learning. Such short videos are especially efficient when sent out close to the time when the violation occurred.
Barron & Newburger
The most efficient training systems I’ve seen are those which build surgical, data-driven compliance content and provide agents the exact training they need when they most need it. This approach avoids wasting time and money on training which does not address the need. Continuous, role-based training programs that focus on the needs of each individual agent are some of the most efficient and effective I’ve seen.
Bedard Law Group
“Training is only going to be effective if it's done at or near the time the violation occurred. As agents handle hundreds of calls a week they will not have the capacity to remember particular moments of each consumer interaction. Therefore, effective monitoring will be critical to address the deficiency when it happens, in order to remediate quickly so that it does not become a systemic problem going forward.”
Consumer Financial Services Regulatory & Compliance Group