NPL Market trends you need to know in 2022

In an ever changing world, you need to keep up with the trends to stay ahead of the competition. At Dignisia, we always keep an eye on the NPL market to see what the most successful companies are doing to effectivize their debt collection processes and increase their cash flow. In this article, our experts comment on the most important NPL trends of 2022.

Simply doing what you’ve always done will not suffice in the long run. You need to constantly challenge the way you’re working to optimize and to help your business thrive. 

We keep a close eye on what’s working and what’s not in the world of NPL and in this article, we want to show you 7 trends that we’ve seen among the highest performing credit professionals right now. If you take these trends, systems and processes and apply them to your work, chances are you will increase your cash flow and stay ahead of the competition.

We gathered our team of experts to comment on the trends and here is the result.

1. Benchmarking several areas to gain more knowledge

This is the most used, and most effective, strategy when it comes to driving high debt collection performance. Benchmarking lets you know how the collection agencies are performing, and gives you insights to elevate their performances. But, the key to success is not always to simply benchmark the cash flow.

“The performance over time from the same agency can vary a surprising amount. This means that different collection agencies will perform best at different times, and you need to work actively with benchmarking to secure optimal outcomes. And don’t just look at the cash flow. You should also compare results, ways of working, customer experience etc. to fully understand which agency performs the best, and what their success factors are. And, as a bonus you’ll also gain a better customer experience to go with the increased cash flow”

- Jörgen Köster, Founder and Chief Innovation Officer at Dignisia

2. Expecting more transparency from collection agencies

Many credit professionals feel a need to transform their collection strategy towards using more data and facts. But at the same time, there is a fear of changing true and tested practices and trying new methods. That’s why we still see credit professionals who are working manually and inefficiently. 

What we see is that the successful credit professionals that have embraced data management are now expecting full transparency in case handling from the collection agencies.

“We see a difference between the interest levels among credit professionals. Some want to stay high level and secure compliance, minimize risk, and keep the performance at “good enough” levels. And they simply trust the collection agencies to do their job. But others are very interested in details and want to comment on specific action chains, letter types and so on. Both of these mindsets work, but they both need a relevant database to be certain about the agency's performance and keep a transparent dialogue, which we like to see”.

- Fredrik Ridaeus, Senior Credit Specialist, Dignisia

3. Adding intelligence in pre-collection

More and more companies are looking to add in-house intelligence in their pre-collection processes, and not just rely on the collection agencies when it comes to debt collection.

“We often see companies sending their claims to debt collection before they’ve tried the right collection strategy. The customer had money, they just hadn’t been approached in the best way strategically. This is why we see a trend in the NPL market, where companies look to add in-house intelligence in their pre-collection processes, and not just rely on the collection agencies when it comes to debt collection. With more intelligence and better data in pre-collection, companies can increase their cash flow and collect the lowest hanging fruits in-house before handing it over to agencies. This will reduce the number of lost customers and increase the knowledge in customer journey”

- Stefan N. Gustafsson, Head of Sales, Dignisia



4. Collecting insights to maximize performance

There is a wide performance spread in debt collection, and no collection agency performs the best across all markets and asset classes. By collecting insights, you make sure you’re using agencies with the right special knowledge, suitable for your company.

“Sometimes we hear that all collection agencies perform the same. This usually stems from one of two misconceptions. First, on the surface it can seem like all collection agencies are doing the same thing with advanced decision support engines, digital communication etc. But the truth is that debt collection, like any service, can be performed with a wide spread of timing, actions, tone and messaging towards the debtor. As well as enormous variations in when and how to use which parts of the legal system.

This is why it is important to partner up close to the agencies, but also to ensure transparency, collect insights and benchmark the performance over time”.

- Gustav Terland, COO, Dignisia

5. Slicing the portfolio and selling to multiple NPL investors

There is an increased appetite to slice portfolios and broaden the spectrum of NPL investors. Although this takes up more administrative time, companies are now discovering the benefits of splitting their portfolios.

“Some agencies and investors are great at B2B and some are experts at B2C, for example. When you’re not taking this into consideration, and sell the whole portfolio to the same agency, you miss out on a lot of profit. When you separate the portfolio into categories, and sell to investors and agencies depending on their expertise, you’ll get better results and an increased cash flow. Niche agencies are also willing to pay more, since they know the potential value of the portfolio better than others.”

- Gunnar Bidås, Founder and Chief Product Officer, Dignisia

6. Collecting knowledge about the customer journey

Debt collection has become a part of the analysis for client retention. The added cost for using collection agencies comes with vital data points needed to improve the customer journey.

Measuring the customer journey is not easy, but it can be a game changer. Especially since a positive customer experience makes your customers want to come back for more, and measuring it makes it easier to follow possible stricter regulations.

“Everybody talks about it but very few know how to do it. You need to stop only measuring cash flow when you outsource your debt collection, and start to look at the customer journey. The one who knows their customer the best will always come out on top in the long run.

- Malin Stockelid, Project Manager / Client Success

7. Increased interest in AI and Tech

We are very happy to see an increased interest in AI! With the rise of tech solutions, companies are becoming more aware of the many benefits of using tech to their advantage. However, it’s important to make sure you’ve taken control over your database and made it structured and easy to read before investing in AI.

“Companies need to lay the groundwork before looking at AI as some kind of magic bullet. The internal processes are often lacking, and the data have not been structured enough. Then they can’t use the tech to its full advantage. So it’s important to start by going over your own processes, even if it’s a complex and costly project. Investing in AI before that, will be a waste of money.”

- Jonny Lingvall, Founder and CEO at Dignisia

IMG_4105At Dignisia, we can help you handle the whole process. Our software enables you to benchmark the collection agencies results,  collect the most valuable data and present it through our platform in a digestible way. And it takes only a fraction of the time it takes you to do it manually. 

“You have to be willing to invest. Even if we at Dignisia offer a SaaS solution, the details are inside the data. What you thought to be true might be wrong (which we can help you with). Our long term clients have seen an increased value in a qualitative data base, and trust the investment. You can build pretty models and use fancy buzzwords, but if you don’t have high quality data to fuel your decisions, it’s all a waste of time.”

- Jonny Lingvall, Founder and CEO at Dignisia

Interested in how Dignisia can help you?