Why Middle East Banks Need to Rethink Debt Collections and Debt Collections Software


The Middle East faces a retail banking environment characterized by significant volumes of non-performing loans (NPLs) and robust technological change. Banks operating in this environment face increasing debt collections costs, growing bad debt write-offs and the need for higher provisions against loan losses.

The good news is that opportunities abound both at home and abroad. Banks are growing and breaking into new markets. But higher profits are available only to banks that manage the consequences of growth. Managing credit loss is a key business driver for banks in the region, one that has a direct impact on profits and the bottom line. 

Smart banks are implementing strategies to minimize NPLs and maximize debt collections efforts. The top players are adopting specialized debt collections software to capture more value from the business already on their books.

Why Debt Collections Software? Why Now?

Why is debt collections software so important to the success of banks in the Middle East? NPLs in the Middle East and North Africa stood at 7.9 per cent in 2014, according to the World Bank. Loan appetites in the Middle East are large. Failing to manage both performing and NPLs is financially disastrous.

For every $100 million of loan loss provisions, a bank’s lending capacity is reduced by $6 to $7 billion. Banks may understand that better debt collections and loan management leads to success. But many don’t realize the credit landscape has changed, which is why they face serious difficulties executing a modern debt collections strategy.

Today’s customer carries multiple debt obligations with multiple providers. They use many different channels online to communicate, and they expect high levels of customized service when dealing with lenders.

Many banks, however, believe they can rely on simple phone calls to collect more from these complex new debtors. They also believe they can use basic spreadsheets and systems to monitor and control risk. These are dangerous assumptions.

That’s why debt collections software is so important. It provides end-to-end management of the debt cycle, from origination to litigation. It does so in an effective, realistic and coordinated way with smart tools, features and automation. And it has some advantages that are specifically helpful to Middle East banks that want to improve profits starting immediately.

1. Balance High Growth and Future Risks

Middle East banks are growing at a clip. As they grow, these banks may attract different types of customers with different risk profiles. Failure to manage these risks impacts both growth and existing profits if the ratio of NPLs on the books grows.

The right debt collections software covers all stages, risk types, products and customers. It covers every type of debt, in-house and outsourced collections using customer, account-level and hybrid approaches over multiple contact channels. That means Middle East banks with ambitious growth goals can scale this software with their operations, no matter what business realities they face.

2. Capture More Bottom Line Results

NPLs represent revenue that’s sitting on the table, right now, regardless of the competitors or market position of Middle East banks. It’s not always possible to identify these opportunities with outdated systems. However, debt collections software makes it possible to not only identify but capitalize on, these opportunities at every stage thanks to the following features:

  • Hundreds of trackable important metrics report. (Such as flow rate analysis, collector productivity and collections efficiency.)
  • Documentation of collector performance.
  • Workflows and queues.
  • Ways to settle and monitor better. (Such as self-service options, risk segmentation and multi-channel communication.)

3. Control Operational Costs

Capturing more value from current NPLs isn’t the only advantage Middle East banks can achieve with debt collections software. One of the highest costs for these organizations is operational costs. As Middle East banks grow, so does their staff. Controlling the price of personnel, labour and operations is a critical differentiator in the market.

Debt collections software controls operational costs by:

  • Automating many debt collections processes that would have traditionally been done manually.
  • Segmenting and distributing accounts to collectors.
  • Enabling faster operations with visual tools that collectors can learn without a vendor standing over their shoulders.
  • Speeding up reporting and document management.

Debt collections software allows you to fix operational costs as you grow, expanding your bottom line and margins.

4. Adapt to Local Markets

Middle East banks have one eye on home markets and another on regional or international expansion. That means they need a debt collections solution backed by local experience that is also scalable to any geographic environment.

To do this, the best software solutions use universal best practices within a framework that adapts to local regulations. Solutions must be backed by implementation professionals who have extensive experience in the Middle East, proven success with customers like your bank, and high satisfaction rates.

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EXUS provides specialized software solutions for financial institutions, banking, telecoms, utilities.
For more information about our products and services please contact:  info@exus.co.uk