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Hello, everybody.
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Adam Parks here with another episode of Receivables Podcast.
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And today I've got someone who's been a frequent guest with me through the years, Mr.
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Larry Costa with Capital Management Services.
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And last year we had a very interesting conversation about diversification of the debt collection business into customer service roles, being a better partner for your clients, and being able to expand your business at the same time.
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And Larry is the kind of guy that practices exactly what he preached.
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So I thought it would be interesting to have him come back on Receivables Podcast and talk to us about the last year, how that diversification has been beneficial, and really what the results of all of the advice we've been giving have been.
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So, Larry, thank you so much for joining me today.
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I appreciate you coming on and sharing your insights.
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It did work.
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Yeah, it worked.
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I mean, went we know the barrier throughout the year.
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Like this isn't my first update just for the audience's sake.
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Like we've been talking about this pretty regularly throughout the year, which is why I thought it was going to be such an interesting conversation.
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Diversification is something that comes up very strong as a need in the TransUnion Debt Collection Industry Survey.
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So we know that the industry has identified this need, but how many people are actively taking the steps to achieve it?
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And you've got a little bit of a cheat code going on here.
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Look, it's not look, it's not a layup, okay, guys?
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I mean, you gotta position yourself correctly.
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And I'm not just trying to plug Adam, but you know, he really helps us get our message out, especially in some of these segments where we think diversification is possible.
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It's by working with Adam, working on our social messaging, getting us out there, you know, getting some messages out there, it really keeps us relevant.
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But I I think it's just like I told you guys last year, you've got to work with the existing client base and demonstrate your ability to do things that they're gonna outsource to somebody else.
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And this has been very successful for us.
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And some of it is episodic work, which I didn't spend too much time talking about the last year, Anna, but the episodic work, look, episodic work's not fun.
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We have banks come to us, we have a mortgage uh servicing company come to us, and they're gonna want a hundred people for 120 days.
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And that's not easy.
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Okay?
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First thing you gotta do is you gotta get them to agree to have remote work.
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Okay, because getting 100 people to come to your office is gonna be a logistical night.
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So you gotta get them to agree to remote work.
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Once they agree to have remote agents, it really becomes an opportunity for you to demonstrate your capabilities to them and have some additional long-term relationships.
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For example, there's this one loan service and come back on.
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I don't mention my client's name.
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They need 100 people between January and April this year.
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We delivered.
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We're able to take those people, another bank came to us with the exact same need, the exact same type of opportunity, transitioning those people to that other bank for 120 days, and now those people, the original loan servicing company came back to us and they want 45 of those people.
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So that's what I mean.
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By being able to do this episodic work and go from you know customer to customer, you know, you say to your bank, you guys, hey, look, I'm doing this sub-servicing for this mortgage service provider.
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It's the exact same thing you guys do.
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What do you got coming up?
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We're acquiring some loans.
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We can use you.
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Wait.
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Okay, do it after April.
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I got people that are already trained.
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Transition them in there.
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Go back to the other servers.
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Hey, these guys are coming off this project at the end of August.
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You want them in September?
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I really don't need them.
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Take them in September now because you need them in December, January.
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So they took them now.
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So that's what you do.
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You leverage that capability.
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And everybody wants somewhat experienced people, especially when you do an episodic work, because you know, you've got to hire people that have experience.
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You can deliver people in doing this for eight, nine months on the same type of product.
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It really hits a home run to you.
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Plus, it's additional revenue.
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It's revenue that you didn't anticipate.
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And that's that's been a success for us this year, success for us last year.
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That's what I mean.
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You gotta go to your organizations with your familiar, say, we can do this.
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If you can't, learn how to do it.
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It's not that hard.
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Well, from a collection agency standpoint, I think organizations have been less likely to break into new products because it is such a differentiator.
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And you've established kind of two sets of train tracks within your organization, one that's third-party debt collection and one that can basically solve whatever problem my client has right now that we can throw bodies and technology at.
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Like we're here to provide that solution.
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What kind of mechanisms do you have to build into your organization to enable that type of flexibility and let's say motion between projects?
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Well, first of all, we have a phenomenal operational leader.
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Stan Moore is our president of operations.
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You gotta have a Stan Moore.
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Okay, none of this works without without Stanley Moore.
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Because he because he is such tremendous skill set in all aspects of this business, he knows how to train people into one, you have to have a strong, you gotta keep these people trained.
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You've got to obviously have a good recruiting team because you you you gotta kinda always have that net out there.
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From a technology perspective, I'm I mean, the these first party episodic works, you're on the client's technology.
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So you don't necessarily have to have a strong technology, but you have to have a good technology team to do these integrations.
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Or you gotta have a good help desk support and good you know, background technology teams to do this because you're just connecting their systems.
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So it's it's good to have, you know, you're gonna need strong internet pipes and you know, a good telecommunications back platform, which most guys have.
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But I mean the real key is is having this operational excellence.
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And you you know, it's that's really what you need.
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You need operational excellence, you need strong telecommunication background, you need decent systems, but you know, a good recruiting team.
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But again, having that operational excellence is what's going to get you there.
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If they believe in your collections team and they see the results and they believe in your leadership team, they're a transition team.
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They know that you're you got things tight.
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Well, it sounds like there's a lot of opportunity that exists out there as you start to connect with the client and actually have a discussion.
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I'm here to solve problems, and you're able to leverage some of the ingredients to your success already, right?
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Your success as a third-party debt collection operation has been your ability to service those clients, technology, your recruiting capabilities, and the apparatus that you've constructed to be able to manage that process to, I mean, to bring in a hundred people in a short period of time for short period work.
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I mean, that's got to be a lot of stress on the HR department.
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How have you increased the let's say resiliency structure of that department?
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It's you know, CIS has been our model for a while.
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I mean, we've been doing episodic work for a long time.
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So we've got that built-in capability.
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So as you build your HR and recruiting team, you got to make sure that because it is, it's it's a challenge.
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Okay, it's absolutely a challenge.
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But again, if you want remember, we also do a lot of first party work too.
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So we got third party collections, we got first party collections, and I've got this episodic customer service work.
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That's the key.
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So you know, so if I'm talking to an agency, if you're let's say I'm talking to a third-party agency, yeah, it's hard to do this third party, obviously you want to get in the first party.
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We had this discussion last year because you you proved your claiming out of the client.
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So you want to get in the first party work.
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Then from the first part of work, then you move into the episodic work or the other customer service works.
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Because if you can build that report with your client, they don't want to manage extra vendors.
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It's more cost and more, more, you know, more strained on them.
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So that's really the key.
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I'll give you another example.
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We we do first product work for a fintech and we're doing their credit card work.
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Okay.
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First part of collection, it's a free charge.
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Did such a good job with them.
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Now they're giving us a personal loan work.
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That's what I mean.
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Is by showing the expertise in whatever segment you're in, you're gonna get additional work.
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Again, because why wouldn't they give you the business if you have the expertise?
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And that comes from again, with that to our operations guy.
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He's phenomenal, but he keeps his agency, you know, he watches the productivity.
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You know, Stan manages an outlier behavior.
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If you got it's easy to bring outliers up, right?
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You got a couple outliers, bring them up, that that's gonna certainly impact your results tremendously.
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So it comes down to operational excellence.
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Yeah, yeah, you gotta do some marketing, you gotta get in front of your client, prove your value.
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Communicate with them.
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And I I I I like your approach, Larry, and in the as you talk about the operational excellence and and being able, I mean, success breeds success.
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So if you're operating well for somebody and you're getting something done and you're already cleared through procurement and they've already got all the headaches out of the way, because the larger the organization, the more difficult it is for them to go through any of those processes, RFIs, RFPs, et cetera.
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So they're looking for the lowest common denominator, the fastest solution that gets them an acceptable or or a high quality result.
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As you look at like the that HR piece, and we've talked a little bit about the technology, so you just have to connect those systems.
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Are a lot of those projects similar for the same client, or are they you're now you're dealing with so many different systems, meaning if I already work for bank A on third-party collections, is it easier for me to connect for the first party work?
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Is it easier for me to connect for the episodic work?
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How does that look like what's that technical strain look like on your organization?
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Well, most banks are like five server T Sys.
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There's not that many origination systems out there, right?
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Black Knight from Organic Work, right?
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So again, you're just gonna connect.
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Okay, it's usually a desktop application.
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Everybody's gonna go to B state download desk application and strain.
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So that's what I say, you have a strong telecommunications network, big big internet pipes, redundant big internet pipes, right?
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So again, everybody has that out there.
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So that's that's not the challenge.
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Here's the challenge is communicating to your client, get in front of your client, showing the operational expertise, and then convincing them that you you can handle them over.
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Then you gotta you gotta deliver.
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You know, and that's that's what makes us different.
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We delivered.
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Isn't that the key?
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We remembered, right?
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We you know we had we had a really good year last year, and we're having a really good year this year.
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We we last year and a half we had responded to five RPs, we won everyone.
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So we had a we had a bank that we were doing personal loan from, they sent out an RP for credit card, we won that bit.
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There's another bank we weren't doing business with, can they heard of our reputation, they've heard of the different things we can do, we show the RP, we show all of our capabilities, we won that bit.
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We picked up a couple of FinTech clients, same thing.
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So, you know, success for your success, but when you can show a bank that you can do more on just third-party collections, you add values for that.
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Okay, that again, that's one less vendor they gotta they gotta put on.
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That's that you can do, excuse me.
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That you can do multiple things for that bank, you know, just create more and more reporting.
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It makes you more valuable.
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Well, then let's face it.
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That differentiate point of being a good partner.
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But different how do you differentiate yourself for an out third party, right?
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You know, technology, right?
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Guys that don't want digital are doing pretty well.
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But let me ask you that.
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Is that really the solution that everybody is making it out to be?
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Is the technology going to be the only answer, or is the technology mostly going to be used or in its most valuable way to empower those live people?
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So you still need these folks, exception management, and all of this.
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And to be perfectly frank, if the banks were capable of deploying putting up and deploying AI fast enough that's they might start looking in that direction, but they can't they can't accept that level of risk.
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They still need those live people to manage these processes.
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But you need technology, you have to have a strong digital platform.
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Every one of my banks asked me what I'm doing with AI.
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What are we doing with AI?
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A lot of people talk about AI.
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Look, agent assist, that's gonna be big.
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Bots are gonna be big.
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Okay, I see those.
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But really, what you need AI for is you get all this data, right?
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You get from your dialing platform, from your system of record, from your email platform, from your text platform, you get all this data, right?
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Then you need AI to say, okay, on this group of customers, what do I do next?
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This responds to this type, to not only this type of text.
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Is it MMS?
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Is it RMS, right?
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This group responds to this kind of email with this kind of offer.
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That's the next step for AI, right?
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And then agent assist, I think, is big because it helps document the notes.
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It gives you more productive time.
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So we've been able to do on the third party side, we're we're deploying technology, we're able to collect more money with the same amount of people.
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That's what digital's done for us, right?
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People, people want to self-service, they can self-service.
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People want to respond to text and respond to the tax.
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We still, you know, we still got a lot of people calling in.
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Wash is still a significant portion of our payments.
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But so it's the balance, right?
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But look, there's digital agencies out there that look, there are digital agencies out there that are doing really, really well.
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So I'm not here to say that digital isn't the way, because there's guys out there that are doing really well.
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There's groups that are doing really well because they're slow to adapt.
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Issues are doing it in the mix.
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I don't think there's digital money is the solution.
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That's that's the key.
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If you're working on big issues like we do, they're slow to adapt.
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They're not letting us do a lot of this stuff yet.
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Okay.
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No, but they want to know how you're looking at it, and they want to better understand for themselves, you know, how maybe they need to be looking at it because drive I mean, I they're looking at the Well look, driving a uh a bank's collections department and driving a collection agency are two different things.
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It's like a speed boat versus a giant cruise liner.
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You you have to prepare to turn left.
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You can't just turn left like we can as more nimble, smaller, you know, privately owned businesses.
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The world just a little different for it.
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Again, this is not a new message.
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Everybody out there knows this.
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I'm just reiterating what you and I have been talking about from years that you've got to have a digital component, it's gotta be a strong component, but you better have skilled people.
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An inbound call comes in, you you know, you gotta close that call.
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Agreed.
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I I think that incoming piece is extremely important.
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And as you're transitioning, I think a lot of the same skill sets apply as you start looking at these other types of work that you're doing, right?
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The skill sets remain the same.
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I I start thinking about it as the economies of scope here, right?
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It's the same reason McDonald sells breakfasts, not because they set out to be a breakfast restaurant, but they had the real estate and the kitchen and the people and the hiring and the supply line and all the other things that they needed to be successful.
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So why not move into that space leveraging that economies of scope and the assets and resources already at play?
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I think you've looked at this very much the same way.
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I want to throw a question back at you, though, because you got a the industry.
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So I think there's also a component where people are afraid of the internet.
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You know, people are afraid of it getting hacked.
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And so I think that's another reason why you got to have that skilled aging.
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What do you find?
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Because I I don't know, I'm not as close to it as you are.
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Fraud is that fear vector out there significantly.
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Like fraud is up there, and so fear is up there.
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And if we look at the last couple of years, you know, one of the the number one or or top two every year in terms of concerns, even for the organizations themselves, is data security.
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Like that is a forefront, and consumers are being bombarded with fake calls all day.
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I know I've got three different spam blockers on my phone, and my office line doesn't even ring to me anymore.
00:15:50.799 --> 00:15:55.919
It forces a voicemail that I get via text message that I can listen to and read, right?
00:15:56.000 --> 00:15:57.120
But that's what it's turned into.
00:15:57.200 --> 00:16:08.960
You've had to put up these levels of walls around you because of the just sheer volume of bad communications, which means that we have to do more to stand out as good communicators.
00:16:09.120 --> 00:16:13.919
It's working with our carriers to make sure that we're flagged appropriately, right?
00:16:14.000 --> 00:16:17.360
And that we're appropriately tagged on all of our communication channels.
00:16:17.519 --> 00:16:24.000
It's looking at our domain reputation scores and managing that process so that our emails are actively being delivered.
00:16:24.159 --> 00:16:28.559
I think organizations over the last 10 years, a lot of them built the same rails.
00:16:28.639 --> 00:16:38.399
They can send emails, they can send text messages, but it's that orchestration piece that you were talking about that is the, I'm gonna call it the secret sauce.
00:16:38.480 --> 00:16:41.039
Like that's where the next thing is coming.
00:16:41.200 --> 00:16:44.000
And you also had mentioned the agent assist.
00:16:44.080 --> 00:16:53.600
And I think that is one of the biggest value ads from an artificial intelligence usage standpoint across customer experience collections.
00:16:53.679 --> 00:16:55.600
I mean, really the whole spectrum.
00:16:55.759 --> 00:17:02.080
I think that's a very important part for us to continue to look at because the more that we can it's funny.
00:17:02.159 --> 00:17:08.319
I was having this conversation with a friend this morning where I said, you know, lawyers and LLMs are kind of similar, right?
00:17:08.400 --> 00:17:14.480
Like they charge you by the word and you're feeding them, if you don't feed them the right context, you're not going to get the right answer.
00:17:14.640 --> 00:17:19.599
Well, you know, I think it's kind of the same thing when you're thinking about how we're operating on the floor.
00:17:19.759 --> 00:17:28.960
Like how much context can we give to that agent so that they can make real-time smart decisions that are beneficial to them, the organization, and the consumer.
00:17:29.119 --> 00:17:41.759
Because that live person there managing that negotiation is where we can add so much more value as an industry to the process and overall to the credit ecosystem.
00:17:41.920 --> 00:17:49.200
So I realize that might be a little bit of a roundabout way to answer it, but that's kind of what I'm seeing from my seat right now.
00:17:49.359 --> 00:17:55.200
And there's some really good research out there to support the idea of the super agent, right?
00:17:55.359 --> 00:17:59.279
You you had mentioned reducing the amount of time it takes to take notes.
00:17:59.440 --> 00:17:59.680
Right?
00:17:59.759 --> 00:18:08.799
You you can wrap up a call a lot faster and you can do it systematically in a way in which those notes are now more searchable, retrievable.
00:18:08.960 --> 00:18:25.519
You're creating a series or a data set of actions and intelligence that are now being collected, and it doesn't have to be done manually where everybody sitting in this row of collectors has their own shorthand for follow-up and whatever the terminology is.
00:18:25.680 --> 00:18:33.599
But even at that, the terminology that's used across the industry in different shops can be wildly different, even just down the street.
00:18:33.920 --> 00:18:35.200
There's no doubt about it.
00:18:35.359 --> 00:18:37.519
So yeah, that's that's the things we're looking at.
00:18:37.680 --> 00:18:44.799
But you know, we look everybody else, we've got to keep our eye on what's developing digitally stay in step.
00:18:44.880 --> 00:18:48.160
But again, having skilled agents is really, really important.
00:18:48.559 --> 00:18:52.960
Because like I said, I like I don't I hate doing anything online.
00:18:53.519 --> 00:18:56.079
I do it because I have to, you know, and it's efficient.
00:18:56.240 --> 00:18:58.880
But I don't, you know, I triple check everything I do.
00:18:59.039 --> 00:19:04.160
I make sure, you know, my investment in I make sure it's I'm totally authenticated and all that stuff.
00:19:04.400 --> 00:19:06.640
But you know people get hacked all the time.
00:19:07.039 --> 00:19:07.839
All the time.
00:19:08.319 --> 00:19:11.920
So you know, I think there's always gonna be a place for that skilled agent.
00:19:13.039 --> 00:19:23.599
And like I said, issuers are again are slow to you know, I think they're moving more rapidly now, but there's still a couple issuers out there that don't know what you email or text.
00:19:24.319 --> 00:19:26.079
They don't, they don't let us.
00:19:26.559 --> 00:19:27.759
There's still a couple of mouth there.
00:19:28.079 --> 00:19:31.599
It's crazy to me because that's what the customer ultimately wants, right?
00:19:31.680 --> 00:19:33.440
Like that is what they're looking for.
00:19:33.519 --> 00:19:37.599
And I don't know if it's the bank saying I've already sent enough texts and emails and they didn't respond.
00:19:37.680 --> 00:19:39.680
Like, how why would they respond to yours?
00:19:39.839 --> 00:19:48.240
But that also comes back to the orchestration engine and being able to orchestrate that series of collection letters because we are hyper focused on banks piece.
00:19:48.559 --> 00:19:50.799
Some of these banks have really old systems.
00:19:51.440 --> 00:19:52.079
True statement.
00:19:52.240 --> 00:19:52.799
I mean, they do.
00:19:52.960 --> 00:19:55.920
I mean, so and some of these mortgages, right, they're 20 years old.
00:19:56.079 --> 00:19:57.279
They're 25 years old.
00:19:57.440 --> 00:20:00.319
They're originated on systems like three generations ago.
00:20:00.480 --> 00:20:00.559
Yeah.
00:20:00.640 --> 00:20:03.839
So on Windows 95 on a back server sitting in the yeah.
00:20:04.400 --> 00:20:05.599
I've done those audits.
00:20:05.680 --> 00:20:09.680
I've I've done some of those consulting projects and got to see behind the curtain there.
00:20:10.079 --> 00:20:14.960
But I think, you know, I think we kind of beat this topic up, but you know, again, the message is really clear.
00:20:15.119 --> 00:20:19.599
Look, you gotta have a digital platform, you've got to continue to evolve it, but you also gotta be full service.
00:20:19.680 --> 00:20:24.799
You gotta have skilled agents to analyze the non calls and out and they make good outborn calls.
00:20:24.880 --> 00:20:27.359
You're still gonna generate revenue from outbond calls.
00:20:27.759 --> 00:20:28.720
Let me ask you this.
00:20:28.880 --> 00:20:30.480
What does the next five years look like?
00:20:30.720 --> 00:20:42.079
You saw, like we've been talking about kind of the culmination of this for the past couple of years, and this I feel like is the the result of what we've been talking about in you implementing your your own strategies.
00:20:42.319 --> 00:20:45.200
What do you think the next five years starts to look like?
00:20:45.519 --> 00:20:47.680
You know, that's that's really hard for me to say.
00:20:47.920 --> 00:20:50.559
I used to be able to confidently predict five years.
00:20:50.640 --> 00:20:52.559
I'm down to two and three-year windows now.
00:20:52.640 --> 00:20:56.880
I think the next two years thing is a digital evolution.
00:20:57.119 --> 00:21:01.119
Well, you got you got to go more than two years because you got to break at least one political cycle.
00:21:01.200 --> 00:21:03.119
You have to cross at least one political cycle.
00:21:04.559 --> 00:21:06.960
The next two years, I think regulatory is gonna be okay, right?
00:21:07.119 --> 00:21:10.400
Unless these states have their own like California's or old CFB.
00:21:10.640 --> 00:21:14.160
I think from regular look, you've got to be compliant regardless.
00:21:14.400 --> 00:21:15.440
But we're seeing some breaks.
00:21:15.759 --> 00:21:20.160
Some of the some of these CERCs have rule that the tax is not considered a phone call.
00:21:20.319 --> 00:21:22.720
So that opens you up for more than seven by seven.
00:21:22.799 --> 00:21:27.279
I mean, I think you gotta I think regulatory, I think it's gonna be okay for us.
00:21:27.599 --> 00:21:31.920
But again, different states, there's always you know states that are gonna be a little more zealous.
00:21:32.160 --> 00:21:34.640
But it g it really just depends on the technology, right?
00:21:34.720 --> 00:21:37.039
I mean, and how fast the issuers deploy.
00:21:37.119 --> 00:21:39.039
I mean, it depends who you collect for.
00:21:39.519 --> 00:21:44.640
If you're issuer centric like we are, then you know, I think the next two or three years is okay.
00:21:45.119 --> 00:21:53.440
But if you're collecting just for debt buyers or or or or fintechs, and you're not collecting for big time issuers, it's gonna be all technology driven.
00:21:54.079 --> 00:21:54.240
Yeah.
00:21:54.559 --> 00:21:55.039
All technology.
00:21:55.440 --> 00:21:58.079
I mean, if you if you apply for a loan at FinTech, right?
00:21:58.319 --> 00:21:59.519
You never talk to a human being.
00:22:01.440 --> 00:22:09.519
The first call you get is from either the the fintech internal collection team or from one of us first priority collection teams for the fintech.
00:22:09.839 --> 00:22:11.599
That's the first time you talk to a human being.
00:22:11.920 --> 00:22:14.480
You haven't stepped into a branch, right?
00:22:14.640 --> 00:22:16.079
You've never met anybody.
00:22:17.119 --> 00:22:18.000
No relationship.
00:22:19.119 --> 00:22:19.599
No relationship.
00:22:19.839 --> 00:22:21.039
First time you talk to a human being.
00:22:21.440 --> 00:22:30.640
So if you know if you're working for fintechs, you gotta be technology forward, but you're still gonna have to have a a smart collective because you know, this is the first time they talk to a human being.
00:22:31.200 --> 00:22:35.519
So you think the the needs of the creditor will continue to evolve as well?
00:22:35.680 --> 00:22:41.279
Do you think that they're you think creditors are going to find themselves we're gonna see this increase in charge-offs?
00:22:41.359 --> 00:22:45.119
We're seeing a shift to where that increase is coming into that subprime market.
00:22:45.279 --> 00:22:52.079
So I think we're gonna see some changes in the way that you know origination happens and we might see some tightening just based on the numbers that I've been seeing.
00:22:52.319 --> 00:22:59.920
But how do you think the creditors, do you think that they'll start to accelerate that technology adoption pace over the next five years?
00:23:00.079 --> 00:23:04.559
Or do you think they're still going to look for the the human aspect and element to be handled?
00:23:05.119 --> 00:23:06.960
Or do you think it's is it still a hybrid approach?
00:23:07.599 --> 00:23:08.799
I think it's a pretty hybrid approach.
00:23:08.960 --> 00:23:10.880
That's just yeah, that's my best educated guess.
00:23:11.119 --> 00:23:13.839
I mean, look, issuers want to drive technology.
00:23:13.920 --> 00:23:17.599
Okay, they want they're gonna be using bots, you know, they're gonna want to drive technology.
00:23:19.279 --> 00:23:24.720
But again, there's always there's always a situation where you just don't understand why you're being called.
00:23:24.880 --> 00:23:28.079
You don't understand, you know, they remember the VOD, the L they should die.
00:23:28.559 --> 00:23:29.359
I thought I'd pay this.
00:23:29.440 --> 00:23:33.359
You know, I thought I'd there's always gonna be a human component to this.
00:23:33.839 --> 00:23:36.160
Because similarly people want to talk to human beings.
00:23:36.720 --> 00:23:40.000
That's where it's really important to make it easy to get to one of your agents.
00:23:40.559 --> 00:23:40.799
Right?
00:23:40.880 --> 00:23:43.440
You can't have these prolonged whole times, you can't have all this.
00:23:43.680 --> 00:23:44.880
Get the call to the agent.
00:23:48.240 --> 00:23:53.440
There's nothing more frustrating than being put on hold and be transferred to two or three different people again.
00:23:53.759 --> 00:23:54.000
Come on.
00:23:54.319 --> 00:23:58.640
Just pick up the phone to the call or being dropped, right?
00:23:59.279 --> 00:24:05.440
But the company that answers immediately, you have a lot more respect for because it's such a rare occurrence these days.
00:24:06.559 --> 00:24:07.440
It is a rare occurrence.
00:24:07.680 --> 00:24:17.440
I don't know what the moves are in the industry because we we don't you know we don't really touch a lot of clients on the industry and play club service, but like I tell you there's a need for it.
00:24:17.680 --> 00:24:18.960
There's an absolute need for it.
00:24:19.039 --> 00:24:23.039
I know some of the airlines, the American Airlines has the platinum 800 number.
00:24:23.440 --> 00:24:25.440
You dial that number, you talk somebody fast.
00:24:25.680 --> 00:24:26.240
Immediately.
00:24:26.319 --> 00:24:27.200
Yeah, immediately.
00:24:27.440 --> 00:24:29.119
And that you know what that's value at.
00:24:29.279 --> 00:24:31.279
That that makes you come back to that airline.
00:24:31.519 --> 00:24:33.119
It is the loyalty program, right?
00:24:33.279 --> 00:24:38.960
Like that is why we stick to one airline is because you're hoping to get a level of service.
00:24:39.680 --> 00:24:39.920
Yeah.
00:24:40.000 --> 00:24:40.240
Yeah.
00:24:40.319 --> 00:24:45.839
When everybody else when the flight gets canceled and everybody's standing around yelling in a line, it's easier to jump on the phone.
00:24:46.480 --> 00:24:49.200
Yeah, I'm I'm I'm already bored in the next flight out of there.
00:24:49.440 --> 00:24:53.119
So it's but that I think is what's how we get there.
00:24:53.759 --> 00:24:56.240
I think that's what the creditor is ultimately looking for, right?
00:24:56.319 --> 00:24:59.119
The creditor is looking to improve the customer experience.
00:24:59.279 --> 00:25:11.200
I think there's going to be some level of that that happens with technology as you think about the fintechs, and consumers tend to want to have their loan service through similar or the same channels in which they originated the loan.
00:25:11.359 --> 00:25:22.079
If I went into the you know, into the bank and filled out a credit card application, I might still be going into the bank once a month to physically make that payment on that card, right?
00:25:22.240 --> 00:25:23.519
It's different.
00:25:23.839 --> 00:25:25.519
It's rare, but it happens.
00:25:25.759 --> 00:25:28.720
I look, I maybe it's just because I live here in Port St.
00:25:28.880 --> 00:25:34.160
Lucie, Florida, but I see that almost every Friday at the bank that I walk in there.
00:25:34.400 --> 00:25:36.240
There's people standing there waiting to make it.
00:25:36.720 --> 00:25:37.920
A little different demographic.
00:25:38.160 --> 00:25:43.440
A little different demographic, but it's also those folks that are not comfortable making that online payment.
00:25:43.599 --> 00:25:45.119
They don't want to do it by phone.
00:25:45.279 --> 00:25:47.279
They like to have that personal interaction.
00:25:47.440 --> 00:25:57.599
So the point that I'm making there is that I think each segment of the marketplace or each segment of consumers has a different way that they want to be serviced, but ultimately the creditor is looking, how can I best service?
00:25:57.759 --> 00:26:10.480
If that's the use of technology, if that's the use of people, if that's that continued hybrid approach between it, I think that's their underlying control their, you know, control those costs and provide the best experience they can for a customer.
00:26:10.640 --> 00:26:17.039
Because even a charged-off customer, especially in those earlier stages, may still be a customer next month.
00:26:17.119 --> 00:26:20.079
You know, we can still work through this and get this back to current.
00:26:20.640 --> 00:26:23.519
Everybody thought all these branches for banks are going to close.
00:26:23.599 --> 00:26:24.720
And some of them did close.
00:26:24.880 --> 00:26:26.559
There's still a lot of branches out there.
00:26:26.799 --> 00:26:28.079
A lot of branches, man.
00:26:28.240 --> 00:26:30.960
Like I'm in, you know, I'm in Del Rey, I'm a federal highway.
00:26:31.039 --> 00:26:33.599
There's like five banks right next to each other.
00:26:33.759 --> 00:26:35.039
Right on federal.
00:26:35.279 --> 00:26:36.960
So you know exactly US one.
00:26:37.680 --> 00:26:38.799
Lots of branches at US one.
00:26:39.599 --> 00:26:41.279
Lots of branches at US one.
00:26:41.920 --> 00:26:43.200
All right, let's move on, brother.
00:26:43.359 --> 00:26:45.519
But no, that's that's exactly it, Larry.
00:26:45.599 --> 00:26:48.319
Well, look, that that was really what I wanted to cover with you today.
00:26:48.400 --> 00:27:01.440
I appreciate you coming on and sharing your insights because it sounds like you've gone through this process, you've you've kind of come out the other side, you've continued to see that success, you're continuing to run that same playbook, and I just appreciate you coming on and sharing it with me.
00:27:02.160 --> 00:27:02.799
Appreciate it.
00:27:02.960 --> 00:27:07.119
You know, just to you know, I know we talked briefly, but the numbers did play out.
00:27:07.440 --> 00:27:13.119
You know, the the third party is still the more profitable land, but the first party covers your fixed cost.
00:27:13.599 --> 00:27:18.160
So it's it, you know, but the episodic work, it was 47.53 this year.
00:27:18.319 --> 00:27:20.640
47% first, 53% third.
00:27:20.799 --> 00:27:24.000
But the third party generated higher percents of the profit.
00:27:24.240 --> 00:27:24.480
Okay.
00:27:24.720 --> 00:27:26.480
Because there's less labor in the third party.
00:27:26.799 --> 00:27:28.720
But just let you know the numbers do work.
00:27:28.960 --> 00:27:29.839
The numbers work, man.
00:27:29.920 --> 00:27:30.960
I told you they would and they did.
00:27:31.200 --> 00:27:34.559
And that's why I wanted to close out this conversation, Larry.
00:27:34.640 --> 00:27:36.559
I can't thank you enough for joining me today.
00:27:36.720 --> 00:27:42.880
For those of you that are watching, if you have additional questions you'd like to ask, Larry and myself, you can leave those in the comments on LinkedIn and YouTube.
00:27:43.119 --> 00:27:44.079
We'll be responding to those.
00:27:44.160 --> 00:27:51.759
Or if you have additional topics you'd like to see us discuss, I bet you I can get Larry back here at least one more time to help me continue to create great content for a great industry.
00:27:51.839 --> 00:27:54.000
But until next time, Larry, thank you so much.
00:27:54.319 --> 00:27:55.359
Come down to Del Rey.
00:27:55.440 --> 00:27:56.559
I'll be there in October, brother.
00:27:56.640 --> 00:27:57.359
I'll see you down there.
00:27:57.519 --> 00:27:58.160
I look forward to it.
00:27:58.319 --> 00:28:00.640
I'll see you there before we head back to Brazil.
00:28:00.799 --> 00:28:03.200
And thank you everybody for your time and attention today.
00:28:03.279 --> 00:28:04.319
We'll see you all again soon.
00:28:04.480 --> 00:28:05.599
Bye, everyone.
00:00:06.559 --> 00:00:07.360
Hello, everybody.
00:00:07.440 --> 00:00:11.519
Adam Parks here with another episode of Receivables Podcast.
00:00:11.679 --> 00:00:15.759
And today I've got someone who's been a frequent guest with me through the years, Mr.
00:00:15.839 --> 00:00:19.199
Larry Costa with Capital Management Services.
00:00:19.440 --> 00:00:33.840
And last year we had a very interesting conversation about diversification of the debt collection business into customer service roles, being a better partner for your clients, and being able to expand your business at the same time.
00:00:34.079 --> 00:00:38.719
And Larry is the kind of guy that practices exactly what he preached.
00:00:38.880 --> 00:00:52.479
So I thought it would be interesting to have him come back on Receivables Podcast and talk to us about the last year, how that diversification has been beneficial, and really what the results of all of the advice we've been giving have been.
00:00:52.560 --> 00:00:54.719
So, Larry, thank you so much for joining me today.
00:00:54.880 --> 00:00:58.240
I appreciate you coming on and sharing your insights.
00:01:04.959 --> 00:01:05.920
It did work.
00:01:06.400 --> 00:01:08.480
Yeah, it worked.
00:01:08.560 --> 00:01:11.439
I mean, went we know the barrier throughout the year.
00:01:11.599 --> 00:01:14.640
Like this isn't my first update just for the audience's sake.
00:01:14.719 --> 00:01:20.719
Like we've been talking about this pretty regularly throughout the year, which is why I thought it was going to be such an interesting conversation.
00:01:20.959 --> 00:01:28.319
Diversification is something that comes up very strong as a need in the TransUnion Debt Collection Industry Survey.
00:01:28.480 --> 00:01:35.760
So we know that the industry has identified this need, but how many people are actively taking the steps to achieve it?
00:01:35.920 --> 00:01:37.599
And you've got a little bit of a cheat code going on here.
00:01:37.840 --> 00:01:39.680
Look, it's not look, it's not a layup, okay, guys?
00:01:39.760 --> 00:01:42.560
I mean, you gotta position yourself correctly.
00:01:42.719 --> 00:01:53.439
And I'm not just trying to plug Adam, but you know, he really helps us get our message out, especially in some of these segments where we think diversification is possible.
00:01:53.680 --> 00:02:01.200
It's by working with Adam, working on our social messaging, getting us out there, you know, getting some messages out there, it really keeps us relevant.
00:02:02.239 --> 00:02:12.400
But I I think it's just like I told you guys last year, you've got to work with the existing client base and demonstrate your ability to do things that they're gonna outsource to somebody else.
00:02:13.039 --> 00:02:15.439
And this has been very successful for us.
00:02:16.080 --> 00:02:24.560
And some of it is episodic work, which I didn't spend too much time talking about the last year, Anna, but the episodic work, look, episodic work's not fun.
00:02:25.120 --> 00:02:32.000
We have banks come to us, we have a mortgage uh servicing company come to us, and they're gonna want a hundred people for 120 days.
00:02:32.080 --> 00:02:33.280
And that's not easy.
00:02:33.759 --> 00:02:34.000
Okay?
00:02:34.879 --> 00:02:37.759
First thing you gotta do is you gotta get them to agree to have remote work.
00:02:38.080 --> 00:02:42.240
Okay, because getting 100 people to come to your office is gonna be a logistical night.
00:02:42.319 --> 00:02:44.159
So you gotta get them to agree to remote work.
00:02:44.319 --> 00:02:55.439
Once they agree to have remote agents, it really becomes an opportunity for you to demonstrate your capabilities to them and have some additional long-term relationships.
00:02:55.680 --> 00:02:57.759
For example, there's this one loan service and come back on.
00:02:57.840 --> 00:02:59.280
I don't mention my client's name.
00:02:59.520 --> 00:03:03.919
They need 100 people between January and April this year.
00:03:04.159 --> 00:03:05.199
We delivered.
00:03:06.080 --> 00:03:22.479
We're able to take those people, another bank came to us with the exact same need, the exact same type of opportunity, transitioning those people to that other bank for 120 days, and now those people, the original loan servicing company came back to us and they want 45 of those people.
00:03:22.639 --> 00:03:23.599
So that's what I mean.
00:03:23.759 --> 00:03:32.319
By being able to do this episodic work and go from you know customer to customer, you know, you say to your bank, you guys, hey, look, I'm doing this sub-servicing for this mortgage service provider.
00:03:32.400 --> 00:03:33.840
It's the exact same thing you guys do.
00:03:34.000 --> 00:03:35.280
What do you got coming up?
00:03:35.520 --> 00:03:36.719
We're acquiring some loans.
00:03:36.800 --> 00:03:37.439
We can use you.
00:03:37.599 --> 00:03:38.000
Wait.
00:03:38.159 --> 00:03:39.520
Okay, do it after April.
00:03:39.599 --> 00:03:41.039
I got people that are already trained.
00:03:41.199 --> 00:03:42.240
Transition them in there.
00:03:42.319 --> 00:03:43.360
Go back to the other servers.
00:03:43.439 --> 00:03:46.400
Hey, these guys are coming off this project at the end of August.
00:03:46.560 --> 00:03:47.599
You want them in September?
00:03:47.759 --> 00:03:48.479
I really don't need them.
00:03:48.879 --> 00:03:51.280
Take them in September now because you need them in December, January.
00:03:51.360 --> 00:03:52.319
So they took them now.
00:03:52.479 --> 00:03:53.280
So that's what you do.
00:03:53.439 --> 00:03:54.960
You leverage that capability.
00:03:55.120 --> 00:04:01.439
And everybody wants somewhat experienced people, especially when you do an episodic work, because you know, you've got to hire people that have experience.
00:04:01.599 --> 00:04:06.159
You can deliver people in doing this for eight, nine months on the same type of product.
00:04:06.319 --> 00:04:07.759
It really hits a home run to you.
00:04:07.840 --> 00:04:09.360
Plus, it's additional revenue.
00:04:09.520 --> 00:04:11.840
It's revenue that you didn't anticipate.
00:04:12.080 --> 00:04:15.680
And that's that's been a success for us this year, success for us last year.
00:04:15.919 --> 00:04:16.639
That's what I mean.
00:04:16.800 --> 00:04:21.040
You gotta go to your organizations with your familiar, say, we can do this.
00:04:21.439 --> 00:04:23.519
If you can't, learn how to do it.
00:04:23.759 --> 00:04:25.040
It's not that hard.
00:04:25.519 --> 00:04:32.399
Well, from a collection agency standpoint, I think organizations have been less likely to break into new products because it is such a differentiator.
00:04:32.639 --> 00:04:46.560
And you've established kind of two sets of train tracks within your organization, one that's third-party debt collection and one that can basically solve whatever problem my client has right now that we can throw bodies and technology at.
00:04:46.639 --> 00:04:48.800
Like we're here to provide that solution.
00:04:48.959 --> 00:04:58.079
What kind of mechanisms do you have to build into your organization to enable that type of flexibility and let's say motion between projects?
00:04:58.319 --> 00:05:00.959
Well, first of all, we have a phenomenal operational leader.
00:05:01.199 --> 00:05:03.439
Stan Moore is our president of operations.
00:05:04.240 --> 00:05:05.600
You gotta have a Stan Moore.
00:05:05.759 --> 00:05:08.720
Okay, none of this works without without Stanley Moore.
00:05:08.879 --> 00:05:21.360
Because he because he is such tremendous skill set in all aspects of this business, he knows how to train people into one, you have to have a strong, you gotta keep these people trained.
00:05:21.920 --> 00:05:27.519
You've got to obviously have a good recruiting team because you you you gotta kinda always have that net out there.
00:05:28.079 --> 00:05:33.360
From a technology perspective, I'm I mean, the these first party episodic works, you're on the client's technology.
00:05:33.680 --> 00:05:38.480
So you don't necessarily have to have a strong technology, but you have to have a good technology team to do these integrations.
00:05:39.120 --> 00:05:45.439
Or you gotta have a good help desk support and good you know, background technology teams to do this because you're just connecting their systems.
00:05:45.680 --> 00:05:53.120
So it's it's good to have, you know, you're gonna need strong internet pipes and you know, a good telecommunications back platform, which most guys have.
00:05:54.160 --> 00:05:58.000
But I mean the real key is is having this operational excellence.
00:05:58.480 --> 00:06:00.319
And you you know, it's that's really what you need.
00:06:00.399 --> 00:06:06.399
You need operational excellence, you need strong telecommunication background, you need decent systems, but you know, a good recruiting team.
00:06:06.560 --> 00:06:10.240
But again, having that operational excellence is what's going to get you there.
00:06:11.120 --> 00:06:17.360
If they believe in your collections team and they see the results and they believe in your leadership team, they're a transition team.
00:06:17.519 --> 00:06:19.519
They know that you're you got things tight.
00:06:19.839 --> 00:06:27.279
Well, it sounds like there's a lot of opportunity that exists out there as you start to connect with the client and actually have a discussion.
00:06:27.439 --> 00:06:33.199
I'm here to solve problems, and you're able to leverage some of the ingredients to your success already, right?
00:06:33.279 --> 00:06:51.120
Your success as a third-party debt collection operation has been your ability to service those clients, technology, your recruiting capabilities, and the apparatus that you've constructed to be able to manage that process to, I mean, to bring in a hundred people in a short period of time for short period work.
00:06:51.279 --> 00:06:55.439
I mean, that's got to be a lot of stress on the HR department.
00:06:55.680 --> 00:07:01.120
How have you increased the let's say resiliency structure of that department?
00:07:02.000 --> 00:07:04.240
It's you know, CIS has been our model for a while.
00:07:04.319 --> 00:07:06.480
I mean, we've been doing episodic work for a long time.
00:07:06.560 --> 00:07:08.480
So we've got that built-in capability.
00:07:08.720 --> 00:07:14.000
So as you build your HR and recruiting team, you got to make sure that because it is, it's it's a challenge.
00:07:14.319 --> 00:07:16.160
Okay, it's absolutely a challenge.
00:07:16.639 --> 00:07:21.360
But again, if you want remember, we also do a lot of first party work too.
00:07:21.439 --> 00:07:26.319
So we got third party collections, we got first party collections, and I've got this episodic customer service work.
00:07:26.800 --> 00:07:27.839
That's the key.
00:07:28.399 --> 00:07:36.480
So you know, so if I'm talking to an agency, if you're let's say I'm talking to a third-party agency, yeah, it's hard to do this third party, obviously you want to get in the first party.
00:07:36.959 --> 00:07:40.879
We had this discussion last year because you you proved your claiming out of the client.
00:07:42.000 --> 00:07:43.759
So you want to get in the first party work.
00:07:43.920 --> 00:07:47.759
Then from the first part of work, then you move into the episodic work or the other customer service works.
00:07:48.000 --> 00:07:52.079
Because if you can build that report with your client, they don't want to manage extra vendors.
00:07:52.959 --> 00:07:55.839
It's more cost and more, more, you know, more strained on them.
00:07:56.399 --> 00:07:58.240
So that's really the key.
00:07:58.560 --> 00:07:59.439
I'll give you another example.
00:07:59.759 --> 00:08:03.519
We we do first product work for a fintech and we're doing their credit card work.
00:08:03.920 --> 00:08:04.000
Okay.
00:08:04.240 --> 00:08:05.920
First part of collection, it's a free charge.
00:08:06.399 --> 00:08:07.439
Did such a good job with them.
00:08:07.519 --> 00:08:09.040
Now they're giving us a personal loan work.
00:08:09.360 --> 00:08:10.160
That's what I mean.
00:08:10.399 --> 00:08:16.160
Is by showing the expertise in whatever segment you're in, you're gonna get additional work.
00:08:17.519 --> 00:08:22.000
Again, because why wouldn't they give you the business if you have the expertise?
00:08:22.160 --> 00:08:24.800
And that comes from again, with that to our operations guy.
00:08:24.879 --> 00:08:29.199
He's phenomenal, but he keeps his agency, you know, he watches the productivity.
00:08:29.519 --> 00:08:31.920
You know, Stan manages an outlier behavior.
00:08:32.000 --> 00:08:34.960
If you got it's easy to bring outliers up, right?
00:08:35.200 --> 00:08:41.679
You got a couple outliers, bring them up, that that's gonna certainly impact your results tremendously.
00:08:42.000 --> 00:08:44.799
So it comes down to operational excellence.
00:08:45.279 --> 00:08:49.600
Yeah, yeah, you gotta do some marketing, you gotta get in front of your client, prove your value.
00:08:51.360 --> 00:08:52.000
Communicate with them.
00:08:52.080 --> 00:09:00.320
And I I I I like your approach, Larry, and in the as you talk about the operational excellence and and being able, I mean, success breeds success.
00:09:00.480 --> 00:09:15.360
So if you're operating well for somebody and you're getting something done and you're already cleared through procurement and they've already got all the headaches out of the way, because the larger the organization, the more difficult it is for them to go through any of those processes, RFIs, RFPs, et cetera.
00:09:15.519 --> 00:09:24.080
So they're looking for the lowest common denominator, the fastest solution that gets them an acceptable or or a high quality result.
00:09:24.799 --> 00:09:31.200
As you look at like the that HR piece, and we've talked a little bit about the technology, so you just have to connect those systems.
00:09:31.279 --> 00:09:43.679
Are a lot of those projects similar for the same client, or are they you're now you're dealing with so many different systems, meaning if I already work for bank A on third-party collections, is it easier for me to connect for the first party work?
00:09:43.840 --> 00:09:46.480
Is it easier for me to connect for the episodic work?
00:09:46.799 --> 00:09:50.639
How does that look like what's that technical strain look like on your organization?
00:09:51.279 --> 00:09:54.000
Well, most banks are like five server T Sys.
00:09:54.159 --> 00:09:56.879
There's not that many origination systems out there, right?
00:09:57.440 --> 00:09:59.279
Black Knight from Organic Work, right?
00:09:59.360 --> 00:10:01.360
So again, you're just gonna connect.
00:10:01.759 --> 00:10:03.679
Okay, it's usually a desktop application.
00:10:04.799 --> 00:10:07.840
Everybody's gonna go to B state download desk application and strain.
00:10:08.000 --> 00:10:14.639
So that's what I say, you have a strong telecommunications network, big big internet pipes, redundant big internet pipes, right?
00:10:14.799 --> 00:10:16.720
So again, everybody has that out there.
00:10:16.799 --> 00:10:18.159
So that's that's not the challenge.
00:10:18.639 --> 00:10:28.320
Here's the challenge is communicating to your client, get in front of your client, showing the operational expertise, and then convincing them that you you can handle them over.
00:10:28.639 --> 00:10:29.840
Then you gotta you gotta deliver.
00:10:30.159 --> 00:10:31.600
You know, and that's that's what makes us different.
00:10:31.679 --> 00:10:32.080
We delivered.
00:10:32.320 --> 00:10:32.960
Isn't that the key?
00:10:33.279 --> 00:10:34.159
We remembered, right?
00:10:34.399 --> 00:10:38.559
We you know we had we had a really good year last year, and we're having a really good year this year.
00:10:39.200 --> 00:10:43.519
We we last year and a half we had responded to five RPs, we won everyone.
00:10:43.840 --> 00:10:49.279
So we had a we had a bank that we were doing personal loan from, they sent out an RP for credit card, we won that bit.
00:10:49.759 --> 00:10:58.240
There's another bank we weren't doing business with, can they heard of our reputation, they've heard of the different things we can do, we show the RP, we show all of our capabilities, we won that bit.
00:10:58.879 --> 00:11:01.440
We picked up a couple of FinTech clients, same thing.
00:11:01.679 --> 00:11:09.600
So, you know, success for your success, but when you can show a bank that you can do more on just third-party collections, you add values for that.
00:11:09.679 --> 00:11:12.960
Okay, that again, that's one less vendor they gotta they gotta put on.
00:11:13.120 --> 00:11:14.480
That's that you can do, excuse me.
00:11:15.039 --> 00:11:20.399
That you can do multiple things for that bank, you know, just create more and more reporting.
00:11:20.480 --> 00:11:21.840
It makes you more valuable.
00:11:22.559 --> 00:11:23.679
Well, then let's face it.
00:11:23.840 --> 00:11:25.600
That differentiate point of being a good partner.
00:11:25.919 --> 00:11:28.639
But different how do you differentiate yourself for an out third party, right?
00:11:28.720 --> 00:11:30.240
You know, technology, right?
00:11:30.639 --> 00:11:32.639
Guys that don't want digital are doing pretty well.
00:11:33.039 --> 00:11:33.840
But let me ask you that.
00:11:34.000 --> 00:11:36.960
Is that really the solution that everybody is making it out to be?
00:11:37.200 --> 00:11:46.000
Is the technology going to be the only answer, or is the technology mostly going to be used or in its most valuable way to empower those live people?
00:11:46.159 --> 00:11:50.720
So you still need these folks, exception management, and all of this.
00:11:50.879 --> 00:12:03.759
And to be perfectly frank, if the banks were capable of deploying putting up and deploying AI fast enough that's they might start looking in that direction, but they can't they can't accept that level of risk.
00:12:03.919 --> 00:12:06.639
They still need those live people to manage these processes.
00:12:07.360 --> 00:12:10.000
But you need technology, you have to have a strong digital platform.
00:12:10.399 --> 00:12:13.039
Every one of my banks asked me what I'm doing with AI.
00:12:13.600 --> 00:12:14.879
What are we doing with AI?
00:12:15.120 --> 00:12:16.399
A lot of people talk about AI.
00:12:16.559 --> 00:12:19.200
Look, agent assist, that's gonna be big.
00:12:19.519 --> 00:12:21.440
Bots are gonna be big.
00:12:21.600 --> 00:12:23.360
Okay, I see those.
00:12:23.759 --> 00:12:27.679
But really, what you need AI for is you get all this data, right?
00:12:28.000 --> 00:12:34.399
You get from your dialing platform, from your system of record, from your email platform, from your text platform, you get all this data, right?
00:12:34.639 --> 00:12:38.080
Then you need AI to say, okay, on this group of customers, what do I do next?
00:12:38.399 --> 00:12:42.240
This responds to this type, to not only this type of text.
00:12:42.480 --> 00:12:43.360
Is it MMS?
00:12:43.440 --> 00:12:44.639
Is it RMS, right?
00:12:44.879 --> 00:12:47.279
This group responds to this kind of email with this kind of offer.
00:12:47.600 --> 00:12:49.360
That's the next step for AI, right?
00:12:49.600 --> 00:12:52.960
And then agent assist, I think, is big because it helps document the notes.
00:12:53.120 --> 00:12:54.480
It gives you more productive time.
00:12:54.799 --> 00:13:01.679
So we've been able to do on the third party side, we're we're deploying technology, we're able to collect more money with the same amount of people.
00:13:02.159 --> 00:13:03.759
That's what digital's done for us, right?
00:13:03.840 --> 00:13:05.840
People, people want to self-service, they can self-service.
00:13:06.000 --> 00:13:07.919
People want to respond to text and respond to the tax.
00:13:08.240 --> 00:13:10.720
We still, you know, we still got a lot of people calling in.
00:13:11.200 --> 00:13:13.840
Wash is still a significant portion of our payments.
00:13:14.080 --> 00:13:16.240
But so it's the balance, right?
00:13:16.799 --> 00:13:22.080
But look, there's digital agencies out there that look, there are digital agencies out there that are doing really, really well.
00:13:22.320 --> 00:13:27.120
So I'm not here to say that digital isn't the way, because there's guys out there that are doing really well.
00:13:27.840 --> 00:13:31.039
There's groups that are doing really well because they're slow to adapt.
00:13:31.360 --> 00:13:33.039
Issues are doing it in the mix.
00:13:33.919 --> 00:13:36.799
I don't think there's digital money is the solution.
00:13:37.200 --> 00:13:38.080
That's that's the key.
00:13:38.159 --> 00:13:41.519
If you're working on big issues like we do, they're slow to adapt.
00:13:41.600 --> 00:13:43.679
They're not letting us do a lot of this stuff yet.
00:13:43.919 --> 00:13:44.080
Okay.
00:13:44.399 --> 00:14:00.000
No, but they want to know how you're looking at it, and they want to better understand for themselves, you know, how maybe they need to be looking at it because drive I mean, I they're looking at the Well look, driving a uh a bank's collections department and driving a collection agency are two different things.
00:14:00.080 --> 00:14:03.519
It's like a speed boat versus a giant cruise liner.
00:14:03.600 --> 00:14:05.440
You you have to prepare to turn left.
00:14:05.519 --> 00:14:10.639
You can't just turn left like we can as more nimble, smaller, you know, privately owned businesses.
00:14:11.120 --> 00:14:12.480
The world just a little different for it.
00:14:12.879 --> 00:14:14.559
Again, this is not a new message.
00:14:14.639 --> 00:14:16.000
Everybody out there knows this.
00:14:16.159 --> 00:14:23.440
I'm just reiterating what you and I have been talking about from years that you've got to have a digital component, it's gotta be a strong component, but you better have skilled people.
00:14:23.759 --> 00:14:26.639
An inbound call comes in, you you know, you gotta close that call.
00:14:27.039 --> 00:14:27.360
Agreed.
00:14:27.440 --> 00:14:30.000
I I think that incoming piece is extremely important.
00:14:30.080 --> 00:14:38.960
And as you're transitioning, I think a lot of the same skill sets apply as you start looking at these other types of work that you're doing, right?
00:14:39.039 --> 00:14:40.559
The skill sets remain the same.
00:14:40.639 --> 00:14:44.639
I I start thinking about it as the economies of scope here, right?
00:14:44.720 --> 00:14:57.039
It's the same reason McDonald sells breakfasts, not because they set out to be a breakfast restaurant, but they had the real estate and the kitchen and the people and the hiring and the supply line and all the other things that they needed to be successful.
00:14:57.120 --> 00:15:03.919
So why not move into that space leveraging that economies of scope and the assets and resources already at play?
00:15:04.000 --> 00:15:05.759
I think you've looked at this very much the same way.
00:15:06.080 --> 00:15:10.000
I want to throw a question back at you, though, because you got a the industry.
00:15:10.080 --> 00:15:13.440
So I think there's also a component where people are afraid of the internet.
00:15:14.159 --> 00:15:16.320
You know, people are afraid of it getting hacked.
00:15:16.559 --> 00:15:19.200
And so I think that's another reason why you got to have that skilled aging.
00:15:19.279 --> 00:15:19.840
What do you find?
00:15:20.159 --> 00:15:22.000
Because I I don't know, I'm not as close to it as you are.
00:15:22.720 --> 00:15:25.440
Fraud is that fear vector out there significantly.
00:15:25.679 --> 00:15:28.320
Like fraud is up there, and so fear is up there.
00:15:28.480 --> 00:15:38.480
And if we look at the last couple of years, you know, one of the the number one or or top two every year in terms of concerns, even for the organizations themselves, is data security.
00:15:38.639 --> 00:15:44.240
Like that is a forefront, and consumers are being bombarded with fake calls all day.
00:15:44.399 --> 00:15:50.639
I know I've got three different spam blockers on my phone, and my office line doesn't even ring to me anymore.
00:15:50.799 --> 00:15:55.919
It forces a voicemail that I get via text message that I can listen to and read, right?
00:15:56.000 --> 00:15:57.120
But that's what it's turned into.
00:15:57.200 --> 00:16:08.960
You've had to put up these levels of walls around you because of the just sheer volume of bad communications, which means that we have to do more to stand out as good communicators.
00:16:09.120 --> 00:16:13.919
It's working with our carriers to make sure that we're flagged appropriately, right?
00:16:14.000 --> 00:16:17.360
And that we're appropriately tagged on all of our communication channels.
00:16:17.519 --> 00:16:24.000
It's looking at our domain reputation scores and managing that process so that our emails are actively being delivered.
00:16:24.159 --> 00:16:28.559
I think organizations over the last 10 years, a lot of them built the same rails.
00:16:28.639 --> 00:16:38.399
They can send emails, they can send text messages, but it's that orchestration piece that you were talking about that is the, I'm gonna call it the secret sauce.
00:16:38.480 --> 00:16:41.039
Like that's where the next thing is coming.
00:16:41.200 --> 00:16:44.000
And you also had mentioned the agent assist.
00:16:44.080 --> 00:16:53.600
And I think that is one of the biggest value ads from an artificial intelligence usage standpoint across customer experience collections.
00:16:53.679 --> 00:16:55.600
I mean, really the whole spectrum.
00:16:55.759 --> 00:17:02.080
I think that's a very important part for us to continue to look at because the more that we can it's funny.
00:17:02.159 --> 00:17:08.319
I was having this conversation with a friend this morning where I said, you know, lawyers and LLMs are kind of similar, right?
00:17:08.400 --> 00:17:14.480
Like they charge you by the word and you're feeding them, if you don't feed them the right context, you're not going to get the right answer.
00:17:14.640 --> 00:17:19.599
Well, you know, I think it's kind of the same thing when you're thinking about how we're operating on the floor.
00:17:19.759 --> 00:17:28.960
Like how much context can we give to that agent so that they can make real-time smart decisions that are beneficial to them, the organization, and the consumer.
00:17:29.119 --> 00:17:41.759
Because that live person there managing that negotiation is where we can add so much more value as an industry to the process and overall to the credit ecosystem.
00:17:41.920 --> 00:17:49.200
So I realize that might be a little bit of a roundabout way to answer it, but that's kind of what I'm seeing from my seat right now.
00:17:49.359 --> 00:17:55.200
And there's some really good research out there to support the idea of the super agent, right?
00:17:55.359 --> 00:17:59.279
You you had mentioned reducing the amount of time it takes to take notes.
00:17:59.440 --> 00:17:59.680
Right?
00:17:59.759 --> 00:18:08.799
You you can wrap up a call a lot faster and you can do it systematically in a way in which those notes are now more searchable, retrievable.
00:18:08.960 --> 00:18:25.519
You're creating a series or a data set of actions and intelligence that are now being collected, and it doesn't have to be done manually where everybody sitting in this row of collectors has their own shorthand for follow-up and whatever the terminology is.
00:18:25.680 --> 00:18:33.599
But even at that, the terminology that's used across the industry in different shops can be wildly different, even just down the street.
00:18:33.920 --> 00:18:35.200
There's no doubt about it.
00:18:35.359 --> 00:18:37.519
So yeah, that's that's the things we're looking at.
00:18:37.680 --> 00:18:44.799
But you know, we look everybody else, we've got to keep our eye on what's developing digitally stay in step.
00:18:44.880 --> 00:18:48.160
But again, having skilled agents is really, really important.
00:18:48.559 --> 00:18:52.960
Because like I said, I like I don't I hate doing anything online.
00:18:53.519 --> 00:18:56.079
I do it because I have to, you know, and it's efficient.
00:18:56.240 --> 00:18:58.880
But I don't, you know, I triple check everything I do.
00:18:59.039 --> 00:19:04.160
I make sure, you know, my investment in I make sure it's I'm totally authenticated and all that stuff.
00:19:04.400 --> 00:19:06.640
But you know people get hacked all the time.
00:19:07.039 --> 00:19:07.839
All the time.
00:19:08.319 --> 00:19:11.920
So you know, I think there's always gonna be a place for that skilled agent.
00:19:13.039 --> 00:19:23.599
And like I said, issuers are again are slow to you know, I think they're moving more rapidly now, but there's still a couple issuers out there that don't know what you email or text.
00:19:24.319 --> 00:19:26.079
They don't, they don't let us.
00:19:26.559 --> 00:19:27.759
There's still a couple of mouth there.
00:19:28.079 --> 00:19:31.599
It's crazy to me because that's what the customer ultimately wants, right?
00:19:31.680 --> 00:19:33.440
Like that is what they're looking for.
00:19:33.519 --> 00:19:37.599
And I don't know if it's the bank saying I've already sent enough texts and emails and they didn't respond.
00:19:37.680 --> 00:19:39.680
Like, how why would they respond to yours?
00:19:39.839 --> 00:19:48.240
But that also comes back to the orchestration engine and being able to orchestrate that series of collection letters because we are hyper focused on banks piece.
00:19:48.559 --> 00:19:50.799
Some of these banks have really old systems.
00:19:51.440 --> 00:19:52.079
True statement.
00:19:52.240 --> 00:19:52.799
I mean, they do.
00:19:52.960 --> 00:19:55.920
I mean, so and some of these mortgages, right, they're 20 years old.
00:19:56.079 --> 00:19:57.279
They're 25 years old.
00:19:57.440 --> 00:20:00.319
They're originated on systems like three generations ago.
00:20:00.480 --> 00:20:00.559
Yeah.
00:20:00.640 --> 00:20:03.839
So on Windows 95 on a back server sitting in the yeah.
00:20:04.400 --> 00:20:05.599
I've done those audits.
00:20:05.680 --> 00:20:09.680
I've I've done some of those consulting projects and got to see behind the curtain there.
00:20:10.079 --> 00:20:14.960
But I think, you know, I think we kind of beat this topic up, but you know, again, the message is really clear.
00:20:15.119 --> 00:20:19.599
Look, you gotta have a digital platform, you've got to continue to evolve it, but you also gotta be full service.
00:20:19.680 --> 00:20:24.799
You gotta have skilled agents to analyze the non calls and out and they make good outborn calls.
00:20:24.880 --> 00:20:27.359
You're still gonna generate revenue from outbond calls.
00:20:27.759 --> 00:20:28.720
Let me ask you this.
00:20:28.880 --> 00:20:30.480
What does the next five years look like?
00:20:30.720 --> 00:20:42.079
You saw, like we've been talking about kind of the culmination of this for the past couple of years, and this I feel like is the the result of what we've been talking about in you implementing your your own strategies.
00:20:42.319 --> 00:20:45.200
What do you think the next five years starts to look like?
00:20:45.519 --> 00:20:47.680
You know, that's that's really hard for me to say.
00:20:47.920 --> 00:20:50.559
I used to be able to confidently predict five years.
00:20:50.640 --> 00:20:52.559
I'm down to two and three-year windows now.
00:20:52.640 --> 00:20:56.880
I think the next two years thing is a digital evolution.
00:20:57.119 --> 00:21:01.119
Well, you got you got to go more than two years because you got to break at least one political cycle.
00:21:01.200 --> 00:21:03.119
You have to cross at least one political cycle.
00:21:04.559 --> 00:21:06.960
The next two years, I think regulatory is gonna be okay, right?
00:21:07.119 --> 00:21:10.400
Unless these states have their own like California's or old CFB.
00:21:10.640 --> 00:21:14.160
I think from regular look, you've got to be compliant regardless.
00:21:14.400 --> 00:21:15.440
But we're seeing some breaks.
00:21:15.759 --> 00:21:20.160
Some of the some of these CERCs have rule that the tax is not considered a phone call.
00:21:20.319 --> 00:21:22.720
So that opens you up for more than seven by seven.
00:21:22.799 --> 00:21:27.279
I mean, I think you gotta I think regulatory, I think it's gonna be okay for us.
00:21:27.599 --> 00:21:31.920
But again, different states, there's always you know states that are gonna be a little more zealous.
00:21:32.160 --> 00:21:34.640
But it g it really just depends on the technology, right?
00:21:34.720 --> 00:21:37.039
I mean, and how fast the issuers deploy.
00:21:37.119 --> 00:21:39.039
I mean, it depends who you collect for.
00:21:39.519 --> 00:21:44.640
If you're issuer centric like we are, then you know, I think the next two or three years is okay.
00:21:45.119 --> 00:21:53.440
But if you're collecting just for debt buyers or or or or fintechs, and you're not collecting for big time issuers, it's gonna be all technology driven.
00:21:54.079 --> 00:21:54.240
Yeah.
00:21:54.559 --> 00:21:55.039
All technology.
00:21:55.440 --> 00:21:58.079
I mean, if you if you apply for a loan at FinTech, right?
00:21:58.319 --> 00:21:59.519
You never talk to a human being.
00:22:01.440 --> 00:22:09.519
The first call you get is from either the the fintech internal collection team or from one of us first priority collection teams for the fintech.
00:22:09.839 --> 00:22:11.599
That's the first time you talk to a human being.
00:22:11.920 --> 00:22:14.480
You haven't stepped into a branch, right?
00:22:14.640 --> 00:22:16.079
You've never met anybody.
00:22:17.119 --> 00:22:18.000
No relationship.
00:22:19.119 --> 00:22:19.599
No relationship.
00:22:19.839 --> 00:22:21.039
First time you talk to a human being.
00:22:21.440 --> 00:22:30.640
So if you know if you're working for fintechs, you gotta be technology forward, but you're still gonna have to have a a smart collective because you know, this is the first time they talk to a human being.
00:22:31.200 --> 00:22:35.519
So you think the the needs of the creditor will continue to evolve as well?
00:22:35.680 --> 00:22:41.279
Do you think that they're you think creditors are going to find themselves we're gonna see this increase in charge-offs?
00:22:41.359 --> 00:22:45.119
We're seeing a shift to where that increase is coming into that subprime market.
00:22:45.279 --> 00:22:52.079
So I think we're gonna see some changes in the way that you know origination happens and we might see some tightening just based on the numbers that I've been seeing.
00:22:52.319 --> 00:22:59.920
But how do you think the creditors, do you think that they'll start to accelerate that technology adoption pace over the next five years?
00:23:00.079 --> 00:23:04.559
Or do you think they're still going to look for the the human aspect and element to be handled?
00:23:05.119 --> 00:23:06.960
Or do you think it's is it still a hybrid approach?
00:23:07.599 --> 00:23:08.799
I think it's a pretty hybrid approach.
00:23:08.960 --> 00:23:10.880
That's just yeah, that's my best educated guess.
00:23:11.119 --> 00:23:13.839
I mean, look, issuers want to drive technology.
00:23:13.920 --> 00:23:17.599
Okay, they want they're gonna be using bots, you know, they're gonna want to drive technology.
00:23:19.279 --> 00:23:24.720
But again, there's always there's always a situation where you just don't understand why you're being called.
00:23:24.880 --> 00:23:28.079
You don't understand, you know, they remember the VOD, the L they should die.
00:23:28.559 --> 00:23:29.359
I thought I'd pay this.
00:23:29.440 --> 00:23:33.359
You know, I thought I'd there's always gonna be a human component to this.
00:23:33.839 --> 00:23:36.160
Because similarly people want to talk to human beings.
00:23:36.720 --> 00:23:40.000
That's where it's really important to make it easy to get to one of your agents.
00:23:40.559 --> 00:23:40.799
Right?
00:23:40.880 --> 00:23:43.440
You can't have these prolonged whole times, you can't have all this.
00:23:43.680 --> 00:23:44.880
Get the call to the agent.
00:23:48.240 --> 00:23:53.440
There's nothing more frustrating than being put on hold and be transferred to two or three different people again.
00:23:53.759 --> 00:23:54.000
Come on.
00:23:54.319 --> 00:23:58.640
Just pick up the phone to the call or being dropped, right?
00:23:59.279 --> 00:24:05.440
But the company that answers immediately, you have a lot more respect for because it's such a rare occurrence these days.
00:24:06.559 --> 00:24:07.440
It is a rare occurrence.
00:24:07.680 --> 00:24:17.440
I don't know what the moves are in the industry because we we don't you know we don't really touch a lot of clients on the industry and play club service, but like I tell you there's a need for it.
00:24:17.680 --> 00:24:18.960
There's an absolute need for it.
00:24:19.039 --> 00:24:23.039
I know some of the airlines, the American Airlines has the platinum 800 number.
00:24:23.440 --> 00:24:25.440
You dial that number, you talk somebody fast.
00:24:25.680 --> 00:24:26.240
Immediately.
00:24:26.319 --> 00:24:27.200
Yeah, immediately.
00:24:27.440 --> 00:24:29.119
And that you know what that's value at.
00:24:29.279 --> 00:24:31.279
That that makes you come back to that airline.
00:24:31.519 --> 00:24:33.119
It is the loyalty program, right?
00:24:33.279 --> 00:24:38.960
Like that is why we stick to one airline is because you're hoping to get a level of service.
00:24:39.680 --> 00:24:39.920
Yeah.
00:24:40.000 --> 00:24:40.240
Yeah.
00:24:40.319 --> 00:24:45.839
When everybody else when the flight gets canceled and everybody's standing around yelling in a line, it's easier to jump on the phone.
00:24:46.480 --> 00:24:49.200
Yeah, I'm I'm I'm already bored in the next flight out of there.
00:24:49.440 --> 00:24:53.119
So it's but that I think is what's how we get there.
00:24:53.759 --> 00:24:56.240
I think that's what the creditor is ultimately looking for, right?
00:24:56.319 --> 00:24:59.119
The creditor is looking to improve the customer experience.
00:24:59.279 --> 00:25:11.200
I think there's going to be some level of that that happens with technology as you think about the fintechs, and consumers tend to want to have their loan service through similar or the same channels in which they originated the loan.
00:25:11.359 --> 00:25:22.079
If I went into the you know, into the bank and filled out a credit card application, I might still be going into the bank once a month to physically make that payment on that card, right?
00:25:22.240 --> 00:25:23.519
It's different.
00:25:23.839 --> 00:25:25.519
It's rare, but it happens.
00:25:25.759 --> 00:25:28.720
I look, I maybe it's just because I live here in Port St.
00:25:28.880 --> 00:25:34.160
Lucie, Florida, but I see that almost every Friday at the bank that I walk in there.
00:25:34.400 --> 00:25:36.240
There's people standing there waiting to make it.
00:25:36.720 --> 00:25:37.920
A little different demographic.
00:25:38.160 --> 00:25:43.440
A little different demographic, but it's also those folks that are not comfortable making that online payment.
00:25:43.599 --> 00:25:45.119
They don't want to do it by phone.
00:25:45.279 --> 00:25:47.279
They like to have that personal interaction.
00:25:47.440 --> 00:25:57.599
So the point that I'm making there is that I think each segment of the marketplace or each segment of consumers has a different way that they want to be serviced, but ultimately the creditor is looking, how can I best service?
00:25:57.759 --> 00:26:10.480
If that's the use of technology, if that's the use of people, if that's that continued hybrid approach between it, I think that's their underlying control their, you know, control those costs and provide the best experience they can for a customer.
00:26:10.640 --> 00:26:17.039
Because even a charged-off customer, especially in those earlier stages, may still be a customer next month.
00:26:17.119 --> 00:26:20.079
You know, we can still work through this and get this back to current.
00:26:20.640 --> 00:26:23.519
Everybody thought all these branches for banks are going to close.
00:26:23.599 --> 00:26:24.720
And some of them did close.
00:26:24.880 --> 00:26:26.559
There's still a lot of branches out there.
00:26:26.799 --> 00:26:28.079
A lot of branches, man.
00:26:28.240 --> 00:26:30.960
Like I'm in, you know, I'm in Del Rey, I'm a federal highway.
00:26:31.039 --> 00:26:33.599
There's like five banks right next to each other.
00:26:33.759 --> 00:26:35.039
Right on federal.
00:26:35.279 --> 00:26:36.960
So you know exactly US one.
00:26:37.680 --> 00:26:38.799
Lots of branches at US one.
00:26:39.599 --> 00:26:41.279
Lots of branches at US one.
00:26:41.920 --> 00:26:43.200
All right, let's move on, brother.
00:26:43.359 --> 00:26:45.519
But no, that's that's exactly it, Larry.
00:26:45.599 --> 00:26:48.319
Well, look, that that was really what I wanted to cover with you today.
00:26:48.400 --> 00:27:01.440
I appreciate you coming on and sharing your insights because it sounds like you've gone through this process, you've you've kind of come out the other side, you've continued to see that success, you're continuing to run that same playbook, and I just appreciate you coming on and sharing it with me.
00:27:02.160 --> 00:27:02.799
Appreciate it.
00:27:02.960 --> 00:27:07.119
You know, just to you know, I know we talked briefly, but the numbers did play out.
00:27:07.440 --> 00:27:13.119
You know, the the third party is still the more profitable land, but the first party covers your fixed cost.
00:27:13.599 --> 00:27:18.160
So it's it, you know, but the episodic work, it was 47.53 this year.
00:27:18.319 --> 00:27:20.640
47% first, 53% third.
00:27:20.799 --> 00:27:24.000
But the third party generated higher percents of the profit.
00:27:24.240 --> 00:27:24.480
Okay.
00:27:24.720 --> 00:27:26.480
Because there's less labor in the third party.
00:27:26.799 --> 00:27:28.720
But just let you know the numbers do work.
00:27:28.960 --> 00:27:29.839
The numbers work, man.
00:27:29.920 --> 00:27:30.960
I told you they would and they did.
00:27:31.200 --> 00:27:34.559
And that's why I wanted to close out this conversation, Larry.
00:27:34.640 --> 00:27:36.559
I can't thank you enough for joining me today.
00:27:36.720 --> 00:27:42.880
For those of you that are watching, if you have additional questions you'd like to ask, Larry and myself, you can leave those in the comments on LinkedIn and YouTube.
00:27:43.119 --> 00:27:44.079
We'll be responding to those.
00:27:44.160 --> 00:27:51.759
Or if you have additional topics you'd like to see us discuss, I bet you I can get Larry back here at least one more time to help me continue to create great content for a great industry.
00:27:51.839 --> 00:27:54.000
But until next time, Larry, thank you so much.
00:27:54.319 --> 00:27:55.359
Come down to Del Rey.
00:27:55.440 --> 00:27:56.559
I'll be there in October, brother.
00:27:56.640 --> 00:27:57.359
I'll see you down there.
00:27:57.519 --> 00:27:58.160
I look forward to it.
00:27:58.319 --> 00:28:00.640
I'll see you there before we head back to Brazil.
00:28:00.799 --> 00:28:03.200
And thank you everybody for your time and attention today.
00:28:03.279 --> 00:28:04.319
We'll see you all again soon.
00:28:04.480 --> 00:28:05.599
Bye, everyone.
