Adam Parks (00:08)
Hello everybody, Adam Parks here with another episode of Receivables Podcast. Today I'm here with my new friend in South Africa, who's joining us from Nutun. How you doing today, Hans?
Hans Zachar (00:19)
I'm doing very well, I don't know. It's good to finally catch up in person.
Adam Parks (00:24)
I do appreciate this opportunity to chat. I wish I was going to be at the RMAI conference to have this conversation in person, but hey, we do what we can. An international podcast is always a good opportunity. But for anyone who has not had an opportunity to get to know you yet, can you tell everyone a little bit about yourself and how you got to the seat that you're in today?
Hans Zachar (00:45)
Great. Yeah, thanks, Adam. So maybe a bit of background. My name is Hans. So I kind of got into the BPO collections world through a slightly different path. I started life out as an engineer. So I was working on modernizing trains with condition monitoring systems. And then got into consulting, where my first project was about optimizing train lines. And obviously, I would know something about that.
Hans Zachar (01:10)
So that's way consulting works. But largely kind of hard to describe myself as a technologist. I spent the better part of 15 years working with large corporates, government organizations in the adoption of new technology. giving away my age in the old days, was mainframe to Windows migration and then the big wave of ERP and then kind of the digital wave and everything was on an app. And then
that kind of transcended into data was the new oil. So if you remember probably five, six, seven years ago, that was all the rage, which then led me to the credit bureaus. So I was the chief product officer for TransUnion across Africa for a couple of years. And that was really about using data to drive outcomes and productizing data to really drive insightful decision-making at scale.
and in a normalized way, which turns out is actually very difficult to do. And the big focus of the credit bureaus, probably what the customers are asking, was all about acquisition, digital acquisition, getting people on the right platforms, granting loans. And I always felt that there was probably something missing on the collection side and that there was an uneven focus, which then landed me at Nutun where I am today, which...
We're a collections agency, 25 years in South Africa, super sophisticated in all the stuff I enjoy around analytics, digital, omni-channel, those kind of things. So yeah, so at Nutun, my official fancy sounding title is the Chief Technology and Innovation Officer. But what that means is I take care of all the technology, but also as a South African entity,
kind of going into the international markets is how do we productize and roll out the sophistication that we've kind of developed in the South African market into the international space. So if people don't know the South African market, highly indebted, lots of economic problems, but it really is a breeding ground for collections innovation. If you can collect here, you can collect anywhere.
So yeah, so that's what I do now.
Adam Parks (03:24)
Well, that's very interesting. If you can collect here, you can collect anywhere. like that. And definitely a good time to be approaching and growing the BPO services. Speaking of TransUnion and authoring the TransUnion 2024 Debt Collection Industry Report, you know, we basically saw that there's an increase in the volume of accounts, a decrease in collectibility and fee compression being experienced simultaneously by the agencies and law firms.
When you look at that and you say, okay, well then how can I grow an organization when I'm gut compressing margins? And so we can hire more people, 88 % are having trouble hiring in the United States, 81 % are having trouble retaining the people they are able to hire. Well, that's a challenge. The second option is to go to BPO services and grow their geographic footprint. South Africa seems like a pretty reasonable option considering it's an English speaking country in a more sophisticated economic environment.
The other alternative is to go into self-service technology, which again is, think, something that organizations are doing and applying artificial intelligence and other tool sets to improve that customer experience. But if we look down those three avenues, we kind of have to look at them simultaneously, I don't know that any one of those is the solution and that we have to look at how are we going to pair these things together? And we've seen this significant lift from a BPO usage standpoint.
And I remember 10 years ago, you know, there was really not a lot of international attendees, for example, at the RMAI show that's coming up that you guys are going to be attending. You know, maybe there was one or two people or organizations that came from outside the United States. Now it's a very international type of show. I think part of that is because of the growth of BPO services. And one of the things that we found in the survey is that debt buyers are the companies that are most likely to use a BPO service to assist with some part of their organization.
73 % of debt buyers followed by 60 % of creditors, And 56 % of law firms collection agencies at a lower rate. And I think part of that comes down to the use cases available and how the the US debt collection marketplace has ultimately viewed BPO services, Like early on, it was like, how many seats can I get? What does it cost for a seat? How what does it cost for a phone call? And I feel like that environment has changed pretty significantly.
What has your experience been like?
Hans Zachar (05:46)
Yeah, no, mean, Adam, I think we're living that reality. So we're kind of engaging these markets. And to your point around the use case, what are we using BPO's for? So traditionally, it's a labor arbitrage. I can't get people necessarily onshore. I can offload that offshore at a better cost. But kind of to your point, if you're seeing margin
contingency compression from your clients, you're getting less out of every account. The volumes of accounts are increasing, but the average balance is perhaps decreasing. We've got the fintechs and the high speed loans coming in there. So you've got these less than profitable accounts to collect on. You also need to start thinking about how we collect and the use cases to say, well, it's not just about
an empathetic conversation. I mean, that's super important. Don't get me wrong. But the and in this, not the or, is to say, how do you start thinking about, you know, when you're talking about right-party contact, contactability, why is it dropping off? Why are those consumers not wanting to engage over the phone? And I don't know about you, but when my phone rings, I tend not to answer it, right? So what are we doing to have a
better engagement strategy and as a BPO and doing a lot of innovation in our own market, we're seeing that. And we're also seeing some positive signs of using different technologies and stuff to kind of address that problem.
Adam Parks (07:18)
That's interesting. So as we think about, you know, how this evolution has happened, right, that initial use case was, okay, I need people that can smile and dial and I feel like that use case is gone, by the wayside. When you look at the creditors, it might be an underwriting, you know, process when you look at the law firms, it might be document redaction for courts. I think there's so many different use cases for how
a US organization can leverage assets in other countries or other geographic, you know, labor pools to improve. It's called the little things, right, the attention to detail even what kinds of projects outside of, know, the standard call and collect type project have you been engaging in lately? Like what have you seen in that process?
Hans Zachar (08:05)
Yeah, so I think it's actually been super interesting. So traditionally, we have been the off-shoring. So we've got a significant demand for that. But increasingly, we're starting to see various people in the collections world saying, hey, can you use your analytics capabilities to just analyze what's going on in my environment? And can you double check?
look at my propensity scoring, looking at my campaign strategies, really start analyzing the value of my book. Should I be getting this yield? So I think the first thing that we've kind of engaged on is, we getting the right bang for buck? And then out of that, I think a lot of the insight starts coming to say, well, if that's what the analysis of the book is telling me, what should I do about it? And should I be penetrating deeper?
Should I be using digital channels? Should I be using digital collections? Should I be sort of optimizing my process flow? Is it my payments engine? I mean, the world suddenly opens when the data points you in a particular direction. And then, of course, AI. Everyone wants to think about, how do I use AI? Should I use it as an agent? Should I use it at the QA level?
Can I automate QA through AR? So I think, Adam, probably just the volume of questions is actually indicative of where the market's at. There are people who are looking to do something different.
Adam Parks (09:32)
You
You hit a lot of points there, You're talking about analytics as a service, and then being able to help the organizations actually be able to execute on those. I think that's a mission critical item, How can we start to deploy that technology? Now, even as we talk about the AI portion, AI also has exceptions.
And so when we talk about AI as an industry, we've got this misconception that AI is like this big brushstroke that's gonna solve all the problems. But I think just like if we look at it through the same lens that we did compliance, And listening to compliance phone calls, it has to go through a significant amount of learning before we really understand where we're at. But it's still gonna create these manual exceptions. When the manual exceptions are created, they're gonna need to be managed by physical people.
Where you're get those people and how you're gonna train those people to understand the patterns that are ultimately being output from an AI technology.
Hans Zachar (10:28)
Yeah, yeah. Yeah, but what's fascinating about that is even if you have the people and offshoring kind of gives you that option is your basic collection process as efficient as it can be. And I know it's not the sexy thing everyone wants to talk about. We like the AI and, you know, all the new Chinese models that have come out, you know, in the last while. And that's what dominates the conversation. But I still believe that there's
just so much opportunity in optimizing the collections journey itself. And then how do you overlay the AI into that journey is a fascinating discussion. Like everyone, we've, I guess, more than dabbled. I wouldn't say our toes are in the water. I think we're probably about neck deep in the AI platform build and using live agents.
And the learnings we're getting from that is your AI is only as successful as your core platform and your core ability to standardize the collections journey. And Adam, it's no different to the human or the bot. If you don't have a journey that kind of deals with as many of the exception cases, you have an inefficient human or you have an inefficient bot. So there's this kind of dual speed journey to look at both.
Adam Parks (11:47)
Well, I agree with you. For me, it's a fundamentals thing, I'm very focused on the fundamentals of a business. And it's been my experience that by partnering with a BPO service that enables me to get more people that are laser focused on a particular fundamental. And for the US market, I'll use a football analogy here, Like I'm all about blocking and tackling, I'm not worried about throwing the ball down the field, I'm worried about the fundamentals, because the fundamentals is what
allowing us to do the throws down the field to do these other things. And so by being able to focus that, and I love what you're saying about looking at the collections process, looking at the whole collections process, because in the United States, it may not be possible for you to hire someone who is going to be laser focused on this particular document and how this particular document flows throughout your organization. But you can.
leveraging partnerships with BPO services start to look at some of those opportunities. And I think that goes back to the use cases of BPO from the different debt collection disciplines, because the needs of a debt buyer versus the needs of an agency versus the needs of a law firm or creditor are just going to be different, The law, the debt buyers, for example, are auditing the collection agencies and the law firms and are probably going to need some compliance related resources, even if they're using
AI technology to listen to 100 % of the calls, they're still going to need some live people who can listen to those exceptions. And the volume of those exceptions is probably going to be pretty close to what they were doing prior to the application of the AI technology for that purpose.
Hans Zachar (13:28)
Yeah, yeah, and 100 % right. And to kind of throw the technology angle into the mix. Technology is expensive. Software licensing takes a big chunk of the profits and you need people who, you know, if you're buying that technology, people who can work on that technology and deploy enhancements on their technology. So the labor arbitrage, you know, that you're seeing at an agent level and the inability to attract staff.
at that level translates to the technology implementation innovation level as well. when you're kind of looking at, I need to make these investments in innovation. I need to comply with the existing and the upcoming regulations. That's going to cost me a bucket of money and going to require tech. I need to automate to improve my efficiency. That's going to cost me a bunch of money in tech.
You really have to kind of challenge the status quo and say, can I look at other avenues? Can I look at other opportunities? And I think that's probably what you're starting to see out of necessity in all the ways.
Adam Parks (14:33)
Well, over 61 % of organizations that are investing in AI ML technology in the debt collection industry are finding that the investment is meeting or exceeding their expectations, which I thought was a rather important fact. When we think about the human resources, have you ever met an IT team outside of a BPO service that has ever said, I've got plenty of, you resources, I'm ready to take on 100 projects, I haven't met that group yet, have you?
Hans Zachar (14:47)
Yeah.
No, no, I've worked in hundreds of IT departments. And the day that I see an overstaffed IT department, I've got an accountant waiting to pass.
Adam Parks (15:11)
Really where I wanna go with that is thinking about the application of artificial intelligence technology, and even as we wanna roll out all of this new technology, requires us to have the engineers and resources that are necessary for the large language model learning, for integrating it into our other platforms and systems, and all of those things, but where are you gonna get those people from?
It's a very expensive resource in the United States and I think that's one of those fundamental use cases that is going to start to grow over the next couple of years because that's some blocking and tackling. I want to deploy this piece of technology. I need to have the people to enable me to do that. Where am I going to get those people?
Hans Zachar (15:33)
Yeah.
Adam Parks (15:53)
And so by partnering with an organization where I can keep those people on staff for longer and not be turning people every time that I need to start a new project, because now I'm starting my learning curve with all my engineers and developers back to day one. That doesn't feel like the best opportunity for me. even then that was kind of what prompted me to move into using BPO services 20 years ago was that I wanted to be able to maintain the people.
I didn't want to turn people over. I wanted to be able to keep them even when I wasn't in a rush for a new project. Back then I was a consultant and yet we were building software and doing other things but we were a project driven consultancy. And so I didn't want to find myself in a position where every time I got a new project I had to go staff up because it was just entirely too much and too much of a learning curve to get everybody back up to our way of thinking.
Hans Zachar (16:25)
Yeah.
Yeah, yeah.
Adam Parks (16:45)
And so for the last couple of years, that's definitely been one of the focal points for me in making sure that I'm constantly looking at that. Have you started to see an increase in the request for technical resources versus let's call it calling resources?
Hans Zachar (16:59)
Yeah, well, maybe also just to kind of respond to, why did you, you talk about retention, but I think what you're really looking for is industry expertise. either.
Adam Parks (17:10)
It's developing a knowledge, It is
absolutely an industry expertise and an understanding of the way in which we do things, Our application stack, our methodologies, because from project to project, the methodology remains the same at a good consultancy, You're not totally reinventing the wheel every time you go out there. You're just reapplying the playbook to a new scenario.
Hans Zachar (17:25)
Yes.
Yeah, exactly right. And I think to talk about the demand and the BPOs, think lots of people are speaking to lots of BPOs. And there are the requests coming for technology and innovation. I think the ones that are going to win and succeed is the ones who focus on industry knowledge and capability in that space. So in the AI space, we've got to.
Hans Zachar (17:55)
large technology team and we built our own AI platform. In the beginning, I thought it was something amazing and special and so did our clients. But now everyone's like, yeah, that sounds like every other bot. That's not so amazing anymore. I'm sure I've heard that bot before. And what's really starting to differentiate is the power of any technology is the speed at which it's adopted. And the AI stuff has just blown everything previously out the water in terms of that pace.
And now you're of stuck with, largely it's commoditized. They all look the same. And once they're integrated into a core process, they're still the same. And when you start talking about expertise, who are the people who are coding or prompt engineering, is the new word, those bots to work on those collections use cases? And how does that change and emerge? And how does that nuance across different channels and...
Hans Zachar (18:48)
And what you're really starting to see is the need for just industry experience, but with also the entrepreneurial sort of flair that says, hey, we're going to try something new here. And we're going to break the mold because we've got the capacity. The labor arbitrage gives us a bit of a buffer to do that kind of stuff. And how can we innovate using that industry expertise?
I think that's kind of where I see it going. I'm not sure everyone's on that bus just yet, but I think that's where you're going to get the most value.
Adam Parks (19:23)
I agree. I think the idea of the BPO service and keeping teams intact and developing a library of expertise. so keeping those people together and having them available to be able to deploy to various projects, because again, you're applying a lot of the same methodologies, you're running the same playbook, you're just running that playbook on different scenarios. And so,
learning about machine learning and the data sets that are required for improved results, like that's gotta be part of your process. Like you've gotta be looking for those improved results, measuring against what you're testing. And I think one of the challenges that the industry has is the lack of, I'm gonna call it,
Documented experimentation. We like to try new things. We don't like to write it down so much. And so I think it's important that we continue to go through that process because for me, that's how our organization learns. We learn by documenting our experiments and our processes. And I've done that a lot in the data space. If I'm gonna test this piece of data to say, does it go up or does it go down? How am I going to measure it? So as...
As the audience is at the RMA conference and they're talking with all these organizations and we're talking about BPO services and clearly there's a need. How would you tell people to make a decision about BPO services in terms of what criteria would you suggest that they look at when selecting partner?
Hans Zachar (20:47)
Yeah, so I think when you spoke about the three things, you spoke about it being parallel, but I think there's a logical sequence in terms of time to value. Starting with the offshoring, there's an immediate benefit there in terms of really good talent, empathetic talent. And in South Africa, as I said, are very highly indebted.
population, they understand what it means to be in debt. They have been collected on. They understand how it made them feel. And they also understand resilience and making a plan in terms of getting back to financial health. mean, the average South African is, you know, they've probably been in delinquency three or four times in their life, you know, and they're constantly kind of recovering. So I think first thing is
there's an immediate benefit in just the outsourcing and then kind of seeing that flow through. But then self-service. How do we start using BPOs on the back end of the self-service? So let's push as much as we can into the digital channels, but the logical step over from digital channels is chat and omnichannel and email. And I think using BPOs in that space,
Hans Zachar (22:02)
as a multi-skilled agent is also super useful and there's a good benefit. I think when you're starting to think about a partnership and leading into that industry expertise, those two things gives you a really good trust-based relationship to try the other stuff, documented experimentation, you called it. You want a partner who
will follow the innovation, or the kind of core base, into the adoption of new technologies. And there's a kind of core factor here is that the traditional BPO metric has been number of seats. I think you mentioned it earlier. But what we should really be looking at is efficiency and outcomes. Collections is all about efficiency and outcomes. And is there, you know, BPO partners going to join you
in that kind of pursuit. So I think it's all those things, but if I wrap it all up in a single word, it's partnership. And who is going to be aligned to your outcomes and help you to kind of reimagine yourself?
Adam Parks (23:04)
That's very interesting. And I think a lot of organizations are going to be looking for the right partners to build out some of this, I'm gonna call it the fundamentals and to help them enable their technology, because I do see that as one of kind of the big shortcomings that the industry is going to be facing as they're trying to deal with the rise, trying to do more with less, Significantly more in terms of volume, significantly less in terms of collectibility. And it's not the first economic cycle where we've seen this. And it's already
started to be experienced, Like that survey was from May to September of last year, and we're six months out from that. We've already started to experience some of those results, and I don't see it getting better anytime soon. When the consumers are overspending and the savings are becoming depleted, we just find ourselves in this same situation again. And I think it's important that we be able to service the accounts and to service the accounts with the best possible consumer experience.
And that is, if you look at how relationships and vendor management is being conducted between creditors and debt buyers and downstream to their service providers, that's a major factor these days, The consumer experience is not even one of the factors, it is the factor, even more so for most creditors than performance itself. Being able to manage reputational risk and kind of put some of these things at play.
So I'm curious to see how this continues to evolve throughout 2025 and how many more organizations really start to embrace the use of BPO services. I do have one more question for you. And this is something that's always kind of been important to me. If I'm gonna use a BPO service in a particular country, I have to go there. I have to go there and I have to interact with those people and I have to lead the organization as if they are part of my organization. Granted, they work for...
Nutun or another company, But I have to be able to integrate them to make them find the job satisfaction that's going to keep them there long term. And for me, my relationship with my teams has changed significantly pre and post visit, Like I would encourage anybody who's in the debt collection industry, who's going to explore BPO services, look at it beyond the service. is people go spend time with the
people and you will not regret the trip or the expenditure because it is, it pays off exponentially when you realize that they're not just seats, This is not just a business transaction. These are people that we're trying to incorporate because we couldn't hire enough people in our local geographic location.
So just like if I wanted to open it, if I'm down here in Florida and I wanted to open an office in Texas or another state, that's kind of the same thing. I would be going there, I would be interacting with those people, spending time with them and trying to build a relationship and to learn from each other because as we talked about building that knowledge base from within the people themselves is such a mission critical factor to success.
Hans Zachar (26:05)
Yeah, yeah. No, couldn't agree more. I think it's absolutely essential. And for me, it's on a couple of levels. South Africa, what we always find is the perception and the reality of fundamentally different things. And when people come visit here, they have certain expectations of safari and lack of infrastructure and dirt roads. And when you get here,
A lot of people fall in love and say, is where I'm retiring. This is amazing. This is world-class infrastructure, beautiful country, beautiful weather, amazing friendly people. So you just kind of see the perceptions change. And you can't really get that without flying into the airport, taking the taxi, going for a walk, and kind of experiencing just the culture. And then to your point is that...
When you're engaging in a BPO, that is an extension of your brand, an extension of your organization. If you walk through the floor in our offices here, it doesn't say Nutun. It's client name all over the place. The news on the TV is the local news. The newspapers, although they're sort of dying down a bit now, are local newspapers. The products are the client's products. It really is an immersion of your BPO.
in your market, in your culture, in your brand. And that does take a bit of effort, and it does take a bit of travel. It is a long flight, but it's to your point. It's absolutely worth it. And I would highly recommend you take a weekend off on either side, experience the country as well as the other side. And just going with a broader view, but I couldn't agree more. I think it's absolutely essential to kind of see what
what the art of the possible is, you know, by just showing up.
Adam Parks (27:52)
look, there's no better way to be successful than to show up. And I think when you get there, and you participate in the conversations, and you are actually engaged with it, it changes the perception of everything. And I no longer look at it as a BPO, I look at it as the other office, Like, that's our Mumbai office, it's our Bangalore office, like, that's just kind of the way it's been for me. So, Hans, I really do appreciate you coming on and sharing your insights today. This has been a fantastic discussion. I hope that everybody at the RMAI conference takes a few minutes to go and chat
with you and get to know you a little bit as well.
Hans Zachar (28:24)
Great. It's been awesome chatting to you as well, Adam. Thank you so much.
Adam Parks (28:28)
For those of you that are watching, you have additional questions you'd to ask Hans or myself, you can leave them here on LinkedIn and YouTube and we'll be responding to those. Or if you have additional topics you'd like to see us discuss, you can leave those in the comments below and hopefully I can get Hans back at least one more time to help me continue to create great content for a great industry. But until next time, Hans, I'm sorry I'm gonna miss you at RMAI but I will see you at another conference, I'm sure sometime this year.
Hans Zachar (28:52)
The world is small, we will definitely find each other.
Adam Parks (28:55)
I greatly appreciate it. And thank you everybody for watching. We appreciate your time and attention. I'll see you all again soon. Bye.
