FICO, a leading predictive analytics and decision management software company, today announced that Black Horse, part of the Lloyds Banking Group, has received a 2013 Financial World Innovation Award for Most Innovative Application of Technology, based upon an application developed using FICO technology. 

Lloyds used a combination of interactive SMS texts and automated payment capture to enable their Black Horse customers to pay overdue debts easily. This approach has increased the amount paid per plan by 25 percent, and the number of successful payment arrangements with overdue customers by 9 percent, while simplifying the customer experience.

“Our innovative approach means we can collect payments in arrears anytime,” said David Morpeth, Operations Director of Black Horse, which helps more than 200,000 UK customers every year to finance new and used cars, caravans, motorhomes or motorbikes. “With this application, we’ve made it much easier for our customers to resolve outstanding debt.”

Signing up customers
The first step in making payment plans is a call from a Black Horse advisor. “Arrangements to pay that are made without fully understanding the customer’s commitments or circumstances are often unrealistic, and therefore likely to fail,” said Morpeth. “Our ’Straight Talking’ dialogue initiative focuses on building trust and increasing customer care through enhanced questioning and listening techniques. Our advisors use this approach to reach a resolution for the customer that enables them to bring their accounts up to date.”

The payment process
Once the payment plan is arranged, Black Horse uses the Arrange-to-Pay application, based on FICO® Customer Communication Services, to manage collections contacts in an automatic phased approach. Two days before payment is due, an SMS reminder is automatically sent to the customer. The text directs the customer to the Black Horse Make a Payment / Manage My Account website, where payments can be made 24/7, including the option of using a card — a feature that very few finance companies offer to their overdue customers. Using this approach, Black Horse has reduced the number of calls to its Contact Centre, as well as cutting the percentage of arrangements that fail because the customer forgets to pay.

Customers who have not paid by the due date receive an SMS via FICO. The interactive SMS message includes the option for the customer to request an immediate call back. FICO’s outbound voice application then helps the customer make a payment using an Autopay facility.

“Customers who responded to the interactive SMS are more likely to resolve, as the call is triggered at the customer’s convenience,” said Gabriel Hopkins, who manages FICO Customer Communication Services. “The percentage of customers making payments as a result of being contacted by text has tripled, as has the amount collected per month through this channel.”

If payment has not been received two days after the deadline, a reminder text is sent to the customer. Customers are scored for risk, and based upon their risk level may receive a grace period of 2 to 10 days.

Web-site optimised for mobile
Knowing customers are increasingly using their smartphones and tablets to access the internet, Black Horse redesigned its Make a Payment/Manage My Account website to optimize it for mobile payments. Visits to the site from a mobile device increased by 19 percent from January 2012 to June 2013, and have continued to increase each month since.

Moving to automated payments when appropriate
Black Horse is now in the process of implementing a continuous payment authority for arrangement to pay, which will enable its advisors to set customers up with a new arrangement to pay using payments automatically taken from a nominated card.

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Congratulations to Lloyds Black Horse on their use of technology to make life easier for clients who are having re-payment problems. This application shows how empathetic use of technology can significantly reduce the payments in arrears and simultaneously cut costs.