Transforming Debt Management: A Journey of Empowerment and Financial Freedom

In conversation with Kian Foh Then

In a world where debt can be over­whelming, one company is revolutionising the debt management industry with a vision of empowerment and financial freedom. Collectius, led by Co-Group CEO Kian Foh Then, is on a mission to transform the debt recovery experience into a user-friendly, seamless, and con­venient process. In a recent interview, Kian Foh Then shared insights into the inspiration behind Collectius, its evolution, and the challenges and innovations that set it apart.

Collectius was born out of a desire to make a difference in the lives of under­served individuals. "I left the traditional banking industry after 15 years to em­bark on a journey of digital lending for the underserved;' explained Then. "I realised that while many lenders want to lend and help the underserved, there are only a few organisations willing to assist customers who are in debt or ex­periencing financial difficulties.” Reminiscing about his journey towards revolutionising debt management, Then recalls, "In 2017, I was approached by Collectius co-founders Gustav A. Eriks­son and Ivar Bjorklund and they shared with me the business model of purchas­ing Non-Performing Loans in Asia and how we can help customers who are in financial difficulties to be debt free. Starting as a Managing Director in the Philippines, I am today the Co-Group CEO of Collectius responsible for deliver­ing growth across our 7 markets in Asia.” Taking pride in its role as a changemaker in the debt recovery business, the primary goal of Collectius is to transform the debt repayment experience into one that is user-friendly, seamless, and convenient - where customers are seen not as debtors, but as individuals they are serving to help on their journey to re­solving their debt.

Since its inception, Collectius has experienced remarkable growth, says Then, "We started our operations in Singapore in 2016 and now have a presence in Southeast Asia (Singapore, Malaysia, Indonesia, Thailand, Philippines and Vietnam) and India, where we serve more than 6 million customers. Last year witnessed a couple of milestones for the company. Firstly, we completed the largest single acquisition in our history when we bought US$800 million worth of non-performing loans (NPLs) from a Vietnam-based commercial bank. We also reached a landmark agreement with a digital bank in Asia to support their debt recovery process from end­to-end. Our total assets under manage­ment reached US$7.1 billion as of end-2022, and the company has recorded a compound annual growth rate (CAGR) of 40% since we began in 2016.” Leading a debt management firm comes with its own set of challenges, and talent management is among the topmost items on his list, according to Then. "People are our greatest assets. We stay com­petitive and nimble by equipping our people for the future. It is critical to build people's capabilities that help manage the radical disruptions in the financial industry and future-proof the organization.”

Explaining further, he continued, "Finding and retaining top talent is crucial for the success of any organisation. To overcome this obstacle, leaders should focus on creating a positive work environment, offering competitive salaries and benefits, providing opportunities for growth and development, and recognising and rewarding top performers.” Collectius's challenges aside, Then shared unique insights on the challeng­es faced by the debt management in­dustry as a whole, and the way forward for players in the industry that want to grow sustainably.

"Moving forward, the debt management industry has to tackle the challenges of digital transformation, personalisation, and sustainability to remain viable. The pandemic has shed light on gaps in the industry that could be improved with technology, thus accelerating digital transformation. If debt management companies want to continue improving their customer experience and efficiency, they would have to adopt greater automation. This has guided Collectius in continually improving processes by integrating Al and automation.”

"Secondly, customers are leaning more than ever towards personalisation and how debt management companies choose to embrace this will set them apart. By leveraging data analytics, com­panies can tailor debt management plans to meet the unique financial situa­tions of individual customers. This personalised approach ensures more effective and targeted debt man­agement strategies.”

"Lastly, sustainability is becoming increasingly important in the debt management sector. Companies are recognising the need to incorporate sustainability principles into their oper­ations, such as promoting digital pay­ment methods to reduce paper waste and advocating responsible lending and borrowing practices. Embracing sustain­ability not only aligns with societal and environmental goals but also contrib­utes to the long-term success and repu­tation of debt management firms:' While debt management is by no means a new field, and hence there are many players in the burgeoning sector, what sets Collectius apart from other debt management companies is its commit­ment to establishing collaborative rela­tionships with customers.

"There is somewhat of a negative per­ception when discussing debt recovery or debt collection in Asia, partly due to some of the unethical ways that com­panies use to recover debt. One of the things that we set out to change from early on is to establish a collaborative relationship with our customers. Rather than view them as debtors, we see them as customers who we are serving to help them on their journey to resolving their debt;” said Then.

"The way we approach debt recovery is through what we term the ‘Collectius Way of Collection’. This means turning debt recovery into an opportunity for financial empowerment. Firstly, we empower customers through financial literacy and guiding them on things such as cashflow management and bud­get planning. Secondly, we empower customers to take charge of their own debt resolution where customers can customise their debt repayment plans and execute payments on a self-service portal through their preferred payment channel.”

Looking ahead, Collectius envisions a sustainable debt management environment that offers personalised solutions, leveraging data analytics and digital transformation to enhance customer experience and improve recovery rates.

Summarising the evolution of customer experience in the industry, Then categorises three major ways in which change has played out "Firstly, artificial intelligence (Al) enables debt management firms to improve re­covery rates and automate processes through advanced analytics and behavioural science. Al-driven data collec­tion helps identify potential defaulters early, allowing proactive measures like incentivising settlements with early pay­ment discounts. Secondly, meeting consumer demands for flexibility and choice is crucial in debt repayment processes. Self-servicing options enable customers to mod­ify payment plans and select preferred platforms. Adopting an omnichannel approach ensures regular touchpoints and accommodates customers' preferred modes of interaction. Lastly, ethics and compliance are para­mount in debt management. Authorities implement protective measures against abusive collection tactics. Adhering to the highest ethical standards differentiates debt management firms and instil confidence in potential partners. Com­pliance with regulations is particularly important in outsourced debt recovery, reducing reputational risks for clients and safeguarding customer relationships.”

On the topic of how he plans to ensure that clients are always treated fairly and ethically, Then laid out his plans in simple words, reiterating that "we are guided by the 'Collectius Way of Collection' that seeks to provide financial empowerment to our customers and allow them to realise new financial beginnings. Our relationship with our customers is crucial, and we regularly audit the conversations that our mediators have with our customers - whether on the phone or online - to ensure that the best service standards are upheld.”

Then's journey building Collectius, and fostering holistic customer empowerment in the debt management industry, while a successful one, has not always been an easy one. Asked about a particularly tough decision he had to make, Then recounted "We utilise both in­house and outsourced debt collection agency partners to effectively collect our debt purchase accounts, ensuring optimal operational efficiencies. We maintain stringent "know your customer" procedures and uphold a strict code of conduct for ourselves and our part­ners. Regular audits are conducted to ensure compliance. During one such audit, we discovered a serious breach of an important code of conduct by one of our top-performing partners, specifically their failure to treat customers fairly. Although discontinu­ing their services would have an impact on our revenue, we were clear in our minds that it was more important to up­hold the 'Collectius way of Collections' and the values that guide our interac­tions with customers.”

Collectius is committed to prioritizing innovation, leveraging technology, and building a sustainable environment both inside and outside the organisation, as evident in Then's reply to how they foster a culture of innovation - "We listen closely to the feedback of our employees and customers and use that to continually improve our operations and level of service. Internally, we employ the Japanese system of incremental innovation through the Kaizen method where we incentivise and reward employees monthly to adopt creative ways of looking at their job or workplace, and either eliminate things that don't add value or propose ideas that create new value. We're also constantly looking at the feedback we receive from customers which guides us in improving the overall user experience. This year we invested in a software where we could do 100% call quality check, compared to the regular practice where companies typically perform 5% to 10% of call quality checks in a given month.”

But it doesn't stop there. Collectius's committment to customers goes above and beyond industry standards, demon­strated by Then's recollections about a particularly memorable customer experience. "I recall a particular incident of a customer in the Philippines where one of his family members was seriously ill and could not afford to keep up with his installment payments for his debt due to the high medical expenses;” notes Then, "the customer eventually came back to repaying his installments in full after his family member recovered from illness.” Collectius successfully balances the needs of its clients with its own financial goals. By focusing on delivering a superior customer experience, the company has focused on "delivering superior cus­tomer experience has directly led to im­proved repayment rates by 10% to 15%;” says Then.

Technology plays a vital role in debt management, and Collectius is at the forefront of leveraging technological advancements. Then emphasizes the impact of digitalization on the indus­try, stating, "In Southeast Asia, the debt recovery industry has been slow to adopt digitalization, often relying on manual processes and outdated technology.”

However, Collectius recognizes the potential of technology to enhance services and improve customer engage­ment. Then elaborates, "Digital solutions can complement traditional approaches by addressing industry shortcomings, improving engagement, ensuring com­pliance, and aligning with customer ex­pectations.”

Collectius adopts a customer-centric approach by prioritizing communication in customers' preferred channels. "As a cus­tomer-centric Credit Management orga­nization, we prioritize communicating with customers in their preferred way, often through email or text, rather than outbound phone calls.” Then explains, while emphasizing, "Our tech-enabled platform enables customers to self-serve, managing their accounts digitally, including modifying payment plans or disputing charges.”

Corporate social responsibility is a fun­damental aspect of Collectius's mission. The company's core business beliefs positively impact society by helping individuals improve their credit profiles and empowering banks to issue credit. Then highlights this, stating, "Firstly, be­ing in the debt management and recovery business by its very nature means we are impacting society in a positive and meaningful way. By recovering delinquent debt from customers, Collectius helps mend the credit profile of individuals, which strengthens their purchasing power. This in turn has a positive impact on economic growth. Also, when Collectius supports banks that are looking to transfer bad debt from their balance sheets, we are empowering them to continue issuing credit which fuels economic activity. "The Company's core business belief is to provide customers a second chance to clear their debt, and to educate them on financial literacy in order to re-enter the economy. Even though the loans are due from the outset, the "Collectius way of collection" promotes transparency and self-responsibility by offering customers the ability to determine their own repayment plan using the digital tools of the platform. Customers also have the ability to discuss options with highly trained mediators to agree on a flexible and realistic repayment solution. The customers benefit from up to 30% discounts and zero interest rate terms (in most cases), or significantly lower rates than what commercial banks charge them:' "Collectius has already helped 142,000 customers fulfil their outstanding financial obligations and currently sup­ports over 100,000 SM Es daily to restore their access to the financial system. By offering them the financial competence to grow with the economy, Collectius paves the way for customers to regain access to formal credit, build confidence, protect jobs, and secure livelihoods.”

Collectius's commitment to financial literacy and responsible collection meth­ods is also evident, says Then. "The 'Collectius way of collection' promotes transparency and self-responsibility by offering customers the ability to deter­mine their own repayment plan using the digital tools of the platform.”

A career in the debt management in­dustry requires passion, perseverance, a can-do attitude, and creativity. The representative advises aspiring professionals, stating, "I think they need to be passionate in helping others achieve a sound financial well-being. Despite the misconceptions surrounding the industry, the fundamental goal is to have a genuine desire to assist and guide individuals in resolving their debts. In terms of qualities, perseverance, a can-do atti­tude, and creativity are essential for success in this industry.”

As Collectius continues to grow and expand its footprint, they remain commit­ed to their core values of professionalism, integrity, and social responsibility.

To summarise, Collectius has established itself as a leading player in the debt man­agement industry, helping thousands of customers and SMEs regain financial stability. Their commitment to financial literacy and responsible collection methods sets them apart, empowering customers to take control of their repay­ment plans.

Moving forward, the company's focus on promoting transparency and self-responsibility through digital tools will continue to reshape the debt management landscape. Aspiring pro­fessionals in the industry are advised to cultivate a genuine passion for assisting others in achieving financial well-being, while embracing qualities such as perseverance, a can-do attitude, and creativity. With the ever-evolving challenges of debt management, the key to success lies in continuously adapting strategies and leveraging technological advancements to better serve customers and drive positive impact.

Collectius's dedication to helping individuals and businesses rebuild their financial futures positions them as a trusted partner in the pursuit of economic empowerment and the preservation of livelihoods.

This article was first published in July 2023 edition of The Enterprise News magazine.