The Paradox of Human-Based Collections and How to Overcome It

Michael Abbott
4 min readJan 22, 2021

Over the past decade, banks have focused on building lifelong relationships with their customers. With COVID-19, customers are experiencing one of the most stressful financial times in recent memory, through no fault of their own. This is a “make or break” moment for banks. How customers are treated right now will shape the customer relationship moving forward, and determine whether or not those relationships stay strong and positive. Customer experiences during COVID-19 will also affect what the public thinks and says about banks for the next decade. Because of this, it’s crucial for banks to be empathetic, especially in collections.

The paradox of human-based collections

There’s an inherent paradox in “human-based collections.” If a customer is unable to pay back a loan and a bank needs to get paid, how can that bank act with empathy and understanding? More importantly, why would a bank act with empathy and understanding? How does the bank benefit from that approach?

There are some obvious positives of a human-based collections model: It can deepen lifelong relationships and could even prompt customers to talk positively about their experience to friends and family (aka, word-of-mouth marketing).

But the true benefit to banks is the unexpected reality that by being empathetic, banks could get paid faster.

Using psychology and behavioral economics

Many people who miss a loan payment will have multiple loans to pay back. Banks can create a relationship based on trust that motivates customers to pay them back sooner rather than later.

But there’s more to human-based collections than simple empathy. Banks can learn lessons in digital marketing from the past decade:

  • Segment customers based on psychographic mindsets and certain principles of behavioral economics
  • Use that segmentation to customize outreach and communications
  • Think digital first in messaging strategies
  • Build a connected experience that allows customers to have conversations across channels

By leveraging principles of psychology and behavioral economics, banks can make collections communications more precise, personalized, and persuasive.

Psychological profiles

There is a myriad of ways banks can segment customers using psychological profiles. Here are some simple examples:

  • Comfort Seekers: Want to feel supported, safe and content with their money management. Example marketing message: “We’re here for you.”
  • Stability Seekers: Want to feel like they are on the right path and not stressed. Example marketing message: “Stay on track.”
  • Happiness Seekers: Want to feel good about where their money goes and what they are accomplishing. Example marketing message: “You can do this!”
  • Control Seekers: Want to feel in total control and know exactly what is happening with their money, and have the ability to stop or change it. Example marketing message: “Here are your options”

Behavioral economics: carrots and sticks

Combining psychological profiles with behavioral economics is powerful. From there, banks can determine the most effective carrots and sticks to offer each group. Some examples include:

  • Goal Gradient Effect: As people get closer to a reward, they speed up the behavior that is taking them toward their goal. This behavior is connected with happiness seekers. Banks can make strategic decisions based on how close these customers are to paying off their loan.
  • Loss Aversion: The tendency to prioritize avoiding losses over achieving equivalent gains. This behavior can be associated with control and stability seekers. They want to feel like they are in control and on the right track, so their focus will be on mitigating losses. Banks can use this understanding to communicate potential losses as motivation.
  • Present Bias: The tendency to settle for an immediate but smaller reward rather than wait for a future, larger reward. This bias is most often seen in comfort seekers, who want to feel the instant comfort of a reward. Banks can implement a strategy of offering immediate benefits to customers who pay back their loans faster.

In the end, human-based collections are about banks truly understanding their customers to build relationships and, in addition, get paid quickly. Of course, these principles also work in segmenting customers for purposes other than collections.

Especially during and after COVID-19, banks will need to retain customers long-term and drive future growth. For help in your collections strategy, please contact me on my LinkedIn page.

Originally published at on January 22, 2021. Copyright© 2022 Accenture. All rights reserved. Accenture and its logo are registered trademarks of Accenture.

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Michael Abbott

Michael Abbott is a Senior Managing Director at Accenture and the company’s Global Banking Lead. LinkedIn: /michaelabbott3