FICO® Collections & Recovery Current State Assessment

www.fico.com Make every decision countTM

O rganizations from a variety of markets in the collection and recovery (C&R)

industry face unprecedented competing priorities and challenges across the credit, collection and recovery lifecycles. Changing regulations, higher capital requirements, risk management, fluctuating interest rates and reduced consumer borrowing collectively pressure everyone to battle for market share. Increasingly, organizations recognize that C&R capabilities can drive stronger profits and long-term success.

Organizations of all sizes have significant opportunities to take C&R to the next level, but often don’t have the regulatory expertise or knowledge of recent developments in methods, tools and technologies to make the leap. Profitable C&R functions may be lagging against the competition, or

adversely affecting other business units due to lost customers, conflicting priorities or inappropriate use of channels.

You can take an important first step to improve your C&R bottom line by assessing your current processing and system. This consulting engagement helps identify where C&R capabilities can be enhanced compared with industry standards and best practices. It gives you an opportunity to look at your data through the lens of your people, processes, technology, external factors, data, analytics, performance management and organizational structure.

Examine your C&R performance details and identify how workflow, efficiencies and processes are impacting your portfolio execution and profitability.

collections and recovery

Deep DiveData & Technology

Executive Summary

Executive Level Summary of Technology

Recommendations RoadmapSample

Improve your C&R performance

FICO® Collections & Recovery Current State Assessment is a quick yet thorough consulting engagement designed to help you identify where your C&R capabilities can be improved for better results. The process includes a review of your critical operational and administrative practices and policies to help identify the business issues facing your organization. We work with you to evaluate your existing environment, analyze opportunities and recommend improvements. Most recommendations generate “quick wins,” boosting ROI within the first six months of a completed assessment.

Assessing Your Collections & Recovery Processes Shows How You Can:

• Evolve from “seeming productive” to measuring actual effectiveness and profitability.

• Strike the right balance between loss mitigation, customer retention and lean operations.

• Identify siloed practices inhibiting you from increasing C&R efficiency and effectiveness.

• Uncover hidden areas of operational negation in your organization.

• Understand how you perform compared to your peers, and how you can raise the bar.

• Align current technologies with processing to optimally perform and achieve better results.

FICO® Collections & Recovery Current State Assessment delivers clear, actionable feedback and recommendations presented personally and interactively.

Sample FICO® Collections & Recovery Current State Assessment Deliverables

» What Do You Get, and When Do You See, Results?

FICO® Collections and Recovery Current State Assessment reviews critical practices and policies under the current work environment of your collections operation to gain an understanding of your specific business. Interviews with key stakeholders and line management provide the basis for identifying the business issues facing the operation. Using a proprietary consultative approach, combined with proven methodology and tools, together we evaluate your existing environment, analyze opportunities and recommend improvements.

The Current State Assessment helps you plan how to prioritize your time to make better use of limited risk and operational resources and budget, and when to modify collection execution strategies. This helps you more readily identify potential areas for strategy improvements, and reduce operations-related costs.

At the end of our engagement, you receive:

• Observations and recommendations you can convert to C&R enhancement opportunities.

• Estimated financial benefits attached to these recommendations.

• Feedback on how to mitigate stress from the economy and unpredictable customer behaviors.

• Gap analysis of current operations versus leading practices.

• Current state assessment of analytic effectiveness.

• Roadmap of operational and systemic improvement opportunities recommended for your organization.

• Executive presentation of findings and recommendations to senior managers as appropriate.

Most recommendations help generate “quick wins”—performance improvement opportunities that can be implemented in under 90 business days without requiring significant capital expenditure or IT modification. The majority of clients who have implemented FICO-identified quick wins have

seen positive results in less than six months. ROI is enhanced by the depth and breadth of our assessment, combined with a final roadmap.

We recognize there’s no single “best practice” for every organization. By working together, we can deliver unique courses of action that recognize the needs and aspirations of your organization.

» A Clear Vision from C&R Experts

First and third parties in the collections and recovery industry need unbiased, independent views of C&R capabilities and challenges, and actionable solutions. The team conducting the Current State Assessment includes operational, analytic and strategic professionals with deep experience helping clients of all sizes make dramatic improvements throughout the entire account lifecycle.

One of the most compelling challenges companies face—operational negation in their C&R function—is a key area targeted during your assessment. Negation happens when operational practices and processes contradict strategic expectations. Negation is frequently overlooked due to the daily pressures of keeping the operation running. Your final report details areas of negation that can be

improved, providing recommendations for moving forward without the risk of disrupting business operations. Clients tell us they benefit from a customized roadmap as we explain clearly why changes are required, as well as the expected value from adopting the outlined recommendations.

The FICO C&R Business Consulting team has worked with clients around the world, including the United States, Chile, Peru, Mexico, Dominican Republic, Kuwait, Australia, China, India, New Zealand, Turkey, Hungary, Russia, Ukraine, UK, Brunei and Colombia. Their global experience ensures you receive a truly localized business roadmap. Consultants are collection experts who typically have held senior operations and analytic positions, including Head of Collections. You’ll find real-world experience combined with the complete spectrum of operational and analytic expertise, providing practical advice with implementable solutions based upon firsthand experience.

© 2013 Fair Isaac Corporation. All rights reserved. page 2

US Bank

• 35% improvement in staff attrition

• Increased productivity resulting in a 25% improvement in contact rates

• Improved employee morale and engagement

• Reduced training and new hire cost

Asian Bank

• 9% improvement in bad debt

• 50% improvement in staff attrition

• Greater buy-in and accountability

• Vastly improved problem-solving environment

Asian Bank

• 10.8% reduction in bad debt

• Employee engagement improved by 5%

• Significant improvement of visibility and controls around risk and compliance

• Greatly enhanced understanding by front-line employees on bottom line results and their contribution

European Bank

• Managed 100% increase in accounts through economic downturn

• 7% bad debt saving

• Operating costs reduced by $500K per annum

• Promises taken increased 37%

FICO® Collections & Recovery Current State Assessment Insights Deliver Real Results

Performance improvements can be implemented in under 90 days without significant capital expenditure or IT modification.

» Credit and Collection Lifecycle Implications and Next Steps

Collections performance can be adversely impacted by other areas of the credit lifecycle, including weak originations and account management strategies, fraud and more. A holistic examination of your collections and recovery operations can help identify these areas for enhancement. After completing your FICO® Collections & Recovery Current State Assessment, we’ll work with you to implement targeted recommendations, so you can retain the momentum created during the assessment process. Take advantage of the tools, applications, and additional targeted consulting services ranging from model validation and review, to the analytic and strategy deep dives FICO offers. We want to help you achieve quick wins and transform your C&R capabilities for profitable growth and regulatory compliance.

Information Gathering and Analysis

C&R Current State Assessment

Personalized Roadmap

Roadmap Implementation

• Review operational practices and procedures to help drive C&R performance

• Focus on management hot buttons, e.g., dialer strategy, operational reports, call flow and contact strategy

• Review results and reports for agent, strategy and portfolio performance

• Compare observations to industry best practices for recommendations

• Conduct stakeholder sessions to understand issues, performance and processes

• Compare decision management and analytic capabilities against those required to achieve goals

• Identify significant improvement opportunities, with areas of strength and weakness benchmarked against industry-recognized best practices

• Provide presentation detailing key findings

• Identify and prioritize actions required to successfully implement recommendations

• Target specific areas of concern for further, deeper evaluation

• Develop a more detailed implementation plan for the roadmap recommendations

• Assist in implementation of recommendations

FICO® Collections & Recovery Current State Assessment Process Overview

FICO® Collections & Recovery Current State Assessment Sample Focus Areas

Process• Call and post-call workflows• Special activity processes• Debt sale processes and price optimization• Process benchmarking• Outsourcing and placement strategies• Operational strategy development• Hardship/loss mitigation programs• Capacity planning and incentive schemes

Infrastructure• Extracting value from your collections technology• Dialer strategy/management review and optimization• Collection system utilization• Inbound call management

External Factors• Business activities• Market and regulatory conditions• Customer behavior

Knowledge and Performance Management• Data capture process for analytics/strategy development• Early- and late-stage collection strategy/performance• Key Performance Indicator evaluation• Management Information System dashboard visibility• Debt collection agency management and performance• Collector effectiveness

FICO and “Make every decision count” are trademarks or registered trademarks of Fair Isaac Corporation in the United States and in other countries. Other product and company names herein may be trademarks of their respective owners. © 2011–2013 Fair Isaac Corporation. All rights reserved.

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