Building better collections processes, with Dylan Jones
Level with me, how often do you really go to the dentist? Is it every 6 months like they tell you to?
Look, I’m not here to judge you, I’ve certainly missed my share of recommended appointments, and it’s not because I don’t believe there’s a benefit to doing so, it’s just that avoiding unpleasant tasks is always an attractive option when the alternative is doing an unpleasant task.
The same bad habit can be seen at play in collections where consumers, fearing an angry phone call, delay making contact, sometimes until it is too late. This is where IE Hub comes into the picture. IE Hub is a UK-based fintech that simplifies the creation of consumer income and expenditure reports - the “I” and the “E” of the name. These reports provide data that guides the entire collections process, and are entirely necessary, but in their current form they can take hours to complete, hours that may have to be repeated over and over as each lender follows their own parallel collections path.
And that’s more than just a discomfort or an inconvenience - though the impact of that on consumer mental health is enough of a reason. Uncomfortable and inconvenienced consumers tend to rush through the process and the accuracy of responses can fall as a result. IE Hub wants to address this by streamlining the first I&E creation and then by making it sharable, so that it can also be the only I&E - and in this episode of HTLMTS, I speak Dylan Jones, CEO of IE Hub to find out ‘how’ and ‘why’.
You can learn more about Dylan Jones on his LinkedIn page
You can learn more about IE Hub via their home page
You can hear related thoughts on customer-centric collections in my interview with Terry Franklin here.
You can learn more about myself, Brendan le Grange, on my LinkedIn page and find my pulpy action-adventure novels in all their formats on Amazon
If you have any feedback, questions, or if you would like to participate in the show, please feel free to reach out to me via the contact page on this site.
Regards,
Brendan
The full written transcript, with timestamps, is below:
Dylan Jones 0:00
It's pretty scary, some of the emails I've seen, with people who've never been in debt, they've never been in debt before but now something has happened and they just don't know what to do. They don't know how to tackle two/ three creditors chasing their payments. Some of the feedback we're seeing on some of the surveys is pretty astonishing, really, where they reach out for help. So that's definitely on an incline.
Brendan Le Grange 0:31
Let's say you wake up tomorrow morning with the realisation that is a difficult conversation that you need to have with someone - do you (a) call them right away, or (b) procrastinate and hope the situation resolves itself? Now, of course, you want to say (a). I want to say (a) but honestly, I'm not infallible, and nor are most people. It's all too easy to find a justifiable reason to put off some discomfort until later, or to cut short and uncomfortable experience even if we know it's good for us in the long run. It's human nature.
So when the success of your process relies on your customers having difficult conversations with you, as collections often does, you can either hope your customers will all defy their human nature and make the call they need to make, or you can try to remove the things that make a collections interaction uncomfortable in the first place.
Welcome to How To Lend Money to Strangers, with Brendan le Grange. I've worked in consumer credit strategy for 20 plus years now, and held down roles across the credit lifecycle, including in collections, albeit the last time I took a really close look at collections was over a decade ago. Still, we always say we learn the most from the mistakes we make. When was the last time you sought out your collections officers and really tried to get to the bottom of why consumers are ending up there? Because when a consumer ends up in collections, it represents a failure of the process, sure, but it's not just a failure of the process that we can budget for, it's a failure in the process that we can learn from.
So I'd like to reimagine our collections teams not just as a way to optimise the risk-reward balance, but as a source of learning, as an opportunity for us to improve our upfront affordability checks, to improve our client contact processes. And that's why I've invited Dylan Jones to the show today.
Dylan is CEO of IE Hub, a UK based FinTech that specialises in helping consumers who are in collections - or heading towards collections - to build accurate income and expenditure reports and to share those with the lenders that are impacted. And they do this in a way that is convenient to those borrowers and which removes as many of the inconvenient hurdles as possible. So consumers no longer need to run away from collectors, but rather can have meaningful conversations. Dylan, welcome to the show.
Dylan Jones 3:22
So my name is Dylan Jones, I'm the CEO of IE Hub. My background very much is data and technology, I started my career with the credit reporting agencies - I was with Equifax, I was then involved in the commencement of a new bureau called CallCredit many, many moons ago. And then I moved on to FICO, 14 years with FICO, and they're in that kind of decisioning space across the credit life cycle - so originations right through to collections and fraud. So spent a lot of time in that collection and fraud space, and then spend some time with TransUnion more recently. So very much a blend of technology and data is my background.
IE Hub: I joined nine months ago, as the CEO, and IE Hub very much is in that space of making the experience, and what can be a horrific experience, for the debtor more manageable for them, more sustainable for them. And whislt doing that it's making it easier for the lender to deal with the process from their side as well.
It's been around for a couple of years. By the time we had the product available, we've then been in the market for about 18 -24 months since then, and obviously COVID struck. Where we've had successes really is based on kind of the individuals in the company, their background was in utilities and debt advice so that's where we've been successful. We've got a number of utility companies signed-up now, some of the larger players, couple of financial services and some of the retailers and really we've got a broad spectrum of users across different sectors. Signed-up a recent motors asset organisation as well, and that's where we've been successful.
Yeah, we won numerous awards over the last couple of years but, more recently, we won two awards for best affordability solution and best solution in the call centre. So great, great to get that kind of traction and that kind of recognition in the industry.
Brendan Le Grange 5:12
And if we look a little bit at the nuts and bolts, how you make managing income and expenditure easier, perhaps not everybody here would be familiar with what that even means - could you do a quick introduction to what sort of situation you're helping consumers with when they engage IE Hub?
Dylan Jones 5:32
Sure, anybody who is in collections - or about to get into collections, pre-delinquency - typically, they owe money to between four and six different lenders. The process today is that they have to do a budget assessment, or what we call an I&E, an Income and Expenditure.
So that typically is a 45 minute to an hour's worth of effort to fill in that I&E, it brings severe anxiety, mental stress to individuals. And they have to do that four or five or six times, many times a year with a different lenders. Consumers rather do that not in the pressure of being with an agent over the phone, but rather do it on their own. So what we've developed is a platform that enables the consumer to fill in the I&E, and once they've completed that they can share it with any lender they have. So the 4 to 6 lenders they have, they can share it in that one one platform. So it reduces that whole anxiety for the consumer.
And then when the agent has the conversation with that debtor, it's a much more informed discussion for both the lender and the consumer, then to have some much more informed and and shorter process.
Brendan Le Grange 6:38
It was a long time ago that I was actively involved in collections, but the biggest problem we were facing at the time, this was in the early days of mobile phones, and we weren't that connected to them, but the problem we had was as soon as the consumer went into collections, they would throw away their SIM card. And I think that just reflects the way that we tend to try and avoid difficult conversations, awkward conversations, it's human nature for most of us. Collections then became chasing the person trying to get hold of him, trying to have the conversation you both need to have. And by the time you could do it invariably, for many people, it was too late by that stage, the debt had escalated even further, there's all sorts of extra fees, and it's far harder to recover from it. In a earlier one of the episodes, here, I spoke to Terry Franklin about collections and he told a similar message: that with COVID, consumers can now go on, in many lenders, onto a system and design to some extent the collections process, within the rules that are scoped by the lender. But it's an easier process to do, if you think about not being embarrassed to have that call. It means people have their call more often.
And I think that's something we can forget about at the front end, you know, where well, my background and a lot of the people that listen to this, where we get involved in the numbers and the analytics and the probability someone's going to default. But as it gets this point, there is a lot of human nature that can make it worse, there's a probability of default, and there is a probability of actually having the call when it's early enough. And so you are making a long process shorter, you're avoiding the logistical problems of a phone call where you're reading out numbers that get misheard and repeated, but also fundamentally, it's better suited to the psychology, I would feel. They're not just trying to finish a conversation so someone leaves them alone.
Dylan Jones 8:35
Yeah, it's definitely shifted away from what can be a very pressurised conversation where you're there, you're speaking to the agent, you're you're under pressure to share those numbers, and maybe sometimes sharing incorrect numbers because of the pressure. Some utility companies, they want evidence of certain parts of the I&E to be shared, like documentation - so our system has that.
So the patterns we're seeing are very interesting, and the journey they go through in order to share that I&E, they revisit their I&E several times before they finally share the I&E with the with the lender, you can see there might be two or three times they're going back and forth to the I&E. They're updating it on our system, doing it in their own time. And then right at the end, maybe after a day, or two or maybe a couple of hours, they then share their I&E so it's a much more fulfilled I&E to then have that conversation with the agents as I said, it's a more mature to conversation. Obviously they share that I&E then with all lenders as part of building that I&E network, which is what we're here to do.
Brendan Le Grange 9:40
We've spoken a lot on this show about how important affordability is now, in the eye of the regulator, and how in pretty much every market around the world regulators are asking lenders to get a lot more serious about measuring affordability. In a country like the UK there's quite a lot of good information about income. If you've got something like open banking, there's good information about expenditures, too. But still, there's still a lot that could be learned from seeing consumers go through the I&E experience. These are obviously consumers who've been given a loan, and it's turns out they couldn't afford it, and now they're redoing this process with far more rigour. Is there something you would say people in the front end of the business could look to learn? Or is this more a case of just 'sometimes things go wrong'?
Dylan Jones 10:30
From what we do, we only see the backend piece, the collection piece, we've not done a great deal today yet on the front end piece. But we're definitely seeing the impact of maybe things having not been done correctly on the front end, and how it's manifesting in in collections, for sure. So we, as I said, we do the surveys on a monthly basis, and I see some of the some of the support emails that hit our system and it's pretty scary, some of the emails I've seen, with people who they've never been in debt, they've never been in debt before, something has happened to them throughout the COVID period and they just don't know what to do. They don't know how to tackle two, three creditors that's chasing their payments. So it's pretty scary seeing some of those emails.
Brendan Le Grange 11:16
You're listening to How to Lend Money to Strangers with Brendan le Grange. If you're enjoying it, now is a great time to hit that little + button to subscribe. Other follow button formats are also available. Let's get back to the show...
Dylan Jones 11:29
You mentioned Open Banking there. I mean, Open Banking, it's a great technology. You mentioned front-end, acquisition, taking on new new customers, I think it's tremendous, you know, it's great in the front end. But on the back end, it's got a long way to go. It'll get there. It will get there. But it's going a long way to go and collections from what we're seeing. And it goes back to those examples of people who haven't been in debt before. We know that it is a massive educational thing. If we're talking about Open Banking, people are afraid of what Open Banking is - have we called the right thing, Open Banking? And I think we've joined that up well as an industry today. We know Open Banking is going to be here for a while and will develop, but I don't think we've joined that whole lifecycle piece up yet with how Open Banking can truly enhance that journey.
Brendan Le Grange 12:16
Well, I think that there's an interesting point of 'is open banking called the right thing ?'. It's also probably a question of 'how big has the term got now?' I think it's fair to say that that core principle of being able to share your own data is echoed in your business model. So you make it possible for consumers to do the work once - and actually, it's shorter the once - but just the ones and to share it among the four to six creditors that they might have, but it's a bit more controlled. How does your sharing work, whose in control?
Dylan Jones 12:48
So the way it works: if I'm in conversation with a lender I owe money to, that lender would signpost them to IE Hub, consumer consent, I then fill in my I&E, on our platform I have a choice, I can use open banking, we have open banking fully integrated, so I can either use open banking or I can follow these smart workflows we've developed within the system. Typically today, to give you some rough numbers, we're seeing about just under 25% of consumers select Open Banking, it is growing, but that's the typical kind of split today.
So once they've selected which which journey they're going to go on within our system, they then follow a process where they fill in their journey, they may want to come back and update the I&E at some point in time, or they share. And it's at that point then where they can decide who they share with - they may want to share with just the organisation that has signposted them to a hub, or they will share with the other lenders that you owe money to as well. It's totally their choice. You know, and this is where it comes back to that consumer being in complete control of their of their journey within part of the process.
Brendan Le Grange 13:52
Before we move on, I do just want to pause a bit on COVID. I did a lot of webinars during COVID, a lot of talking to people. And for a long time the message was 'actually, it was far less bad than it could have been... but there's a bill to pay'. And so it feels, in terms of the broader timeline, that we're heading out of the active COVID period, you know, touch wood, but at the same time that means all the government support has now finished. The UK went longer than most, but even here, all the furlough programmes and such are now over. Are you now starting to see, in the collection space, that wave building up of the actual COVID risk coming through, consumers that are now on their own and having to deal with COVID debt and/ or COVID job losses and such?
Dylan Jones 14:40
So I'm definitely seeing signs of that, for sure. Just I mean, there's a number of ways we are seeing those signs: I mentioned to you the surveys we're doing... all heading one way. Some of the feedback we're seeing on some of the surveys are pretty astonishing, really how people have got to the state they're in financially, where they're reaching out for help. So that's definitely on an incline.
We're seeing organisations that are using us now coming to us asking for support on operational readiness, they're forecasting more volumes going to be hitting collections next year. How do we train our agents? How do we gear up for this high level of volumes coming towards Christmas?
We can see it happening. Just, you know, every day we're hearing fuel bills increasing; petrol, diesel increasing; furlough ending; National Insurance going up next year; Christmas in itself. So I've had a conference a couple of weeks ago, and people are trying to get the joint view of when do they forecast things really hitting badly? You know, are we a month, three months, six months away? And there was a consensus that February, March time onwards we're likely to see a big, big uptick in volumes.
Brendan Le Grange 15:53
One of the reasons I wanted to talk to you is that, in the grand scheme of things, it can be a little bit easy to say, well, actually, when this all started we had provided x amount, and it was way better than it could have been, and we do know it's going to lift a bit but we've budgeted for that so it's not that big a deal. And that separation from the human story, the human costs of it, you're obviously right there working with the people involved and you're making mental health a key part of the business...
Dylan Jones 16:25
What we've done, we've invested heavily in that consumer journey, trying to make that as as easy and as simple as possible. And we continue to invest in that journey. For me, though, I'm trying to bring it all together and add more things to that journey. So the whole vulnerability piece, obviously, we hear that term now every every week, so we signpost to vulnerability services, I'm looking to bring in other means of helping the consumer. So if there's if there's a way of identifying where potentially they could have other forms of income, for example welfare benefit, which they haven't applied for. That's all part of the journey that we need to get to.
From the feedback from our creditors, they're definitely seeing situations that are a lot more complex, their agents they're having to deal with much more difficult situations. Another example I gave you is gaming. We're having conversations in that space, where previously, you wouldn't ask a debtor if they had any gambling challenges, that would just be classed as entertainment. There's those kind of areas we're looking at now to really expand that whole I&E, Are there patterns in there that we should be aware of, questions we're not asking. We're definitely seeing things changing for the worse, unfortunately, over the next six months and beyond.
Brendan Le Grange 17:42
I don't want to besmirch an industry without any evidence, but I feel like we've known about income and expenditure, or affordability, for a long time. But still, I feel like lenders often didn't want to ask a question they didn't want to know the answer to. So in lending this would be true, in gaming it would be true, that this consumer is paying their debts, so they can afford it, and we're not going to ask anything beyond that. Because maybe they shouldn't be paying this gaming bill, maybe they shouldn't be paying this new extra loan, it seems like you're spending an awful lot of money on consumer debt. And, you know, consumers are allowed to spend their money how they want, but it is a grey area and a tricky area but lenders do need to not just say, well, in practice, they're paying the debt.
Dylan Jones 18:30
Yeah, I think so. And that's why we really want to make sure that journey is as insightful as possible, to make sure that the two-way discussion between the consumer and the agent is as accurate as possible. No longer can you just assume things and tick the box, 'why is this person in the position they're in?'. And is asking those questions in a certain way based on the information you've seen within the I&E.
There's an example I saw where the consumer, they had a problem, and they said if somebody asked me the question, I would have shared information, but no one asked me.
And it all in all kind of washes out in the end if an agent agrees a payment for, I don't know, £50 a month and that arrangement is broken in two months, that consumer is back in the cycle again, of establishing the whole I&E process again. So you have to break that cycle. And I think it's the more investment into the I&E the better for both. So when we're seeing that in the results we're seeing, and there's a utility company that used us recently and they got 40% people more through the system with an amicable arrangement plan which they had compared to previously. And that was all down to what they'd invested - time and data quality - in the end.
Brendan Le Grange 19:48
Your mileage may vary on the number, but it really does show, I think, that if you don't make collection something to run away from, it's a lot easier. So instead of chasing people with a big stick, and then catching them and getting all the money out, work with them, consumers will come to you and will, if you're reasonable, they'll probably be reasonable. This is the perfect time to build a relationship, if you can help somebody in their moment of trouble, that's where you build loyalty. And that's where you build a lifelong relationship. And I think that positive experience, particularly if it's somebody who's had a few negatives in the past, it's surely going to build a lot of loyalty to the lender that stood by them and help them. And now you've got a consumer who's educated about the process, who's had their fingers burnt and knows what to do to avoid it.
Dylan Jones 20:39
It's the long term, isn't it? As you say, you're in collections today, you want to maintain a relationship. And I think compared to many years ago, where as you said, it was a case of 'right, you owe me money, you owe me £100 pound, I want to make sure I get that money regardless of the other debt you have.' You always have a commercial angle, but those days have gone, you know, it's now all around treating customers fairly, which is a good thing. It's getting into the situation, as I said, having much more informed dialogue, having an appreciation for those three, four deaths that you've got, and how can we help you through that journey of paying some more all those debts off.
And we're seeing organisations where maybe, maybe they're the first lender, that debtor spoken to have a range of three, four debts they have maybe, but was telling the finding that organisation wants to take the lead of having that conversation and owning that relationship with that data. So you pay us whatever you owe us. And that's, that's kind of that works for us. But we are but also appreciating that we can see you will make these three lenders, and then you can have to pay some of that debt back as well. You know, when it comes down to primary/ secondary debt, we have all called out within our system.
Brendan Le Grange 21:56
And again, if we do that all once, we avoid the chance of trying to please whoever's on the phone now, to go, 'yes, I'm definitely going to pay you back, I've got that in the budget', and then getting on the next phone call a then 'no, no, you're definitely the one we paying first'. You can just have everyone there, everybody can see the picture, everybody being reasonable can come up with a reasonable approach, without the fear and the competition of well, if I don't go hard, somebody else might go hard and I might lose out. I think it is just a much more adult approach to bad debt to say, well, you know, to some degree, obviously, some of these utilities in government is not so much that we gave you a loan, but we are all participating within this system. And this is a case where the original agreement is in trouble, let's make the best of a bad situation together.
There's still a way to go. I share an almost email address with somebody - a complete stranger who shares a few initials and things in common with me - so sometimes this person's emails come through to one of my email addresses. And they're being chased for a few debts and it really isn't a pleasant thing to read, and they're not even mine. But certainly, if you can fix the way that lenders deal with the loans that went wrong, consumers are accountable, too, but if lenders can take responsibility by investing in these sorts of programmes, I mean, I think it does show good faith.
Dylan Jones 23:32
Yeah, we're seeing a lot of shift in the market really, especially with some of the bigger organisations, utilities, some of the banks where they are looking to invest in those customer journeys into collections. I guess pre-delinquency. Look at the signs pre-delinquency, of how customers are trending, can they help them at an earlier stage. And then when they've got into collections, you may hit another process within that organisation where we need to refine your I&E again. Or we may pass you on to an external agent, guess what, you need to do another I&E once you speak to them again. So we're speaking to these organisations to see, how do we streamline all of that, again, coming back to doing it once it's investing upfront in the right I&E as a one time event. So that that then can be used across the whole ecosystem of collections. So we're doing a fair bit of work in that space as well.
Brendan Le Grange 24:22
And you go through a form like that, and the more it's asking you for things that you are tired of filling in over and over, those sort of processes, you start to just put in the minimum possible. And so, I think if you've got a collections process where this is the fourth time this week someone's asked you to fill in an I$E you just try to get it over and done with, whereas if you're goingt to invest into it properly once, there's more information for everybody to work with. So it does to me feel like a win win.
Now, a slight change of tack: collections in utilities. To me that feels like a perfect place for the rest of us to learn from, because it's very difficult for utilities to actually do anything if you don't pay them back, to cut off people's water, and yet utilities are able to go through these processes and collect from their customers. So it's not about the threat of your house been foreclosed, or your car being repossessed, people generally want to pay you back, they want to work with you. Because if the water company can do that, then surely you as a bank could do that, too?
Again, it goes back to the point you made about developing and enhancing that relationship. So we have a number of water companies using us purely as a way to, once they consider the I&E, them assessing does this individual qualify for a certain total domestic tariff, we can see maybe you're struggling, you're this level of debt, let's see your I&E. Let's see where you where you live, guess what you qualify for this special tariff. So at the end of the day is that is a good thing for the consumer.
And for lenders that want to explore those services a bit more for their customers, iehub.co.uk, I guess is the easiest place, or where else could they go looking if they wanted to learn more?
Dylan Jones 26:09
We just just relaunched our website, which is that site that you've mentioned - that's that's the best place. But what we what we're finding as well as many of our clients, they now have us on their websites. So part of that strategy of dealing with with individuals which haven't got yet into collections, putting them on the website, that if you are experiencing issues, please visit our partner IE Hub.
Brendan Le Grange 26:32
That's actually a great point. So I was about to wrap up, but I'd like to go back into it quickly. When I was in portfolio management, we would often look at consumers and we can see, okay, here's a consumer that's running up towards the credit limit with a credit card, and we're seeing a decrease in the score, we can see or we can highly expect that they're on their way into collections. We should do something about that. And then the question would be 'well, what can we do?', we can't really decrease their credit limit, because I haven't actually done anything wrong. There wasn't much that could be done for the consumer, or at least that we thought of that could be done.
And actually, as you call that out now, one thing we really should be doing as lenders in those sort of situations where we see through our own data, or through the consumer realising it themselves that, hey, I'm in some trouble, I haven't missed a payment yet but it's getting really, really difficult. Maybe I'm dipping into my savings to make these payments. Here's a resource that can help you maybe relook at your budget, look at your income and expenditure, negotiate now a payment plan, and I think that that is something that lenders should really be thinking about.
Dylan Jones 27:48
Absolutely. I think that's so important as we go into the challenges of next year, for sure.
Brendan Le Grange 27:53
Yeah. So Dylan, thank you very much for making the show. Fantastic. Thank you very much. Thanks very much.
And thank you all for listening. And indeed for your wonderful reviews - please do keep those coming in. And if you haven't done so already: like, share, and subscribe to the show. How to Lend Money to Strangers is written hosted and edited by myself Brendan le Grange and recorded outside the actually not that rainy city of Maidstone, England. The theme tune and show music is by Iam_wake.
You can find show notes written transcripts more in-depth articles and details on how to book me for speaking engagements at www.howtolendmoneytostrangers.show I'll see you again next Thursday.
It's me again, just in case you've had your fill of lending talk. Did you know that I've also published two pulpy action adventure thrillers? Drachen and Butterfly Hill are both available as ebooks, paperbacks, and audiobooks from Amazon and other online retailers. They're not Shakespeare, but they're not expensive either. And Foreword Clarion Reviews compare Drachen to "Clive Cussler turning Raiders of the Lost Ark into a shoot 'em up". Full disclosure that was in a three star review, so I'm not sure it was meant to be a compliment but I think you get the picture