An Interview with
Gustav A. Eriksson
Founder and CEO, Collectius Group
At Collectius, we perform two very different but interrelated roles in the financial ecosystem. The first is all about empowering people to take charge of their financial destiny regardless of their situation, while the second focuses on acting as a trusted restructuring partner to banks and financial institutions in Asia.
The latest statistics from the Asian Development Bank show that private debt has increased significantly in developing economies across Asia in recent years, and this has major implications for regional financial stability. This has also created challenges for banks when it comes to debt recovery. The process can be onerous and too enormous for any single financial institution to do alone.
This is where we come in to help solve some of these problems banks are currently facing. We purchase and service portfolios of non-performing consumer loans from banks and recover them by supporting its customers to become debt free using the ''Collectius way of collection.'' With the customer’s needs at the heart of what we do, we deliver tailor-made and compassionate solutions through our data-driven collection platform that is powered by machine learning and digital-first communication. In a nutshell, helping banks recover their loans and helping customers rewrite their debt stories are essentially two sides of the same coin, and we hope to reshape the way debt is understood in today’s digital age.
10 March 2021
Tell us about your background, and how you came to found your company?
In a lot of ways, the debt servicing industry in Asia is a bit like the Wild West, with many players perceived to be operating outside the boundaries of legality. As a result, debt selling became the last resort for many lenders.
Hence, we felt there was a real opportunity to do things differently by challenging that stigma through introducing ethical and transparent practices into the industry, as well as inject a dose of compassion and understanding into the customer experience. Our Co-Founder (Ivar Björklund) and I decided to spend more time getting to know the local markets, analysing where the gaps were in order for us to make a positive change. Eventually, we took the step of acquiring several collection companies before co-founding Collectius as a customer-centric debt management company in 2016.
After a tireless year of improving and automating our operations, and carefully optimising the collection process, we bought our first portfolio of 80,000 non-performing loans (NPLs) in Malaysia in 2017. This was a key milestone in our short but successful corporate history - it kickstarted a wave of business opportunities that came from many years of us carefully cultivating relationships with banks and financial institutions in Asia.
Last September, we announced a partnership with the International Finance Corporation (IFC), a member of the World Bank Group, to launch a US$60 million regional investment platform solely dedicated to acquiring and resolving unsecured debt in Indonesia, the Philippines, Malaysia, Thailand and soon Vietnam. For us, the greatest vote of confidence came when IFC also invested in our vision by becoming a minority equity shareholder in Collectius, at a post-money valuation of US$80 million, taking the company’s total capital raised to US$123 million over six years.
Today, we have 3 million customers in Asia, with operations in six countries across the region - Indonesia, Philippines, Singapore, Malaysia, Thailand and India. Over the next few years, we plan to introduce our debt purchasing solutions to India, Vietnam and Singapore.
What is most important to you and your organization – mission, vision, or core values? Why?
To us, vision, mission and values are all key ingredients when it comes to driving company success. Our vision is simple – we want to create a world where every person, regardless of background, has the financial know-how to grow with the economy. This informs our mission, which is always to put people first, to take the time to listen to our customers and show compassion for their financial situation.
We firmly believe that “doing good is good for business” and caring for our customers by holding ourselves to the highest possible ethical and compliance standards have always been at the core of our approach.
Can you explain briefly how your service(s)/product(s) works?
Collectius’ customer-first outlook towards debt collection means our mediator model focuses on finding the best possible solution for our customers. This starts with creating an open dialogue with our customers and understanding their financial situation. By building a relationship based on trust and compassion, our mediators work closely with our customers to negotiate a customised, affordable solution plan that ensures their repayments are both manageable and practical.
Additionally, we place a significant emphasis on the overall customer experience from start to end. In addition to ingraining in our company culture that a debtor is first and foremost a ‘customer’ and must therefore be serviced accordingly, we seek to make their journey with us as seamless as possible through flexible payment plans or convenient payment channels.
Financial literacy is also a cornerstone of our approach, where we want to help our customers learn how to manage their debts effectively.
We also deploy technology in a thoughtful way that enables us to do our job better.
One such example of deploying technology comes in the case of our recently launched customer portal (images below). This provides customers the ability to take control of their repayment, for us to automate the collection of payment.
As you can see, the portal gives customers a clear overview of their pending payments, and allows them to take charge of their repayment plans according to their financial situation.📷📷📷 📷
A digital-first communication, omnichannel payment gateways, self-service portals and data analytics creates operational efficiencies as well as create more intelligent and flexible options for us to transact and communicate with our customers.
How has the industry been changing in recent years?
When we first entered the market, we saw many firms in Southeast Asia take a very traditional approach to debt management of non-performing loans (NPLs), where most relied on inefficient “pen and paper” strategies of manual phone calls and intimidation tactics. Many thought that there was no other approach to debt collection.
This old school approach is not viable in today’s digital age. That is why Collectius has adopted a customer-centric approach that combines advanced technology tools with a humanised, empathetic style to fill this communication gap and facilitate a more efficient and professional mediation process, which we hope will set the benchmark for other collection companies in Asia.
Additionally, we are seeing new trends in the industry such as increased compliance, more outsourcing of debt collections by banks to third parties and more debt sales and industry consolidation.
Essential to this is also our commitment towards educating and empowering our customers around financial literacy. We hope to see more firms adopting a similar approach to debt management in Asia.
What makes you different from what’s currently available in the market?
With 3 million customers on board in Asia, we believe that we are now firmly entrenched in the sweet spot of being the preferred partner of debt selling in South East Asia for both financial institutions and customers (the debtors themselves).
Additionally, having a poor credit history can affect one’s ability to qualify for future credit, making it so much more difficult for individuals to plan their financial affairs and achieve a reasonable quality of life. Hence, it makes sense that people are intrinsically motivated to be debt free. Sometimes, it is not by choice that people remain in debt, but somewhere along the debt collection process, communication has broken down and pushed people away from proactively seeking solutions to resolve their debt situation. Therefore, by understanding our customer’s situation and offering a customised solution plan, we are focused on building a relationship based on trust and compassion with our customers and closely work with them to help them lead a stress-free and debt-free life ahead.
Apart from the above, financial literacy is also a critical part of our service. We aim to ensure that all customers who interact with us understand fundamental economic principles, including the accumulation of interest and the different fees and structures that banks and creditors have.
We also heavily invest in employee training, continually innovating and updating our high-tech capabilities to ensure our mediators and customers have access to what they need at their fingertips.
What does the future hold for your company?
As shared earlier, we are very excited to be collaborating with IFC, a member of the World Bank Group, to launch a US$60 million regional investment platform solely dedicated to acquiring and resolving unsecured debt in Indonesia, the Philippines, Malaysia, Thailand and soon Vietnam. We hope that this collaboration will operate as a model for banks and finance companies interested in improving their balance sheet, profit, operational effectiveness and facilitate open discussion around best practices in debt monitoring, resolution and regulations in Asia.
Following the recent rollout of our cutting-edge Debt Management System (DMS), we recently announced our new customer portal for Philippines customers. The pilot program will be kicking off in the Philippines, followed by the rest of our markets in future.
In countries where the fintech disruption of collection has gone further, we hope to further leverage technology to automate 10-15% of our late collection operations, and as much as 95% of early collection. This will help strengthen our “Collectius way of collection”, allowing our debt managers to better focus on customer service and supporting customers through their situations. Furthermore, to offer our customers easy solutions to pay off their debts anytime and anywhere, we have announced partnerships with platforms such as Paynamics (Philippines), Counter Service (Thailand) and Duitku (Indonesia). India is also going to be a key market for us in 2021, and we hope to make some announcements for the market soon.
Most importantly, we will continue to work hard to empower individuals with the knowledge and ability to be financially self-sufficient.