Arvato Financial Solutions does not do things by halves when it comes to digital transformation and has designed its debt collection business from scratch. On the new Paigo platform, the focus is on people. […]
The debt collection business is changing, and Arvato Financial Solutions is feeling the same. One of the challenges, for example, is that consumers are increasingly losing track of their finances. This is also due to the fact that consumption is becoming easier and easier. Consumers are buying on credit and in installments like never before.
The result: about 6.9 million citizens in Germany are over-indebted. In addition, new digital business models increase complexity. The regulatory environment is also intensifying: in January 2021, the law on Improving Consumer Protection in Debt collection came into force. Volker Bornhöft, Member of the Management Board at Arvato Financial Solutions, as well as Florian Lampe and Sven Schneider, both Managing Directors at Paigo, estimate that this will lead to a decline in sales of up to 30 percent in the entire industry.
It was clear to the financial services company that it needed to transform its business, especially as it faces new competition from international tech companies that have a stronger IT and data focus and are working on scalable solutions. This mix-up gave the impetus for the creation of Paigo, a fintech that should rethink debt collection. With this idea and the way the following project was implemented, the responsible persons impressed the jurors of the Digital Leader Award (DLA) 2021.
The first question was how to reconcile two seemingly contradictory goals: how companies can improve their liquidity by settling their claims faster, and how consumers can manage their financial situation independently again in payment difficulties. “Both are more urgent than ever now, in the midst of the corona pandemic, “stated the initiators of Paigo and noted:” This requires a completely new solution, an approach that deliberately breaks with everything that has been done so far.“
The solution was a digital platform for receivables management. However, this should follow a new guiding principle: the focus should be on the human being. “We are changing our previous view from ‘consumer as debtor’ to ‘consumer as customer’ and looking at his particular life situation, ” says Paigo. This also includes personal, individual communication, which is directly integrated into the new digital debt collection platform. In addition, users should be able to gain a financial overview, manage debts and build up knowledge.
“We accompany financial processes along the entire customer life cycle,” said the people responsible for fintech. This knowledge has been used to build an overarching IT and data platform that connects existing standard products via APIs (Application Programming Interface) or microservices and makes them usable. In addition, dedicated product owners and interdisciplinary teams are continuously developing features.
For example, automatic concern detection using AI ensures greater efficiency and quality. In addition, consumers can be clustered in groups to enable a more individual approach. The “Look into the account” function helps users to arrange installment payments faster and easier and to identify potential savings. The digital self-disclosure is intended to ensure greater transparency and control over open receivables and to provide knowledge through a digital financial lexicon and a financial advisor.
Paigo has also committed itself to cultural change and agile organizational development for the construction of the platform. “Using design thinking, Scrum and lean startup, we bring strategic goals to life,” say those responsible. Hierarchical thinking has been replaced by self-responsibility. Progress would be measured using OKRs (Objectives and Key Results). “As a digital growth organization, we continuously reflect and adapt what we do.”In addition, there is a close relationship with all those involved. The solution is developed in co-creation with the clients. In this way, new products could be adapted to specific customer needs, set standards together and strengthen customer loyalty. Digital self-service portals provided transparency and offered data-supported decision-making bases based on individual KPIs.
The first figures show that the platform is well-received by all parties involved. Since the launch of Paigo, the number of contacts with consumers has increased by 15 percent, it said. They would also rate the new portal well: with an average of 4.5 out of a possible 5 stars. In addition, about three-quarters of direct comments are positive. Paigo is also worthwhile for clients: The willingness of portal users to pay is 25 percent higher, the fintech states. In addition, the increased use of digital channels means that the returns are on average one day earlier. In addition, the solution rate for complaints has increased significantly. And their own employees are also more satisfied and show a higher level of commitment, as regular surveys show.
With the technology platform paigo.com as we have moved closer to consumers, and through co-creation projects closer to our clients, the fintech executives conclude. The project has shown how much the platform economy can also change the role of debt collection companies as a whole. It became clear how important the user experience of end customers is in receivables management. “Never before have debt collection companies been so challenged to respond to the needs of consumers.“
For Arvato Financial Solutions, digital transformation was just the way to go. Through the development of a fintech company, the prerequisites have been created to significantly increase one’s ability to innovate. “We were able to digitize interactions, make processes more efficient, reduce complexity and thus make better use of resources.”But Paigo may have been only the first step. “We are on a journey where we know we will never arrive,” the people in charge note. Far away from traditional paths, there is always something new to discover. This requires courage, will, and the willingness to try things out, as well as a high level of trust in employees.
* Martin Bayer: Spezialgebiet Business-Software: Business Intelligence, Big Data, CRM, ECM und ERP; Betreuung von News und Titel-Strecken in der Print-Ausgabe der COMPUTERWOCHE.