More consumers in Asia Pacific becoming late-paying clients: survey

2 in 5 collection managers say more consumers are paying 60-days past-due.

In a recent poll, three in five senior collections managers from banks, telcos, and utilities across Asia Pacific revealed that consumers in the region have taken longer time to pay their bills in the past year. The 60-days past-due segment has seen the highest growth according to 41% of respondents , while 72% of collections managers have also registered an increase in the number of first-time delinquents .

"These figures show the need for businesses to react to dynamic changes in consumer behavior across the Asia Pacific region," said Dan McConaghy, president for FICO Asia-Pacific. "Earlier this year, Moody's reported that household debt in Asia has grown at an average of 13.5% a year. The rapid rise of the middle class in the region's emerging economies and the growth in services that provide some type of credit are two key reasons for the changes in collection rates this year."

Senior collections managers said that mobile communications and automated collection strategies were very effective at helping customers make payments. 59 percent of respondents said consumers paid their bills one to two days faster while 25% said their time-to-collect improved three to fourteen days.

Further to this, 78% of respondents reported higher customer satisfaction rates using automated customer communications, and reported that 60% of consumers will rate the experience between seven and ten.

The survey revealed that older Millennials (24-to-35 years old) make up the greatest portion of early collections. By contrast, 47% of collections managers said Generation X, or consumers 35-55 years old, made up the largest portion of late collections activity. This shows that Millennials cure better than their older peers and respond to collections in a timely way.

"It is encouraging to see that Millennials in Asia Pacific are more responsive and willing to take speedy action on bills when approached using their preferred communications channels," said McConaghy. "Given that 60% of the world's Millennials will be living in Asia by 2020, it's important that businesses adapt to their expectations of digital service channels that are easy to use."

In terms of the growth of collections cases in 2017, the survey showed that three in four collections managers anticipate a 10-25% increase next year. Half of the Chinese attendees expected there would be a 25-50% or greater increase in collections cases. Most put this down to natural business growth as well as an increase in the number of higher-risk customers their companies are willing to sign up.

"Automated collections is the perfect solution to deal with this growth while keeping a lid on costs and ensuing all collections remain compliant with each market's regulations," said McConaghy.

FICO conducted a survey of 37 senior collections managers from across Asia Pacific in November 2016 at its FutureCollect event.