Adam Parks (00:01.208)
Hello everybody, Adam Parks here with another episode of Receivables Podcast. Today I'm here with my good friend and collection agency legend, Mr. Brian Bowers with Financial Recovery Services. How you doing today, Brian?
Brian C. Bowers (00:16.27)
I'm doing well, Adam. It's great to be here this morning with you. We're really excited to get started on this.
Adam Parks (00:22.786)
Well, I really appreciate you coming on to share your insights through the years and getting to know you. We've talked a lot about digital strategies, the intersection of e-commerce and debt collection and how technology and self-service models are really starting to play a bigger role, especially even for organizations that started as traditional agencies. But before we jump into all of that and for anybody who has not been as lucky as me to get to know you through the years,
Could you tell everyone a little bit about yourself and how you got to the seat that you're in today?
Brian C. Bowers (00:55.618)
Yeah, sure. you know, I'll go back a little ways, because I think it's important to, to, to, get the full background. I'm one of the few people that was a former pig farmer, you know, I was raised on a farm in Southern Minnesota, which gave me this great work ethic. So, you know, if I can't get it through skill sets and knowledge, I'll get it through my work ethic. Right. So.
Adam Parks (01:10.059)
Okay?
Brian C. Bowers (01:23.35)
and when I was in college, I, I used to, purchase hogs and ship them in by the, the semi truck load, from Arkansas into Minnesota. And, and then I would market them on the Chicago board of Trade through futures contracts. And I was doing that while I was attending college. So that gave me a, pretty good background in, in, you know, dealing with challenges and challenges when you have, you know,
Adam Parks (01:45.005)
Wow.
Brian C. Bowers (01:53.098)
final exams, your, futures contracts are dropping at the same time and you're losing money every single day. Cause you can't get away to, to, to get everything to market. But, that's kind of a little tidbit that not a lot of people know about me. I met my business partner in college. I had a small private arts, liberal college in Minnesota called Gustavus Adolphus where I studied accounting and political science.
Adam Parks (02:09.943)
I like that, it's interesting.
Brian C. Bowers (02:22.466)
And I met my business partner there, Wade Davis. you know, fast forward, we both ended up working at ITT Consumer Finance. So we started on the creditor side where we, you know, went through the manager trainee program and dealt with collections and receivables and writing loans and dealing with bankruptcy reaffirmations and legal collections and all that stuff.
Ultimately, we both left and entered the third party debt collection world where we both worked at Viking Collection Services for a number of years. And after a number of years, we both worked up into management positions there and decided, well, why don't we try to do this ourselves? And we had a discussion over lunch and drew it all out on a napkin, basically.
Brian C. Bowers (03:21.378)
That was the end of the conversation. and, a couple of weeks later, you know, I looked into everything and we got together with Wade and said, okay, we're ready to go. And he's like, what? I go, no, I've got everything kind of lined up here. you know, how much money do you have? Let's, let's do this. And, know, shortly after we gave our, our notice to Viking and, and, and started out on our own and we didn't have non competes at the time. and.
Adam Parks (03:30.798)
You
Brian C. Bowers (03:51.182)
We hadn't solicited any clients while we were deciding this. And we left and we started pounding the streets, so to speak. And it was a very interesting time because we had to look at, how many months can we actually make it before we run out of money? And so we started this in 1996.
And we've been doing it ever since.
Adam Parks (04:24.078)
That's a really cool story, Brian. I did not know all of that. I did not know the pig farmer background story, and that honestly is my favorite part of this podcast, really getting to know how everybody kind of came into this industry, because no two stories are the same. But now you've been running FRS for, since 1996, you've been around for a minute. Tell us a little bit about FRS and what makes your collection agency special.
Brian C. Bowers (04:51.628)
Yeah, you know, I think FRS started out small and both of us are, we both started on the phones. We both worked ourself up through management. We've done everything that can be done at an agency. You know, we wear out, we've wore a lot of hats. We're still here. We're still involved in the day to day. And although we're not.
Brian C. Bowers (05:19.432)
people staring at each other in a room. We now have a team of folks that help us and we've hired people that do their specific jobs far better than what we were able to do them. And we've grown to point where we have four call centers, one in Wisconsin, one in Minnesota, one in South Dakota, and a small operation in Jamaica.
Brian C. Bowers (05:49.102)
And we service primarily third party, bank card, fintechs, student loans, and a little bit of automobile recoveries as well. So primarily in the financial services vertical.
Adam Parks (06:06.242)
So since 1996, you've had the opportunity to go through quite a few different economic cycles, right? You've been through the crash of 2008, you've been through the difficulties in 2020, right? And so you've seen these cycles a few times and it seems like the industry now is about to go through another, I'm gonna call it a cycle because if you look at the TransUnion 2024 Debt Collection Industry Report, it talks about how...
Agencies and debt buyers are seeing this massive increase in the volume of accounts. At the same time, we're expecting to see a decrease in the liquidity of those accounts as we've seen in other economic cycles, which leaves us with really three options to continue to grow businesses in the debt collection industry.
We can either hire more people, 88 % are having trouble hiring, 81 % are having trouble retaining. Then you have the BPO services hiring and other geographic locations, which it sounds like you've already taken on as an organization internally, right? With the operation in Jamaica and your other US operations. And then the other option is to improve or increase the deployment of self-service technology, which is also something that you've been years in front of now.
And that's why it's always fun to talk to you about that intersection of e-commerce and debt collection. So as a tenured professional in the space, what indicators kind of showed you that this was going to be the future and that you needed to make these investments? Because you've been at this for a long time now, right? In terms of deploying the self-service technology.
Brian C. Bowers (07:38.55)
Yeah, you know, this is not an industry, you know, for the weak hearted or the weak footed, you know, you have to be quite nimble in this industry. I've said all along, it's, it's, it's, there's a certain element of, of, of being proactive, but, it tends to be a lot more reactive, you know, based upon not only what's happening, you know, in the, in the economy and, and, and, you know,
Brian C. Bowers (08:08.62)
those aspects that you don't really have too much control over, but also with your clients and with what's happening in the industry itself. And there have been numerous changes throughout the years. We've gone through the periods of time when everything was outsourced to an agency. That was the only thing that they did. And then it switched and they were selling everything. And we had to...
to react to that and follow the money. And we ultimately ended up servicing for the debt buyers that were buying it. So, it doesn't really matter to us who owns it as long as we continue to do the work. So, we went through that phase and then the phase back. And then you've got the phase where more legal collections took.
and more went out through the legal channels. So then we got in front of that and developed a pre-legal strategy. So, you know, which is a significant portion of what we do today with pre-legal, mainly for debt buyers right now, but we're also marketing that to originators. And so, yeah, we've gone through a lot of changes and...
As you've indicated, the next change that's coming forth here is the change with e-commerce and automation and those sorts of things. And that's driven primarily because of some cost prohibitions. mean, you you used to be able to send out letters for 30 cents a piece. And now with all the disclosures that are required and the cost of postage, a lot of those
Brian C. Bowers (09:55.02)
those letters have risen 70 plus cents a piece, you know, which, you know, that's a pretty big chunk of your budget. And so we've had to, you know, make those changes not only for the efforts and activity because of hiring and bodies and to get the activities, you know.
Brian C. Bowers (10:23.926)
increased. But also just to make sure that you're keeping in line with what's changing in the industry.
Adam Parks (10:37.058)
What sounds like you've been able to stay out in front of some of these things as they've started happening and we've seen changes across the industry, creating programs that and that kind of fit these niches that are new needs created by the cyclical choice of the collection channel the creditors are using at any given time.
Brian C. Bowers (10:57.804)
Yeah, yeah, you know that that's it. You know, we've we've made the decision to migrate to a new software package. We had a software package that was developed in the 80s and called CR software. It's platinum version and we've decided to make the change to latitude and we've been working on that for the last year and we're getting closer to actually deploying it. But we want to make sure that it's absolutely perfect.
before we go live. So we're in the midst of the conversion, the testing systems, all of that. And that goes hand in hand with a lot of the changes that we've made in the organization itself to be able to ready the organization for email, texting, new payment portal, and driving consumers to that portal.
Adam Parks (11:33.304)
System conversion. Yeah.
Brian C. Bowers (11:54.094)
It's kind of meeting the customer where the customer wants to be met. And interestingly enough, we first started the email and text message campaigns and we saw immediate lifts from that. And we were just completely excited about that and seeing those results.
after it was deployed, you you get into it another 90, 120 days, you see it drop off. And primarily that's because you've sent all of these messages and these communications driving the consumers to that portal that hadn't received any of those types of messages before. And so, you know, there was a big rush and
and was a flurry of activity, but now it's kind of normalized a little bit. And we're still seeing a good lift from activities with those consumers and new consumers, but it wasn't as dramatic as the first 30, 60, 90 days.
Adam Parks (13:10.968)
Well, from the text messages and emails, every time that we're sending them out, the really only the option that we have is to send these consumers to a portal to make that payment, right? Like we have to find some digital way to engage them through that self-service technology, which is, I'm assuming, fueling the decision to move to a new system of record and to move to a new payment portal, right? Because the least friction we can have between the text message
and the actual receipt of payment is our objective, right? I always tell people when I'm building websites, I'm trying to get the consumer from I found you to I paid you in the shortest distance, right? I don't want them clicking 12 times. I want them to be as smooth as possible. And I think until we started running these larger volumes of accounts through the self-service portals, it's been difficult to evaluate because without enough critical mass and data analytics,
It's hard to understand how I would redesign a tool like that in order to flow that type of traffic. Has that been your experience?
Brian C. Bowers (14:10.786)
Yeah, it really has, you know, and trying to smooth the pathway for them as well as find the proper mix of communications that get the results that you need. And that's an evolution. You you start off with something really basic and you're just a call to action to get them to go to the site.
Brian C. Bowers (14:39.874)
But after you send that message, you you can't send that message a thousand more times, right? You have to develop, you know, new content that maybe triggers them in a little different way. I'd be lying if I said that we have this completely figured out, you know, it's one of those things that's an evolution. You're building upon it. You're building your library of communications to...
Adam Parks (15:03.214)
you
Brian C. Bowers (15:08.942)
to send at the right appropriate moment. And you hit the nail on the head with getting the right amount of data to readily determine when and what message works.
Adam Parks (15:26.35)
100%, I don't think that content ever ends, right? The development and the evolution of your content library, I don't think ever has a conclusion. In my world and in my opinion, that's an ongoing effort because the consumer will continue to change, what calls them to action will continue to change, and there's always new and interesting ways to try to...
modify that content to drive the engagement. So I don't know that that ever really comes to an end, but I think as more data gets layered on top of it, we'll continue to refine and maybe kind of bring those libraries into a more, it's called manageable volume of content. But it is a lot about the data analytics. Is it being delivered? Is it being clicked? Is it being engaged and did that message, even though it brought to engagement, did it bring it all the way through to payment? And so this is where I really see that
intersection with e-commerce coming alive in the debt collection industry because the e-commerce funnels that we've been using for 20 years to drive sales online and between 1996 and today, I'm willing to bet you buy a lot more product online as an individual than you did in 1996, right? Because nobody wanted to wait 10 days for things to show up. Then Amazon shortened that time gap and e-commerce came alive. So I always look at that
funnel and say, how am I going to work my way through that funnel and then create messaging that is engaging in the same way? I'll give the example I always like to give is the abandoned cart message, right? If I go on Amazon and I fill up my cart and I don't make the purchase, Amazon will be sure to message me repeatedly over the next couple of days to remind me that that cart is full or that maybe I would like this product or to offer alternatives to the products that I had put in the cart and not purchased.
And I think we're gonna find ourselves doing more of that type of funneled messaging, which gets more specific, is a little bit more direct, but I find those things to drive direct call to action. Especially in the e-commerce space, I don't see why any of that technology or that methodology wouldn't function in the debt collection space.
Brian C. Bowers (17:37.068)
Well, I think you're exactly right. And there's going to be different types of messaging, right? I mean, right now we're sending, for the most part, pretty basic text messages, call to action messages. You know, that can change. And, you know, we're looking at potentially MMS, you know, involving, you know, some sort of video or audio to capture their attention to that, you know, would maybe emulate to some degree, you know, what a collector's activity or message would be.
You know, so those are steps that can be taken as well. And, know, I'd like to go back a little bit here and talk about, you know, some of the reasons why we have to do this. You you look at some of the changes that took place when CFPB rolled out Reg F, you know, and you've got seven attempts in seven days. And that may seem reasonable, but, you know, we have certain projects in certain verticals and
and different vintages, where we looked at how many calls does it take to actually get a consumer on the phone? And in some cases, on average, it's 55 attempts to get the consumer on the phone. And so if you're looking at seven and seven and you're looking at
In some cases, your recall period for some of these projects at being at four months, all you're doing is making attempts and not even getting the opportunity to really talk to somebody. So how do you change that? How do you get in front of the consumer or contact the consumer when obviously doing it by a traditional phone call isn't getting through?
And in many cases, we're not leaving messages or recorded messages because of the threat for TCPA violations. And so, you know, one of the things that we've found that helps is leaving the text message or the email, that leaves something for the consumer that they can reference back.
Brian C. Bowers (19:59.15)
and take action when it's convenient for them. Whereas a phone call, you make a phone call, they don't answer, it's gone, it has no impact whatsoever.
Adam Parks (20:12.074)
Interesting, And going back to the MMS portion too, where you talk about sending video and audio content, it's interesting because I never check my voicemail, right? Like I'm not interested in voicemail. I will read the transcript that it texts me if somebody leaves a voicemail, right? And then determine if I actually need to go back and get that information. But on the flip side, my wife,
will talk back and forth with her friends, right? Like using voice messages instead of typing out the text messages. So I think again, that's probably a generational difference, but it's interesting to see how you're trying to meet all of these different consumers in the place and try to identify the place, time and methodology in which they will actively engage and respond. Continuing to try all of those new things, you must be.
You must feel like a scientist with all the experiments that you have to do in order to execute on that.
Brian C. Bowers (21:08.71)
Yeah, that is kind of how it feels sometimes. Well, let's try this, let's gauge how it works and move forward. And it's interesting too, because not all consumers want to use the portal or communicate digitally. So we get many that call us or even respond to an email that says, just want to talk to someone.
Adam Parks (21:10.798)
Yeah.
Brian C. Bowers (21:38.022)
You know, so I don't think you're ever going to, you know, fully automate the whole process without having some element of human involvement for a certain population, you know, of consumers.
Adam Parks (21:57.184)
I agree with that. I if in reading the 2024 TransUnion report, it sounds like letters, phone calls, right, that still remains the number one collection methodologies. And when we look at the self service technology, the portals, the emails, the text messages are all really gaining traction very quickly. But on the flip side, the slowest
conversion, right, or the slowest application of a self-service technology in the debt collection industry seems to be like the AI voice. And I feel, don't know how consumers are really gonna interact with that over time. I'm sure we'll see some engagement and involvement over a period of time. I've had some interesting conversations and I was doing a video recently with another group who was talking about how their...
their AI technology and doing the voice or the self-service technology has improved results because it takes away the shame of the consumer, right? They're not talking to anybody, they can engage digitally, they're able to go through that process without feeling like they're less than or whatever the case may be from a behavioral standpoint. Have you guys tried to experiment with any kind of voice technologies or is it mostly on that written communication format?
Brian C. Bowers (23:12.684)
Yeah, you know, we've we've demoed certain organizations, voice, AI platforms, and I always get nervous whenever it could be determined that it's a pre-recorded voice or a pre-recorded message. And so we have a little
Brian C. Bowers (23:41.514)
reservations there. And so we've decided to focus all of our energy at this point in time primarily on email, text messaging, traditional collections involving outreach via telephony and hard copy mail. That's not to say that we won't look at it again.
down the road, we're focusing, and it's a fair amount right now to focus on, those four elements and trying to find the right percentage. Right now we're still probably a 75 to 80 % telephone outreach, and then the rest is made up of...
Brian C. Bowers (24:38.146)
digital emails and text messaging, primarily more emails than text messaging right now. But we're playing with those percentages and the percentages of digital are growing each month.
Adam Parks (24:53.164)
So how do you find the balance between the self-service technology and the, let's call it the traditional debt collection methods, right? Because you've got to get collectors who are generally not a quick to adapt group of individuals to start to understand the value and you don't want them to over rely on pushing people to self-service and you don't want them to fear it at the same time. So how are you trying to find or any tips for finding that balance between the two worlds?
Brian C. Bowers (25:22.83)
You know, we're right in the middle of that right now. We rolled this all out and as a means for not only getting the low hanging fruit and contacting the consumers that just aren't answering their phone anyway, as a method to begin activities. And we've communicated that to the collectors and
the collectors tend to be a pessimistic group and they see any digital communication outreach and self-serve portal as a means to replace them. And so it's difficult to get them to communicate that to consumers, that, you can utilize this self-service portal.
Adam Parks (25:56.878)
It's an understatement.
Brian C. Bowers (26:21.294)
They just aren't embracing that too much right now. And so we're having to look at different ways to do that, whether that's through, know, inbound calls, going to IVR first, sending out the, you know, giving the information before they get routed to a collector and taking that, you know, accountability or responsibility away from them. But also, you know, communicating to the collectors that.
Well, there's a lot of folks and you've seen it where they don't want to deal with the portal. And so, you know, they want to talk to somebody. And so if they go through all this effort and they want to talk to somebody, that's probably somebody that you want to speak to. And so, you know, there may be warming to it a little bit, but it still is a big challenge.
Adam Parks (27:13.678)
Sounds like it's a process of evolution, right? And I feel like I should probably go get you a white lab coat with the experiments that you're continually running to try and find that balance and engage with them on some level, right there, there's gotta be some tips and tricks to kind of.
approaching a balance there. And I don't think it'll ever be easy, right? Because I think a lot of people, and even within my own organization, as we've experimented with artificial intelligence, I think it does start to make some people nervous because they get worried that they're going to be replaced. Although I don't think that's ever going to be the case. I think that debt collection will always have a place for the live collector. It's still the most popular channel for payment.
or the second most popular channel for payment right behind the mailed in check, which believe it or not is still number one according to the survey. So I find it to be interesting that things are starting to change, but they're not changing I think as fast as people might expect them to change in other industries.
or as fast as maybe the regulators are expecting us to change. with the reg-ef coming into place, the rules changed. We had to find these opportunities to engage or to communicate new and interesting ways to try and drive some level of engagement. And I think there'll be even more technology that the industry will start to see in learning from the world of e-commerce and continuing to apply that to the debt collection industry.
But Brian, I really do appreciate you coming on and spending a little bit of time with me today to share your insights on the debt collection industry.
Brian C. Bowers (28:52.11)
Well, it's been a pleasure speaking with you, Adam. know, as you, you know, I think in closing on this, you know, it is evolving and, and we all are running, you know, these experiments and trying to find, you know, the secret sauce, the secret formula, the secret equation and what percentage of Watts gonna gonna do the best for us. Right. And, and, and I don't think that it's, it's, I don't think any one of those communication streams is
stands alone. I really think that in looking at some of the folks that we've competed against, some have all digital, some have none, and then there's everybody that's in between. And I really think from looking at the liquidation rates and the performance, it's really somewhere in between. And just finding that right percentage of
of outbound calls, utilizing both human and AI, utilizing mailing service and the email and text messaging and finding the right message at the right time through the right stream is key. That's gonna be the key component.
Adam Parks (30:18.606)
I think you're right and I hope that you will continue to come back and chat with me some more so that we can continue to educate this industry. I agree with you wholeheartedly that the optimal performance never lives in the extreme. It's never on the extreme to either side. It's always some sort of a blend to get the best of both worlds. But finding that blend requires experimentation. It requires a lot of work, a lot of data, and the opportunity to analyze that information to understand what has happened from a large data set.
Brian C. Bowers (30:49.134)
Absolutely, and doing it in a compliant manner.
Adam Parks (30:52.367)
Yes, absolutely. For me compliance is table stakes now. That's the ante to be at the poker table. Like I feel like that's the expectation. And now we're getting back, you know, five years ago, everybody was trying to find the balance between compliance and performance. And now I think the compliance bar has been set and we can start looking for how to use the technology to improve our operations knowing what the rule set is. But I think reg F.
clarifying some of our communication rules and things of that nature has been helpful. Hopefully we'll get clarity on the voicemails and other things related to using the telephone for debt collection over time, but I don't think they're in a big rush for that. For those of you that are watching, if you have additional questions that you'd like to ask Brian or myself, you can leave those in the comments here on LinkedIn or YouTube, or just grab Brian by the arm as he walks by at RMAI in just a few short weeks.
but you can leave comments below. Brian and I will continue to respond to those. Or if you have additional topics you'd like to see us discuss, you can leave those in the comments below as well. And hopefully I'll get Brian back at least one more time to help me continue to create great content for a great industry. But until next time, Brian, thank you so much. I really do appreciate your insights.
Brian C. Bowers (32:04.984)
You bet. Thank you, Adam. And once again, we will be exhibiting at the RMAI and we do have a booth there. Thank you very much.
Adam Parks (32:11.768)
Well, I highly suggest that everybody go and take a look, go chat with Brian, learn a little bit more about his organization. But for those of you watching, thank you so much for your time and attention today. We'll see you all again soon. Bye, everybody.
