| As 2024 ends, it has been another challenging year for the debt collection industry. Economic uncertainty, rising consumer debt and financial hardship levels, and increasing regulatory demands have pushed organisations to adapt faster than ever. The pressure to balance operational efficiency with customer-centricity has never been greater. At the same time, technological advancements are moving more rapidly than ever, offering immense potential but leaving the industry grappling with where and how to use them best.
To better understand the road ahead, we asked industry leaders across the UK, US, and Australia to share their insights on the challenges, opportunities, and technological shifts they expect to define 2025 and beyond. These views, combined with Telrock Systems’ own Andrew Pritchard‘s perspective, provides a collective understanding of what organisations should look for as they navigate this evolving landscape.
Where Are We Now?
The three territories under discussion – the UK, US, and Australia – are operating under different regulatory pressures and economic conditions, each shaping the collections landscape in unique ways.
In the UK, the debt collection industry is operating under increased regulatory scrutiny. Chris Warburton of ROStrategy highlights the growing focus on consumer outcomes, noting that “regulatory bodies increasingly scrutinise how well institutions can demonstrate good consumer outcomes, which will only deepen as additional product sales data becomes a requirement from the regulator next year.” This focus has driven organisations to adopt more transparent processes and invest in solutions that align with these expectations. There is also a growing view across the industry that compliance is now the minimum standard. Firms are striving to go beyond this, driving excellence in how they support customers experiencing financial hardship.
However, this shift comes at a cost. Phil McGilvray of Coeo UK points out that “the costs of doing business continues to be a challenge for many organisations” particularly following investments in meeting Consumer Duty requirements and new FCA guidelines. The financial strain is further compounded by recently increased employment costs. For smaller players, this could lead to consolidation or increased pressure to digitise their operations and partner with innovative suppliers.
Despite these challenges, Andrew believes that using a modern technology platform can vastly help in navigating these pressures. Such platforms enable firms to adopt the latest digital technologies, streamline operations, and support compliance. By investing in adaptable systems, organisations can also future proof their operations, ensuring they can quickly integrate emerging technologies and regulatory requirements.
In Australia, Sacha Close of Qurioux describes an industry grappling with outdated technology, with “nearly 90% of big players are on the same platform, many of which are ageing and in need of costly upgrades.” Rising financial stress among consumers is driving a need for more empathetic and customer-focused solutions. Regulatory initiatives, such as ASIC’s report 782 (supporting customers in Financial Hardship), are encouraging institutions to prioritise fairness and adaptability in their processes.
In the US, John Sanders of Bridgeforce highlights challenges in third-party vendor risk management, explaining that “collections and recoveries vendors are currently experiencing a 70-80% increase in volume,” which is straining resources and requiring closer supervision. Additionally, consumer demand for seamless, self-service options continues to grow, pushing organisations to enhance their digital offerings while maintaining trust and security. Andrew emphasises that information security is a critical priority for firms in this space. Technology partners must demonstrate maximum credibility in securing sensitive customer data, particularly as digital engagement increases.
The Evolution of Consumer Expectations
The shift in consumer expectations is a recurring theme across regions. Consumers increasingly demand convenient, flexible, and personalised interactions, but the path to delivering these experiences varies.
Stateside, John emphasises the growing importance of self-service capabilities, urging organisations to dig deeper into what a digital experience really means. He notes, “59% of consumers prefer an experience that is fast and simple, while 41% favour an experience that is personalised, innovative, and empowering.” This duality highlights the need for tailored strategies that reflect customer diversity.
In Australia, Sacha observes that “rising cost-of-living pressures are driving an urgent need for empathetic, customer-focused debt solutions,” particularly as households face increased financial stress. The reliance on legacy systems has limited agility in the region, but institutions are beginning to embrace innovation to meet evolving consumer demands.
Andrew adds that some organisations have already seen up to a 75% reduction in agent utilisation by operating in a digital-first environment. This is unlikely to remove the need for agents but does allow customers to choose when to engage digitally and when to seek human interaction. Digital solutions can also drive more data capture, which, when utilised effectively, can create more personalised journeys, enhancing customer satisfaction and outcomes.
Economic Pressures and Regulatory Challenges
Economic instability continues to challenge the industry globally. Rising interest rates, inflation, and household debt are straining consumers and organisations.
In Australia, Sacha describes the debt landscape as a “storm building up – high interest rates, soaring living costs, and the shift from fixed to steep variable mortgage rates have eaten away household savings, leaving many financially exposed.” This puts financial institutions under pressure to absorb higher collection costs while supporting vulnerable customers.
In the UK, Phil warns that funding gaps for debt purchasers could reshape the market, allowing smaller players to gain a foothold. However, he notes that “the impact of consumer duty and the likely regulation of newer sectors such as Buy Now Pay Later (BNPL) will result in higher standards and better outcomes if implemented well.”
The US faces its own challenges, as John observes that “there hasn’t been a real test of default and collections management for many financial institutions since the 2008 Recession.” With credit card spending increasing and account balances depleting, the industry must prepare for potential economic shocks while managing rising regulatory expectations.
The Role of Technology: Innovation Meets Compliance
Technology remains a double-edged sword, offering immense potential while introducing new complexities.
John highlights the compliance challenges of AI in the US, describing it as a ‘compliance conundrum’ due to its variability in outcomes. He notes that “traditional collection models are straight-forward because of the way the logic waterfalls through…AI flips this around and makes it ‘outcome’-based,” which could clash with regulatory requirements for consistency.
AI is becoming increasingly nuanced, with advancements such as Explainable AI helping firms understand the rationale behind decisions, and Generative AI unleashing possibilities for agent support, personalised customer interactions and process automation. These innovations bring immense promise but require careful consideration to ensure they are deployed responsibly and compliantly.
Meanwhile, in the UK, Nick Georgiades of NTG Associates sees AI playing a role in shaping customer journeys. He explains that AI can be used “to support self-serve options, tailoring customer journeys and offers based on the cumulative interaction of the journey so far.” This not only helps consumers navigate their financial challenges but also ensures that agents can provide more effective, informed support when needed. This is likely to play more of a supportive role for agents than a full replacement.
Andrew further reinforces the importance of using technology that supports rapid change. As the pace of regulatory and economic shifts accelerates, firms must be able to adapt quickly, minimising disruptions, and ensuring they remain aligned with both consumer needs and compliance requirements.
Looking Ahead
As John puts it, collections must evolve from being purely transactional to becoming a ‘marketing event.’ By integrating behavioural science, choice architecture, and innovative technologies, the industry can create better outcomes for consumers and organisations alike.
The insights shared by Sacha Close, Nick Georgiades, Chris Warburton, Phil McGilvray, and John Sanders, along with our own Andrew Pritchard, highlight the shared challenges and opportunities across geographies. While the journey ahead may be complex, the commitment to leveraging technology, prioritising customer outcomes, and adapting to change offers a hopeful outlook for 2025.
Thank you to the contributors for sharing their valuable perspectives:
Phil McGilvray, UK, CEO Coeo UK – Helping clients in the Retail, Financial Services, and Professional Services sectors with Debt recovery. Coeo partners with businesses to improve their decision-making and resilience through the effective use of data and AI.
Sacha Close, Australia, Founder / Director of Qurioux – Dedicated to transforming customer experience in mtm via tech, data, risk, policy.
Chris Warburton, UK, Founder / Director of ROStrategy – With experience across the customer lifecycle – Acquisition to Collections and Recoveries – we helping companies find value in their processes, improve customer experience and generate more profitable growth.
John Sanders, US, Managing Partner / CEO of Bridgeforce – Bridgeforce helps financial services companies of all sizes bridge the gap between pressing challenges and emerging opportunities to succeed and thrive.
Nick Georgiades, Founder / Director of NTG Associates – Experienced Consultant with a demonstrated history in the financial services, telco, utilities sectors, and local government. Helping build organisations and achieve operational excellence through the pragmatic use of data and analytics.
What are your thoughts on the future of collections? Feel free to email me at Andrew.Pritchard@telrock.com. |
