Unknown Speaker 0:54
Well, hello there, everybody. Thank you for joining us today on receivables info for another webinar today, we’re going to be talking about the critical role of customer service in the modern debt collection process, and I could not have two better speakers joining me today for this discussion, Mr. Scott Vick, who’s joining us with upgrade, and Larry Costa with Capital Management Services. How you guys doing today. We’re just doing awesome. And yeah, quick, quick correction, Scott’s been upstart. I’m sorry, and it’s

Unknown Speaker 1:28
okay. And that’s comes from me being brain dead today. So I do apologize, but I really want to thank you guys for coming on, because as we started preparing for this webinar, just the conversations that we were having around the entire idea of how the industry has changed from being really debt collection to this customer service hybrid, and how all of that has changed, not just in first party collections, but also in the third party collection space. So before we start getting into that, Larry, could we start with you? Could you tell everyone a little bit about yourself and how you get to the seat that you’re the seat that you’re in today? Yeah, big pleasure, as always. Thank you, Adam. I got true pillars to work with you. You know, little shameless putt for Adam, but he is the ultimate professional, and he’s well respected in the industry. So I’m very grateful with this opportunity, but I’ve been doing this for 22 years. I started out just as the Director of Sales for Capital Management.

Unknown Speaker 2:23
And throughout the years, we progressed as an organization, adding on the largest issuers of consumer data, FinTech companies, migrating into customer service and all types of other servicing. And about eight years ago, I was promoted the president of the organization, and to get grateful for the opportunity, and that’s pretty much how I got to where I am today.

Unknown Speaker 2:45
Well, Scott, I know that you come with a storied career yourself. Could you tell everyone a little bit about yourself and how you get to the seat that you’re in today? Yeah, first, Adam, again, thanks for the opportunity to join today. It’s a it’s a pleasure to be part, and of course, getting to have any conversation with Larry is fantastic. So really excited about this. I’ve been in the banking slash FinTech space for 26 years now, with about 21 of those years in some sort of collections capacity. The previous 15 years working in some sort of vendor management capacity, previously at Bank of America, running our first party collections network on the pre charge off side of the business, and then, most recently, about nine months ago, transitioned over to upstart and now back on the recovery side of the world as director of recovery for the organization. So really glad to be here and see some familiar names on this panel as well. Well, welcome back to the dark side.

Unknown Speaker 3:42
I do appreciate you coming on and sharing your insights with us. I think the history behind and watching this evolution from your perspective, right, like living in the creditor world is probably a little bit different than necessarily how we’re experiencing it. So I’m excited to kind of talk about this, this topic today, but to kind of set the stage a little bit, could you guys share how your relationship came together and what that history looks like? Clearly, you guys know each other pretty well, so like, what’s that history look like? Just to try and set the stage for the journey, it’s real simple. Um,

Unknown Speaker 4:17
Scott managed us in in two roles at Bank of America. Initially he was our third party because originally we were only a third party vendor for Bank of America, and Scott managed us. And when Scott manages you, you’re managed and in a very positive way, because Scott really embraces the business partner he looks at, you know, back then, and we’ll talk about this in a webinar. You know, we looked at the different KPIs, the production metrics, and Scott was very keen on that, and he would coach us. You know, by improving this particular metrics, you could advance your organization and move into greater market share. So he managed us on the third party side. Then he was promoted several times, and he was instrumental.

Unknown Speaker 5:00
And working with them on the first party side. He managed us for six years. Actually, he had a team of people working for him, and he managed us on the first party side, along with every other vendor, in fact, and Scott’s too modest to admit this, but Scott was able to have his vendor network perform as well, if not better than the particular, than the in house, Bank of America

Unknown Speaker 5:22
internal teams, and that’s because his attention to detail. And again, he’s the one who really, and I let him talk to us more. He’s one of really encourage the whole customer service model for collections. So go ahead, Scott, yeah, it’s agree, and Larry and CMS and myself have had a few iterations together, and hopefully we’ll continue that over the next few months. But when I think about where this journey started, and I think Larry is a really good one to have on this panel, right, when I think about 2010

Unknown Speaker 5:56
right, I’m beating up Larry to try to get more penetration and make more phone calls and just focus on balance and full payments, and how many settlements can you do? And then 2012 to 2013

Unknown Speaker 6:08
we see really the control environment hit, and it focused and pushed a lot of the organizations to really shrink the number of partners you’re working with and really focus on the ones that can handle and invest in that level of infrastructure, and then fast forward to really, probably right before COVID, you had the performance feature, the control now you’ve got this customer experience umbrella that is now almost equally as important as the other two. And I give Larry credit right his organization has been very nimble and migrating and diversifying into new, new, really, segments outside of just recovery. And, you know, that’s a big reason why we continue to do business together. Yeah, I just want to, I want to just interject real quick, because it’s Scott alluded to, you know, back in the day, in 2010 2013

Unknown Speaker 6:56
everybody looked at the following. You know, what’s your RPCs, right? What’s your red party context, right? Okay, what’s your you know? How many of those you did? You convert to promises, right? How many promises you convert to payers? How many payers stuck? Right? What was your average payment size? Those are the big statistics, right? Scott, that’s what everybody honed in on. Is he said, can you take more settlements and people develop score cards based upon those strict production KPIs? Fast forward to what six years ago, Scott and Scott will tell you about the different scorecards now that are being utilized. Well, it feels like there’s a big difference here between even the approach. And if you look at how debt collection companies are communicating with consumers, it’s definitely become a more

Unknown Speaker 7:39
let’s call it helpful approach, right? It was, I feel like there’s a lot more carrot than stick these days, and that feels like it’s an ongoing methodology, especially from a creditor perspective. And even if you go back and you look at the consent orders back in the day with Chase and those since that point in time, it feels like that was kind of the tipping point where everything started moving towards that consumer first kind of functionality. But it may also be partly the growth of FinTech in our world as well. You just are dealing with a different consumer who’s originating their loans a little bit differently. Any insights into that? Scott as someone who has kind of been on both sides of the equation. Yeah, I mean, right? When you, when you think about the previous life that I had, and, you know, to Larry’s point, what was the most important thing? I wanted people that can make 20 phone calls in an hour. I’m one of them talking to 15 customers an hour. I wanted that phone call to be five minutes or less. Get a payment, get the account, get move off, bring the next customer on the phone to today, right? Like the the most important part of the conversation right now is a how do you build a rapport with the customer, and how do you develop that account appropriately? I know we’re going to talk about this in more detail later, but even in my new life right now, right, like in the FinTech space, origination and automation, and the fact that how quick can you get somebody into the loan life cycle with as little amount of interaction as possible? Is the name of the game, and it’s one of the things that upstart does probably better than anyone else, anyone else in the industry, that is also going to translate into the agent experience, as you see more people not wanting to spend time on the phone if they do that, interaction has to be flawless, and that’s the easiest way to put it right. Now, I know we’re going to talk about that. Yeah, let’s, let’s just transition to that. We talk about score cards. And again, Scott helped design this scorecard,

Unknown Speaker 9:39
the score cards. Now the component that used to be a production scorecard. Now the qualitative and compliance section of the scorecard are as important, if not more important, than the overall Scott can articulates better than I can. But every every issue, or any of the FinTech companies have changed a whole different.

Unknown Speaker 10:00
Model the measurement Correct? Scott, yeah, we partnered with our vendors, and we created a sort of a multi faceted score card that measured both performance control and customer experience metrics and weighted them all into one score, right? And I think the lenders and the issuers that migrate towards that level of vendor management will be the ones that will be most successful. And I’ll tell you, when we were thinking about what are the proper weights, the compliance and the customer treatment portion of that scorecard, you know, if the performance scorecard is 51% the other is 49%

Unknown Speaker 10:41
I’ll be honest with you, when I started collecting in 1999 I would said that would never be the case. Larry’s point, this is probably a five year old, very recent transition into the industry. Yeah. I mean, we have clients and who have actually articulated to us that essentially this, we want you to collect money, but if you fail the quality component, you’re not working for us any longer. Doesn’t matter how much money you collect, you’re not going to be you’re not going to represent this particular organization. That’s how important quality has become. And think about who’s in performance to compliance to now experience, right? Right? Well, think about a FinTech customer, right?

Unknown Speaker 11:22
Maybe the first communication he’s going to have is communication from one of us, because he’s delinquent, yeah? Like when he get the mercen says loan at upstart or prosper, or best ache or loan care, or many other upgrade, they don’t talk to anybody. It’s all done online. There’s no communication. So the only communication the human being they may have may be with when they enter delinquency.

Unknown Speaker 11:47
So that’s why this whole concept of quality is really becomes important, because it’s the first time they talk to anybody you know. They’ve never, probably experienced delinquency. Well, as we continue into this conversation, I just want to encourage the audience, which I feel like a lot of us know, pretty much everybody that’s on the call watching right now, but feel free to ask questions as we’re going we’d love a natural discussion as much as possible. So if you have any questions, feel free to chime in with those as well. And we’ve started talking about this focus of the past to the current focus. But can you talk to me a little bit about how the criteria itself has changed that’s being evaluated. We talked about that it went from a performance based to a compliance based, and now kind of a quality or experience base. But can we talk a little bit about how that criteria has evolved from the compliance criteria to this new experience criteria. What kinds of things are we looking at now that maybe we weren’t looking at three years ago? I’m gonna defer to Scott, so it’s a, it’s a great question. And I think, you know, three it was probably a little bit longer than three years ago, because COVID was really the stamp of you must be able to develop the account appropriately, show empathy, build rapport with the customer. You know, I think the smart ones were doing it before. I think that was the official stamp of it. But, you know, in the past, right, when you think about a score card for an agent before this transition, you would think about a few different characteristics. How much are you in the phone? How many calls are you taking an hour? How many contacts are you generating, and then what do you do with that contact? How many payments are you taking? What’s your average payment size, what’s your close rate? How many payments are you setting up with at least one multiple payment in the future, to the addition of what’s your quality score? And then you saw sort of like a diversification of that quality score to be comprised of two different components, right? Think of it as a your first part of the score is the regulatory component of it, or your control component of it. And are you doing all the things that we were we are required to do on the phone. And the second part of that with now an equal weight transitions into the How are you treating the customer? And that all revolves around, how are you building rapport? How are you developing that customer? How are you listening that customer to come to the right resolution by the end of the phone call, and then what do you do at the end of the phone call to make sure the customer is fully aware of what took place on that phone call and they know what is expected of them in the future. And I think the issuers and the vendors who choose to adopt all three of those principles, if they haven’t done so already, they should be, and if they have, how do you continue to evolve those I think that will be the future of this well, plus there’s a bonus to doing that, because we developed those consumer centric principles. We may diversify our organization. We do a lot of customer service work. We do loan customer servicing, mortgage customer servicing. We do after our calls for banks. So it really allows you to move into different market segments. So if you’re a typical third party collection agency, you know and what we do.

Unknown Speaker 15:00
Many, many years ago, we migrated ourselves to become kind of a mini BPO. We do a lot of different things for a lot of different people. Do loan verification for people, because we have that customer centric approach, and that’s what the finance institutions are looking for, looking for organization that can do multiple things in an extremely compliant way and a good customer experience. And I think Larry, as you said it, I’d be curious to see if you agree with this. I think six years ago, Adam, as you threw that number out there, I think you can clearly tell the difference between like a customer service role and a collection. And today, there’s a lot more similarity into into those two roles. And I think a lot of us on this phone would have probably ever thought would have happened here we are.

Unknown Speaker 15:42
If you look at the TransUnion debt collection industry report this year, you can read it at TU dot receivables info.com but it talked a lot about diversification of organizations and really debt collection agencies, saying that I need to diversify my services in order to scale at the level in which I want to scale. And Larry was one of the first people that I started talking with about this. Because I want to say, you’ve been at this for almost 15 years now, in terms of diversification, I think it’s interesting to look at as a debt collection agency that’s running a call center. The call center skill set is a lot closer than it used to be. It felt like debt collection was over here. You had the call center operations over here. But over the last 1015, years, it’s really started moving closer and closer together. And now I don’t think that there’s that big of a difference. So it becomes, I guess, Larry a question for you would be, what comes first, the chicken or the egg here? Is it

Unknown Speaker 16:41
servicing the you know, is it servicing a client like Scott and then being able to move into new areas based on that kind of on the need of that client? Or do you develop the new capability and try and find someone to fill that? But like, how do you look at that in terms of a diversification and growth perspective? Well, we did is exactly what we did. We had, we clearly had third party collection expertise, sure. We were really fortunate that we worked for large issuers, so we had to take a customer centric proposal in the first place. So we did what we found. We found our agents initially did, had good communication, schools, good attendance, maybe not the strongest closes, right? Maybe good. They’re good at setting up payment arrangements. We started to transition those people said, Okay, here we have, we have really pleasant people, really good attendance, really care about their job. So what else can they do? So we took that skill set, we went out and cross marketed to these same clients, because these same clients have those needs to start. Yeah, yeah. Yeah. So we started across market, then we developed that skill set, and then we moved in other markets. My advice always to other agencies. Really difficult to go out and land a new client based on a new skill set. It’s always better to go to your existing clients, demonstrate your capability. Do a pilot. You guys all knows, do a championship. Let me go up against who you’re currently using, put some good people on it and watch yourself grow. And that’s what we were able to do. We, you know, when we were at Scott at Bank of America, we we demonstrated expertise in third party, having the customer service background, we’re able to move in the first party. And that’s, that’s a tremendous dynamic, and we have over 100 people servicing their first party work. So that’s, you know, that’s my recommendation, because to go out and say, I’m going to all I’m going to tomorrow, I’m going to become a customer service call center. Okay, how you going to do that? You’re going to hire a bunch of people and then go chase a client, work at your existing client base, find a niche, grow that niche, and continue to grow those markets. And you know, for most of our clients, we’re in multiple streams of business. That’s really the way to do it. Like this one bank, we do mortgage customer service, mortgage collections, and then we do after hours. So after nine o’clock at night, when you call this particular bank, you’re talking to our people. So it really helps you diversify and it keeps you running it, plus the cost of growing existing customers is significantly less than adding up and adding a brand new client and a third party where you had a new client, you’re not profitable for six months, first party where you can come profitable fairly quickly, but not a third party. So that’s how we were able to do that. So that’ll be my advice. Let me ask you this. What about the transition? So it seems like the first party collection seems to be like the halfway point, right? So you start as a third party collection operation, then you’re moving into first party but what’s that transition look like from doing that first party work into doing straight customer service work? Is it the same people, the same skill sets? Like, what changes between those two areas?

Unknown Speaker 19:38
The only, the only thing you can do is you can get a less expensive agent. You know, we go again. I’m talking to the agencies out there, right? The call centers out there, a regular just customer service agent. You can probably pay them slightly less, but it’s the same skill set. Again, it’s Scott. Will test us. There are some people that are really, really good on the phone. They have a very good customer service that just don’t know.

Unknown Speaker 20:00
How to ask for the money, but provide great customer experience, but just not answer the money. Those are the people you clearly move into a customer service role. You can find that in your first party, you’re always going to find people in your first party work that are really, really good, but just don’t know how to close the deal or take a minimal payment. It doesn’t really impact the consumer, but no, so it’s very easy to move that pool of agents.

Unknown Speaker 20:23
That’s interesting. Scott, any thoughts on that? Yeah, I was. I was curious to see how Larry was going to answer that, because I couldn’t agree more in the fact that if I’m looking for an agent, right, I can’t. I can’t teach an agent to care about the customer. Either do or you don’t I can teach you how to collect an account, and I think I can do it pretty well. I can teach you in customer service how to how to maximize, you know, cross selling opportunities, or all the widgets that a customer service agent has to complete on that phone call. So I agree with Larry. It’s not too much different between the two. It’s just sort of a different widget, but you have to have the ability to talk to people being the primary sort of focus point on what you’re trying to generate in a new hire. Yeah. And sometimes you’re, it’s your third party agents, too. Again, same thing, because third party is really good attendance, really good on the phone, really diligent. But just, you know, they don’t, they’re not great at asking for the money, but they do everything else. Well, that’s a natural transition of those people who move into a customer service role. Seems like a good role for that person too, because then you’re able to keep somebody that you’ve already onboarded, you’ve already started instilling culture. All of that is very expensive, and at the turnover rate of collectors, I have to assume that that’s a great feeder into the other areas of your organization. If somebody’s just and they may not make the same kind of money from a commission perspective that they could have made if they were actually closing deals in the third party space. But it does seem pretty reasonable in terms of a feeder. Or do you find a lot of people that are kind of shifting from one role to another based on their even have people going to the third party world. So, you know, in the first party world, the variable comp is minimal, right? Most, most agents in the first party will get an hourly rate. And there may be some bonus criteria, but it’s not significant. It’s not like but they become so good at it, they say, Well, you know, let me move to the third party world, where the variable comp is significantly higher. So it’s a cross training for all your for all aspects of your organization, and we’d be able to do that very, very well. Scott, from your perspective, how much more attractive is a service provider that can provide multiple services? I have to assume it would reduce your auditing costs and the workload. From your perspective? Yeah, I think it’s I think there’s two angles to that, and I think this is going to be an unpopular opinion, but it’s mine, and I’m okay with it

Unknown Speaker 22:50
in an RFP setting. I don’t know if I would look at a vendor who’s not diversified into multiple different channels anymore, and there’s a few different reasons as to why I think that way. We need to get into them here talk about it. I think, I think that’s an interesting statement, and I don’t disagree with what you’re saying. It’s an interesting approach. There are, there are absolute vendors that come to mind that I think are really good at one particular part of the organization. Maybe it’s customer service, maybe it’s, you know, third party collections, maybe it’s first party collections. But I think to the second question you asked, at least from my experience in my previous life and in my current life, the answer to the question is not, how many vendors can we bring in to solve a problem? It’s, can we use the vendors that we currently have first before we go to market for new vendors? There’s a balance there, right? I think you need a healthy amount of vendors that are skilled in one or two areas. You also need a healthy amount of vendors that can do and be very omni present in multiple different channels. And I think the ones that have diversified themselves to get to the point where they can do we’ll call it all three, between customer service, first party and third party. Post charge off, recovery, to me, a that shows a vendor who had the right thought process in mind on what the future of the business is. And this is the big reason why I think this way. I think one of the differences between a lender and their internal we’ll just call it collection shop. And the vendors who do it the best is their leader development program. And in my history, I have yet to see a vendor who’s diversified themselves into multiple different areas that doesn’t have a good leader development program. You can have the best collectors in the world or the best agents in the world, and if you don’t know how to coach them and you know how to train them effectively, it’s never going to be a long term successful solution. And I’ve seen the ones that are very successful in customer service, and most you know, for my history, being mostly in collections, very successful in both first and third party.

Unknown Speaker 25:00
Collections, they have that fundamental groundwork of a development program that I think is very

Unknown Speaker 25:06
important. That’s true,

Unknown Speaker 25:09
awesome

Unknown Speaker 25:10
look, I think that’s the kind of insight that we’re looking for, really, is what kinds of things are being used in that evaluation process. And if you’re looking at the training program. And how are you developing leaders within your organization, especially for a larger vendor? That’s that’s important, because I think it does say something to the sustainability of that relationship long term. Are you, you know, and are you hostage to the 100 people that you have today, or are you capable of turning and growing new people or increase in your service level through training? Yep, and I don’t just mean the check the box training that we know that through, and I think, I think that could be a whole different webinar.

Unknown Speaker 25:56
What is effective coaching? That’s for sure. I might hold you to that one. But

Unknown Speaker 26:02
so we started talking a little bit about the score cards and how they’ve changed. And we talked about how the score cards have gone from performance to compliance to to this experience measurement. But talk to me in a little bit of detail about what that overall satisfaction with the call type of language means to you. Like, what are you really looking for as you evaluate an organization?

Unknown Speaker 26:25
Larry, want me to take this one to start absolutely so, you know, I think of it in two different ways. I think of it in it’s very prevalent in customer service and first party collections, and it’s about to get there on the recovery side of the world, and I think the good ones will get theirs to you, rather than later. But you know, I think when I see most lenders today, you know, especially Bank of America and upstart, you are surveying your customer base very regularly, and in those surveys, you will have a multitude of questions, and you will target scoring based off of a handful of them, and each lender, I think, is different, right? How many surveys are you going to target? You know, what segment of customer base are you going to target? Are you going to create the modeling behind that? I think there could be a lot of different variables that go into that, but at the end of the day, what are you doing with those responses, right? Are you just letting them sit there, or how are you really evaluating them? And going back to what we just talked about in a coaching standpoint, how do the best lenders and vendors take the results of that survey and whatever the key questions that you’re identifying or evaluating and not only using that in your monthly decision making? Will that be the only thing that drives a market share change? Absolutely not, but it’s not part of the conversation, and it was never part of the conversation, probably as little as maybe three or four years ago.

Unknown Speaker 27:50
And then how do you peel back the onion to really identify trend analysis with the agents, collectors or customer service agents that do it the best versus the ones that don’t. And then, how do you then adapt that into your monthly model, whether that is a contingency model or, to Larry’s point, a commission structure, like, how does the results of that impact so you can drive the right results in the future? I think all of that has to be part of the conversation. Yeah, compensation absolutely has to have a quality component. You

Unknown Speaker 28:28
third party side, first party side, especially on the third party side, because, you know, a first party consumer is less likely to be litigious. A third party charged off, consumer is a lot more likely to become litigious, so you really want to make sure you have a very positive customer experience. And

Unknown Speaker 28:50
yeah, let’s face it, you know, things are going to change now with the administration, but you know, the CFPB and rag off really, really made things difficult for us, right? When you think about it, right? Seven phone calls, maybe contact somebody they don’t want to talk yet the cooling off period some states are limited to even, even fewer and fewer opportunities. So you know quality when, when you actually get to talk to the consumer, you’ve got to take every advantage to make sure it’s a superbly high quality call. It’s a one call resolution, because the chances getting that consumer back on the phone, are minimal, are slim.

Unknown Speaker 29:24
It does feel like there’s been a change there in terms of how those consumers are interacting. And we’ve talked about the feedback in the coaching now I feel like there’s two areas of the coaching here. There’s the live coaching, and now we’ve got this compliance and kind of AI coaching that we’re starting to see coming up around the industry. Any thoughts on the the tool sets that are being used to get those collectors up to speed or to monitor those collectors? Like, is that something that you guys are using now? Is that something that you’re starting to look at? You know, what’s your general feelings around that area?

Unknown Speaker 30:00
Area of AI and analytical tools. And the analytical tools are really important. We we have a tool that actually transcribes the call. So instead of a manager listening, you know, to a 10 minute phone call or seven minute phone call, you can read it in 45 seconds, right? So it really is a very helpful tool. And also can highlight some of the particulars where the call may have gone wrong, even sort calls like calls that were no payment was taken, or calls for payments were taken, or, let’s say, a 15 minute call resorted resulted in nothing. Well, what happened? Right? Yeah,

Unknown Speaker 30:36
the technology to sort those things quickly in AI, we have not deployed AI yet. We’re seriously looking at it,

Unknown Speaker 30:45
but some of the technology out there, and that’s one of the reasons I’m going to Rm AI, to look at some additional technology, some technology out there is just incredible, just incredible. I actually interviewed an AI bot last week that I’ll be publishing over the weekend. This weekend, I had done with a new group that was coming in, and they were trying to do it through the automation. I don’t know that that really fits into the customer service realm, so to speak.

Unknown Speaker 31:11
I know that American Airlines and some others have tried those types of things, but I feel like the from a compliance standpoint, there’s been some opportunities to leverage artificial intelligence to actually

Unknown Speaker 31:25
identify those calls where the live human really needs to step in and pay attention to it. So you guys are transcribing it and reading it. That’s definitely faster. I’m going to read the transcription of this rather than re watch the video at the end. Right? Just my style, so I definitely understand that. But go ahead, we

Unknown Speaker 31:44
had a question just came in that’s pertinent to this. So sure, Ethan just said, chimed in. How might the creditor approach Scott differ from an agency approach Larry when it comes to ignoring reggae or continue to try to stay within this guideline? Is it worth being conservative for for some amount of time, I’ll let Scott go first, and I’ll answer it. I got an answer for that one too. Yeah. You know, I’m not in legal. I’m not in compliance as an operator. This might sound a little surprising, but I wouldn’t go changing anything to shit. And even if, who knows what will happen now that there are clearly changes coming down the road, even if some of that language eases in the teeth behind things like reggae. I don’t know if I would recommend being the first to the table to really go against that. Yeah, I would, I would agree with you. I would not recommend going to strike off because you’re going to, you know, there’s a lot of state attorney generals now they’re going to be very active with the scenes like the cooling off of the CFPB, if not mailing the CFPB. So I think it’s always Yeah, I’ll be honest, we noticed. We did not notice any degradation in contact our PCs when we went to the seven by seven. You know, why dial somebody five times a day,

Unknown Speaker 33:02
yeah, especially with the adaption of, you know, the digital landscape and that becoming, you know, more prevalent. I think as we get into the next two to three years, I completely agree, right? Like I don’t, I don’t see any need to go back to blast human dialer penetration rates to what they were prior to all of this. The name of the game is, how can you diversify into the digital landscape? The human part of it will also be, always be there, but you can stay within those guidelines and still get more creative. Yeah, again, I think it’s a good time to transition to digital, because all of us are deploying digital, and you know, we’re having a reasonably good results. It’s

Unknown Speaker 33:45
where the consumer wants to talk, especially if they originated as a FinTech consumer. If they’ve never talked to anybody before, I can imagine they don’t want to start now. No, I agree with you. I mean, we’re getting really good results, very effective results, especially when we set out settlement emails. Get a really, good response to that. So

Unknown Speaker 34:05
I don’t think the CFPB is going anywhere. I don’t think that it’s going to be dismantled. I expect that some of the most recent changes that have been pushed through haphazardly, in my opinion, and with almost no regard for any feedback that’s been received from anybody. I think some of those things, the medical credit reporting will probably get, you know, maybe Claude back, but I don’t see reg f actually going anywhere anytime soon, so I would not suggest that anybody ignore the law and operate outside of it, because there was an administration change, because you still don’t know who the final director is going to be, or what their objectives are going to be. And regardless of the director, there’s still private suits. There’s still plenty of other challenges that could come to the forefront. So I would really avoid changing the rules. And it sounds like, from your experiences, that that’s not actually going to have an impact, no

Unknown Speaker 34:59
impact anyone.

Unknown Speaker 35:00
Know. I know the guys that I talked to, the one other agencies are interested in deviating again. We’ve been in Oregon for what three, four years now, has not affected our contact rate. Hasn’t affected our collection. It hasn’t affected anything so and we’ve all invested a lot in it, the technology implementate, the technology implementations, the system of record management bringing together. I think what it did do, though, was force people to bring all this data together and to better understand what they were doing cross channel. Has that been your experience? Yeah, you have to be you have to keep your systems really pristine, right now, which is good, right? I feel like that’s a positive.

Unknown Speaker 35:41
Yeah. I just think, Well,

Unknown Speaker 35:44
I think we answered the question. Ethan, had to respond back. So, Ethan, thanks for the question.

Unknown Speaker 35:50
Thank you. Good question. So we talked a little bit about the technology advances. We’ve talked about ensuring fair treatment in the compliance standard. So I’m going to kind of skip past those. But when we talk about onboarding and managing vendors, I think this is an interesting call. It angle to the discussion. When you’re looking at taking on new organizations, you’re looking at new vendors, you’ve talked a little bit about the criteria, how the criteria has changed, how has the evaluation process changed? Has that started to evolve as well, from like, first hand shake, like you’re going to rmai next week, first handshake is Hello, but like, has the process between first handshake and actually bringing on a new vendor changed in the last few years? I’ll let Scott answer this, but it’s definitely changed.

Unknown Speaker 36:37
I know it’s changed. I guess it’s more like, how did it change? Yeah, I’m remembering Larry, as he recently went through an RFP with us, calling me, saying, Oh, my Lord, this thing is is massive now. And you know, the the lenders everywhere, right? Like the procurement and sourcing, part of the conversation is, is has grown leafs and bonds from what it used to be, because, you’re right, the handshake, hey, let’s start doing business together.

Unknown Speaker 37:03
I’m sure that still happens. I think that’s the very small minority today. And I’ll tell you the these RFP Question Sets, at least for me, have migrated into Yes, I want to know about your company history. Yes, I want to know about your experience and whatever markets we’re trying to bring you on, and yes, I want to know how you operate as a as an organization, because we still do need to collect money, and there’s lots of goals attached to that. But I’m now equally as interested in how your control and compliance operations impact the entire organization, and how your development programs drive not only agent improvement, but leader development. And I’m very curious to see how vendors identify that, and how vendors not only drive customer treatment, but how vendors drive internal associate satisfaction, because the happiest associates are going to treat your customers the best. And you know, I think it’s really important for vendors to diversify into those areas. And if you know, if you don’t have those facets of your organization built, and I’m not sitting here saying everybody’s got deep pockets, because that’s certainly a significant investment, but I think it’s needed right and now we ask for that in the RFP, and we ask for proof of that. So that’s where the RFPs have migrated to very recently. Yeah, I would agree. I love that. That is fantastic. I mean, looking at the agent health from the client perspective was one of the early successes, and probably the only success that credit Max had in its early days, in the early 2000s is that they were, I mean, even as a

Unknown Speaker 38:46
as a debt buyer, they were paying direct commissions to the collectors, but they were directly engaged in the process of, I would say, including the collectors in their ecosystem. And it was a very unique I really haven’t seen a lot of that since, but thought that was a pretty good approach. The first time I’m really hearing somebody talk about the quality of the existence of the agents themselves as part of the evaluation process. We always shoot the fintechs and move to the onboarding section. The fintechs are really interested in branding and the agents, they work really hard and making agents, and this is the brand, and they make it a really good experience. The FinTech we found really care about our agents to give them. For example, we just brought on a recent FinTech, and they were the colors of that fintech. They have shirts that were the color that FinTech, and the FinTech provides really good bonus pools. You know that, you know, I’ll provide that, as the collection see, but the FinTech provides it, and all kinds of approach to things. They’ll have lunches, they’ll recognitions. So it’s, it’s the onboarding is really a it’s a true partnership now that we’re seeing especially in the FinTech states, because they, they really.

Unknown Speaker 40:00
Want their brand promoted, because remember, again, this is probably one of the few times that their consumers are going to talk to a human being. So they really want to make sure that they that it’s their brand and their philosophy. Is there any difference between the, let’s say, the evaluation of a first party versus called a third party, like, do you see, do you still see any difference between evaluating those two types of organizations? Yeah, I mean the third party, even though there’s always a, you know, there’s always going to be an emphasis on quality when you’re in the third party. RFP, that really focus on your results, your strategy. You really gotta, you know, you really gotta articulate your strategy prior to getting the business

Unknown Speaker 40:45
that’s really important in these third party RFPs. And you know, like Scott mentioned, you know, they’re gonna look at your financial integrity. They really make sure you’re a part of it. Can be there for the long haul,

Unknown Speaker 40:56
but there is, there is more of an emphasis on what your past results like a lot of questions on these are free, some third parties.

Unknown Speaker 41:04
What other credit cards you collect out? What are some of your liquidations? Yeah, they’re really interested in in your performance. Again. They want to make sure you’re compliant. With a lot of compliance questions when you get some of your compliance program, any lawsuits you’ve had, so that all that due diligence still there

Unknown Speaker 41:21
first party.

Unknown Speaker 41:23
You know, all the things that Scott mentioned, you know, he’s already done a great job explaining what a first party is looking for. So from an RFP perspective, would I be correct in interpreting it as it’s become kind of a balance of a compliance and marketing piece, because I gotta sell you on why I am the group that you want to work with, and at the same time demonstrate my capabilities and my compliance with you somewhere this balance, are you going to different yourself? Because, look, most people know how to collect money. I mean the people that are left in this business. There used to be a ton of agencies in business, and there’s still a lot of agencies, but the agencies that we typically see in the scorecard, these are all quality organizations, sure, right? They ought to collect money. What you got to do is differentiate yourself, and how you do that, you know, I’m not going to give away what I do,

Unknown Speaker 42:13
but that’s, that’s what really makes or breaks it, you know. And Scott will tell you, as a guy who’s evaluated many agencies, you know, you got to differentiate yourself. So I’ll defer over to Scott, yeah, it’s such a tight margin, right? Like, the one of the unique things about being in collections, right? It’s such a small world. And, you know, I think people say that, but it’s really true, right? Like, I think most lenders at this point are working with some of the best in the best so when we think about expansion, it’s going to be such a tight margin or tight window of what does overall scoring look like to try to get to the best outcome at the end of the day? To Larry’s point, a few key factors that maybe we didn’t think about a year ago could be decisioning factors now of why somebody does or does not getting award Absolutely.

Unknown Speaker 43:03
See, I find that. I find that to be interesting. And we’ve talked a little bit about the expanding roles from BPO into loan servicing, and we’ve talked about some of the trends that we’ve seen. But from a communication perspective, I’m curious, is omni channel a table stakes ante to be at the table now. Or is there still organizations that are focused on, let’s say individual channels? Just how does that depends on the product you’re servicing. It really does.

Unknown Speaker 43:36
So when you work with the big issuers, Omni channel, you’ve got to have a digital strategy. You’ve got to have you got to bound the channel. There’s no infancy, but it’s fintech. You have to find a channel. Some of the mortgage servicing people you’re doing customer service that you know, you’re on their platforms, you’re on their systems. You just got to provide high quality people. So it really depends on what you do, okay, but depends on the project, the underlying projects in the work I’m going to provide, and most, again, most first party work, you’re on the issuers, or whoever you’re working with for system. So it’s their technology. You got to be able to connect to it, but it’s their technology. And what I’m seeing is it varies for different

Unknown Speaker 44:19
but mortgage servicing is a human I mean, you think about your mortgage, right? And I hate to, I don’t mean to deviate here, but I think it’s very important, that’s okay. It’s probably the single largest investment people are going to make in their life.

Unknown Speaker 44:31
So when they’re calling in, you gotta, you have to know your information, life and death for them. Well, I think you think about it. Right this time of year, we get really busy. We get a lot of subcontract work. Because guess what, everybody’s escrows change. Why don’t escrow change? But your taxes went, why don’t my taxes go up? Your insurance, if you live in Florida, I have to tell you, Adam, your insurance. Oh, my God, but you think about it, right? So you gotta call him say, What the hell am I asking?

Unknown Speaker 45:00
My mom always came over from 2500 month to 2900 month. What happened? Well, your insurance went. Why am I insurance going? She explained to people, because wind coverage in Florida is like, it’s

Unknown Speaker 45:10
Larry went up so much this year, I had to go look and see whether or not I was on an arm loan or something like, Did I miss something? Is this not fixed? Like this jumped right? But that’s, you know, that’s where I’m like, channel is not important. But the important but the important thing is having the right agents train. And training is really, really important. Because this, again, when you do a mortgage customer service, these are very difficult questions, you know. And then, you know, people ask you, you know, I heard rates are going on, what is my payment going down? Well, you got to spend your fixed markets. Your payment is not going down, not going down. Let’s re fire it out so and then when you you had closing costs, refi is not a good option right now, especially after five years. It just doesn’t make sense. Because you’re losing your you’re losing the you’re paying more at the principal for another five years, and it actually offsets so like once you hit year six, it gets real hard for those numbers to work, unless your rates dropping by a point, 200 basis points, if you get 200 basis point, drop you to it. Even 100 basis point, it’s like it’s margin, because it’s interesting and you’re not, you’re not chewing up any principle. It only works under five years, right? Yeah, so I agree. I’m glad I’m not a mortgage broker anymore. Sorry to digress. That’s okay. I think it’s look, it’s an interesting part of the conversation, and it ties back to that customer service aspect, because the debt collectors, I would think, or someone with a debt collection background, would be better at dealing with that high stress situation caller, because you got somebody calling in on a mortgage that I said it before, but it’s like, that’s like life and death for them, that’s everything. This is, this is where I live. This is my home. So I feel like the tensions are probably a little bit higher than if I owed, you know, a $5,000 unsecured personal loan.

Unknown Speaker 46:50
I can just imagine that the personnel question is, next question is, what’s going to happen next year? You can’t say

Unknown Speaker 46:58
anything good move out of South Florida. I would say, get involved. I generally tell people, get involved in your local government. You don’t like the way the taxes are going up. Get involved in your local government, because that’s the only way to make it stop. Yeah, it’s really scary. It’s really scary. I feel really sorry for people, because, you know, I consider myself fortunate that it’s not that big of an issue, but I can definitely feel it in the local community. Here in Florida, it’s terrible itself. It’s on the, it’s on the, you know, news station I listen to.

Unknown Speaker 47:29
It’s every, every week they have something about insurance. It’s crazy down here. It really and especially with the HOAs, that’s another story altogether, but that that just kind of ties everything together for kind of where we’re facing here as an industry. But, you know, we talked a little bit about this digital evolution. We’ve talked about higher stakes for the collectors being that first point of contact. We’ve talked a little bit about the mortgages. What advice would you give to a collection agency that’s beginning this diversification journey. What would you tell them? What a journey of 1000 miles starts with the first step. What direction should the first step be in? Yeah, going to your existing clients and demonstrating your ability to do more than one thing. That’s where you start. And how do you prove that? How do you prove that capability to yourself? First

Unknown Speaker 48:20
you have to say, well, first of all, you have to make it directionally, very simple. That’s not simple, but I’m going to try and make it seem simple. You’ve got to save yourself. Okay, yeah. What am I gonna do when I grow up? Right? I no longer be a third party collective. Say, I want to be a mini BPO. Because, you know, unless you’re like one of some of these big organizations, you’re not gonna be a true BPO. I’ll be a mini BPO. So what else do I know how to do? Right? And that’s where you have to say to yourself, Okay, I want to be in customer service on credit cards. I mean customer service on mortgages. You decide what it is you have to do, and you find the people in your organization that you feel can do that, then you go out and market it, but it’s look it’s a tough decision. You know, when I did this 15 years ago, I was going to make it,

Unknown Speaker 49:07
but I knew if I, if I said it’s a third party collection agency, there’ll be some rough times, huh? Well, look, you, you took a leap of faith. And maybe that is the, maybe that’s the first step you have to take as a leap of faith into yourself and identify those seats on your floor that would have this capability and develop a program about it. Because I can’t, I mean, you guys have a great relationship, but I can’t imagine. I can just pick up the phone, call the creditor and be like so I do PPO now. No doing doing customer service today. I feel like questions. You have to do a low risk, right? You gotta take a client. You gotta do low risk. Let me start with, you know, 15 seats. Let me just do this for you, and then you grow from there.

Unknown Speaker 49:48
But Scott, when someone shows up and says this to you, what’s the first two questions that come to your mind? What’s your experience and what have you invested to show that you can manage successfully in that space? And.

Unknown Speaker 50:00
What would be a an acceptable answer to demonstrating the capability

Unknown Speaker 50:06
first party or third party? First party, sure, I’m thinking more in the customer service role for a collection agency that’s trying to move into customer service in the first party so the the fully implemented ability to manage your business from a performance, compliance and customer treatment standpoint, having a proper collector and leadership development program and a proper coaching methodology in place, right? Because that at the end of the day to Larry’s point, if you’re in first party, you’re probably on the issuer system. So you’re managing people, you’re managing productivity. You’re not necessarily managing strategy. So if you’re not going to have the experience that a lender is already looking for, you have to prove that you have the concept and the model already built out. Because I would assume very few lenders are going to say, hey, let’s start the project, and then, oh, by the way, in the next year, I need you to have these three things built out. You’re gonna have to invest in that infrastructure before you go find your first client. And the way you do it, to be honest with you again, you got to report your clients again. I’ve been blessed over the years. Hit the cup, report my clients. It’s really helped us. But you partner with your client. Hey, what are your pain points? What are some of the things that you’re concerned about, you know, overall, right? And clients, they’ll tell you, hey, look, I got this one particular project that I’m really happy about. Now you find out what the problem with the pain points are. Hey, pile together. If I get some resources, can we at least try it? And that’s how you kind of work your way in. But, you know, good as close to fronts and I as Scotts are, and he remember, he was my third party manager for years. Yeah, every time I asked him, put me in first party, you give me look like, really lair, really layer, show me that you can do this. I mean, that’s, I mean, sure, and then, as he should have, show me you can do this. All the things he just mentioned. If I wasn’t able to demonstrate that to him, I wouldn’t be in the role I’m in. So that’s why I asked the question true? Because our audience is, you know, I think a lot of people are still starting this journey, and where do they go from here? It’s just calling the bank and saying, I’m ready to take customer service is one thing. But if the policies and procedures and the RFPs and all of these other things need to be in place, they need to explore what that needs set is and then finds a low hanging fruit to work out the kinks, because nothing is going to be perfect from a plan. I mean, at least I’ve never had a perfect plan before. I don’t know about you guys. You just got to go an existing client. You know, that’s really what you have to do and and then grow with that client and be honest with the client. There’s going to be some pain points. One thing that the only the lesson that I give to sales people. I don’t have any sales people, by the way,

Unknown Speaker 52:48
but the lesson I give, I’ve had sales people throughout my career, but this is like, don’t, don’t say I’m number one on this, on that. Don’t do that. Okay, because nobody’s number one in everything. Okay, nobody wins. Every bad somebody does all this other stuff. Just talk to the client. Say, listen, we’re going to work with you. We’re going to we’re going to meet your expectations, and we’re going to be an open book to you, and we’re going to them, Look, there’s times I call Scott when I knew we’re having a bad moment, and said, Scott, we’re not doing well this month. Because, first of all, these guys are smart. They know you’re not doing well. That’s what you have to do. You’ve gotta be very honest and upfront with your clients, because you’re gonna have bad months, you’re gonna have bad badges. You’re gonna have you can have agents that aren’t performing well, and you gotta call your clients, hey, look, this knucklehead is not doing well. Yeah, we’re gonna coach them. We’re taking them off the phone. We’re gonna coach this individual, and we’re gonna improve. And here’s why we’re doing it, and that’s how you become successful in this business. What I’m hearing is proactive management of a client. Be open, communicate and be honest. Here’s where we stand. I have to assume, Scott, that you’re going to be more open to somebody coming to you than you having to go to them to let them know about an issue. Yes. And to Larry’s point, I will tell you, as a lender that has managed multiple RFPs before, if I can give the collection agency one piece of advice, never tell the lender you’re number one in everything. It is the worst thing you could possibly say. I haven’t seen this very often, but I had one that blew me away, like when we got into the historical performance portion, they showed me a three month window of when they were last, and then they showed me the three month outline of how they completely changed strategy and how they changed their coaching habits to turn that from a last place project into a performing project that blew me away.

Unknown Speaker 54:39
That sounds pretty good to me, actually being able to demonstrate where you’re at, what you’re doing, and as we kind of come down into the the final moments of our discussion today, I did have one more question that I wanted to float out there, Scott, because Larry, I feel like I know your answer to this one. But Scott, what can a collection agency? Whether.

Unknown Speaker 55:00
First party, third party, or even customer service. What can an organization do to be the best partner for you? What are what’s that criteria look like? It’s a it’s a good question, because there’s a lot, and I don’t know if we have a there is, I feel like it’s a whole other webinar, but,

Unknown Speaker 55:19
but the A, it starts with experience. B, it starts with you have invested in your organization to diversify into the things that make that market segment operate the best. And if we’re talking first party, it’s how do you develop people and how do you develop the customer base? If it’s third party, how have you developed into things like digital and SMS and text and a fully functional online payment portal, and then from there, like, to Larry’s point, right? Like, I love when somebody will come to me and say, Hey, what? What’s your pain point right now? Where can we help you that we’re not today? And then once you’re in the relationship and be open to feedback, right? Like, we’ve all been in collections for 15 plus years. Everybody has an ego in collections, and I love it, but I will tell you the partnerships that I’ve had where not only was the the agency open to feedback, but the lender also open to feedback. Larry can tell you he’s called me many times that, hey, you guys are doing it wrong here. Get your head out of here. You know what? And those are the relationships that foster the best, right? Because when you have that trust in your partner, and somebody comes to you and says, Hey, we have an opportunity, here go. Phillip, who are you going to call first? It’s the partner that you trust, that you have an open line of communication with. Absolutely sounds like trust and honesty are the core of everything that we’ve discussed today. Right? Be between the relationship between the organizations, whether that’s the relationship between the agency and the consumer, everything comes down to it. I mean, years ago, the guys that you know, manage collection agencies, the guys that manage recoveries, yeah, they were just guys that been doing it forever. The people in industry now are extraordinarily bright. Every one of these people, like Scott, they know what they’re doing. They understand analytics, they understand technology. So if you don’t have integrity, if you can’t go to your client and say, This is what’s going on, they know what’s going on. You know, there’s no surprises here. Everybody’s on the same system. Everybody sees the same data. So just, you know, just be upfront. And, you know, it’s gotta tell you. I’m not afraid to make suggestions, but we think things through. I talk to the our ops because we get, we get the best ops guy in the world standing more. Talk to our ops people. I talk to our compliance people. Then we sit down, we discuss with the client. Here’s what we think, okay, and implement it. And that’s really how you get you want to be successful in this business. Just, you know, follow what Scott has suggested, some things I suggested, but it really just comes down to integrity. You got integrity. You work hard, and you run a good organization, and don’t try and grow too fast. You’ll be successful. Don’t do that, you know, don’t, don’t try and grow too fast. That is the recipe for disaster. I think you guys are providing some really sound advice for our audience today, and honestly, I just can’t thank you guys enough for coming on and having a chat with me at all. I know that you guys are busy running your organizations and managing departments and doing all of the things, so taking an hour to chit chat with me and to help spread good information and share good content with the debt collection industry is greatly appreciated. On behalf of the entire audience. Listen, we always like speaking to Adam, and I can’t thank you enough for for this opportunity. And Scott was always just a privilege to be to work with you. Yeah, likewise, first time being part of this, this part of the organization. Adam, thank you, Larry, as always, it’s a it’s a pleasure, alright? Thank you, gentlemen. So much. For those of you to watching. If you have additional questions you’d like to ask, we’ll be replaying on YouTube on Friday. You can leave comments on LinkedIn and YouTube, and I will get them to these gentlemen so that they can answer. And if you have additional topics you’d like to see us discuss, you can leave those in the comments or message me directly, and hopefully I can get hopefully I can get these gentlemen back at least one more time to help me continue to create great content for a great industry, because I found this to be an insightful conversation for me, and I hope the rest of you got as much out of it as I did. But until next time, gentlemen, thank you so much. I’m sorry. I’ll miss you at the rmai conference next week, but you know, priorities call and I look forward to seeing you at the next event. Thanks a lot. Take care. Bye. Take care. Thanks guys. Miss.