“Long term, if we can tackle some of the challenges of problem debt collectively, working across the industry between the charities, between the debt collection businesses, between the creditors and government, then I think the economy will recover much more swiftly.”

Intro:
Welcome to the Agile Digital Transformation podcast, where we explore different aspects of digital transformation and digital experience with your host Tim Butara, content and community manager at Agiledrop.

Tim Butara: Hello everyone, thanks for tuning in. I’m joined today by Tom Goodwin, Head of Growth at Just, the enforcement market integrator based in London, UK. Just are on a mission to positively transform the debt collection industry by using digital to optimize the experience of both debtors and creditors. In this episode, Tom is going to tell us more about this, the challenges that the industry is facing and what digital innovation is already taking place here. Welcome Tom, it's great to have you here today, especially with the really interesting topic that we have.

Tom Goodwin: It’s good to be here, Tim.

Tim Butara: Can you start off by telling us a little bit about Just and what you do?

Tom Goodwin: Sure. So, in a nutshell, Just are a fintech startup and as you said, we're looking to disrupt a traditional industry which in this case is debt collection and that's a very established industry all over the world but in the UK, that's like a thousand-year-old industry. We're backed by a serial entrepreneur called Jamie Waller. Jamie’s quite an interesting character, he's previously built and sold two businesses in this sphere, one called JBW group and also a tech business called Hito. He's also advised the UK government on digital transformation. So, a few years ago now, the UK government was looking at how to effectively transform some of their processes for the collection of debt for the government, and the model that Jamie and a few other characters advised the governments on, has actually proved the inspiration for Just.

Tim Butara: So, it was actually something that was initiated before Just was formed and it just kind of flourished now with Covid and the pandemic and everything.

Tom Goodwin: Yeah, precisely. And so as you probably know and your listeners will know, the UK is a curious kind of country that combines some quite traditional elements, such as the monarchy, and also some quite forward-thinking elements. So, London is quite a vibrant place especially for finance and for technology, and that's reflected in the UK government as well. So, it was 2013 that this project happened. During this period of time, the UK government was also pioneering behavioral science in tax returns for example and so you might know about a team called The Nudge Unit, which basically pioneered the use of behavioral science in something as simple as a tax return. These kinds of innovations really run through many different departments in the UK Government.

Tim Butara: And I understand that you recently achieved a major breakthrough with Just in the debt collection industry, namely with the court ruling in your favor that's now allowing debt collection and part of this process to be done via Zoom calls or another video platform, as opposed to obligatory in-person visits which is huge for the industry. Can you tell us a little bit more about that, some of the challenges to the ruling, some of the main outcomes and yeah what this means for the industry at large?

Tom Goodwin: Certainly. So, I guess the story begins at the start of the pandemic. So, in Europe, that's March 2020 and as everyone will know because everyone's been affected by it and during that time lockdown begins, all across Europe and the world starts to pivot towards virtual. And so, businesses such as Zoom suddenly become a household name. Now, in the debt collection sector, this causes many problems as many industries struggle to adapt and debt collection enforcement stops. So, enforcement agents are no longer going to collect unpaid debt door-to-door and that means that creditors at this point are going unpaid.

So, creditors will be: energy companies, will be local government bodies looking to collect council tax, and also as many of these enforcement agents are self-employed, they're actually out of work at this point because they're not being paid. So, this causes a huge deal of problems. At Just during this period, we're looking at how to respond and we realized that actually the process of collecting unpaid debt, securing what's known as a controlled goods agreement is effectively a legal document and that actually, the consultation between the debtor and the creditor and the securing of this document can actually be done virtually.

So, we start the process of thinking about how to use modern video technology similar to a Zoom call or Facetime call or WhatsApp call to actually agree these documents and thereby solve the problem during the lockdown period. But the legal precedent for this is unclear and this isn't unusual at all because often, the law, when it's written, doesn’t account for many of the technologies that emerge. So, in this case the law that governs this process was written before all of these modern video tools became popular and before many of these different businesses even existed. So, we basically go to the High Court of England and Wales to confirm that this can take place and what we're asking the courts in this legal procedure is whether a video call such as what we're having even now on this podcast, whether that actually can constitute a visit in the context of debt collection.

The curious thing about this whole legal case is that it actually, because of the way the world has changed, takes place virtually as well. So, the legal process-- all across the world courts are learning to adapt to this new reality and our court case about the use of video technology in this very specific sector, debt collection, happens virtually as well. Now that cool case concludes in January at the start of this year and there's various different things that come out of that court case. But in a general context for your listeners, what that ruling basically concludes and hands down is that bailiffs, debt collectors were originally called bailiffs, but the actual term is enforcement agents. They can work remotely for the first time and they can basically create these controlled goods agreements for the first time in a virtual context. So, that's the impact of the law.

Tim Butara: That does sound really impactful. Especially, considering the major changes not only in, like, safety and guaranteeing health and contributing to not spreading the virus and whatnot, but also if I understand it correctly, these in-person visits of enforcement agents always came with a certain cost to the person who owed money, right? And I understand that this could now be done away with.

Tom Goodwin: Effectively yes. So, the debt collection process falls along a schedule of fees that you charge, a set fee schedule, and there's different stages to the enforcement process and they all have different fees. So, the idea of using a virtual visit as opposed to a physical visit actually presents a chance to make a number of cost efficiency savings. So, instead of an enforcement agent appearing on someone's doorstep which the typical process is, that's going to be a car journey and then you're usually appearing on someone's doorstep quite early in the morning before they go to the place of work. If you can actually do that via a video call, which is mutually agreed with the debtor and the enforcement agent, then you don't have to make that car journey and you don't effectively have to incur all of those costs.

Now what the court ruling handed down was that it didn't make a judgment on whether it should be charged at the full fee. So, instead it's effectively leaving that open to interpretation and we're currently seeking with the industry bodies to have regulation that would define a fee. But in the context of what we're looking to do, which is to effectively transform the way debt collection happens and make it better for both the creditor and the debtor and also for the enforcement agent, we've decided to offer virtual visits as an alternative to physical enforcement and to do that at no cost. Now, in the context of a typical process, that would actually save what's known as stage one enforcement fees which are currently 195 pounds plus 7.5%. So, it’s you can think of this as a 200-pound cost saving compared to a physical enforcement process.

Tim Butara: But what about on the other end of the spectrum, what about those enforcement agents who were happy with making money off of these visits, how does that-- I mean, did that factor into the decision and the whole court case as well?

Tom Goodwin: I think certainly, it's fair to say that as a private sector business as we are, there's not too many businesses that will look to remove a cost where you’re able to charge it. But again, it’s a case of looking at a set process and thinking about how it can be done differently. So, realistically the cost of sending someone to an address is quite high and that fee when it was put in place was basically there to cover the cost of sending someone to that address; their time, transport costs, all the other associated costs, and also make it worthwhile for the industry as a whole.

And so, this is quite a tough industry and if you're an enforcement agent, you are on the front line. You’re often dealing with quite tense situations, all sorts of different societal kinds of problems that debt creates. So, I think the fee structure does have a logic as it was set up, I think almost a decade ago now, but that logic wouldn’t necessarily apply in the same way for a digital version of this solution and so, it does make sense that there is a lower cost and we certainly hope that that will be reflected in an updated series of regulations in the future.

Tim Butara: Yeah, thanks for the clarification, yeah. Important to have as much info here as possible; and okay, we're already kind of transitioning more into the digital aspect of this. So, maybe my next question is - how does this new method work in the context of the technology, like what digital technologies or what platforms are used to make this work? Tell us a little bit more about that.

Tom Goodwin: So, I think it's important to say that virtual enforcement as a process is just one aspect of our wider technology stack. That technology is built on the Salesforce platform as a service. So, some of your more technical listeners will know that Salesforce is a huge company that services the majority of the Fortune 500 and platform as a service effectively allows you to build your infrastructure on top of theirs. So, it adds all sorts of fantastic things including cyber security and it makes it very quick to scale and to build fantastic solutions.

So, virtual enforcement is effectively a tool within our offering for creditors, and it's something that they can set as a preference over a physical enforcement process, which is the traditional way that creditors would seek repayment for unpaid debts. And that can be set at either an individual case level or at a portfolio level. So, a creditor would be able to say ‘I have a hundred cases where that's unpaid and I’d like to use virtual enforcement on all 100 cases.’ or they can say, ‘I have this very particular case that I want to trial and a virtual enforcement solution with’ and that might be for example, I don't know, a high value case involving someone that they already are in touch with and would use like, digital technology with. 

Now the visit itself is actually preceded by a number of different steps and that's to ensure quality, that’s to basically offer quality assurance throughout the whole process. So, it's important to state that the visit only takes place with the explicit mutual consent of both the debtor and the creditor, and at that point, a virtual call similar to a Zoom call would take place. So, during the call, what happens is that the debtor would speak with a qualified and certified enforcement agent but instead of it happening on the doorstep it would happen on a scheduled video call. So, it's the exact same process between the same two people but instead of it being a face to face on the doorstep, it happens behind a laptop screen or behind a smartphone screen and that whole process would take place as we've said before with the lower cost structure. So, in our case, we're offering that for no additional cost and that provides an incentive for agreement.

So, if let's take an example, if you have a 600 pound energy bill that's overdue, and it gets passed to the debt collection agency, you would be charged for having an enforcement agent come to visit you at your doorstep. But using a virtual solution, you would save 200 pounds just like that. Of course, what's happening in that process is that a legal agreement is being drawn up, which is known as a taking control of goods agreements and this is securing the repayments. So, it's securing a payment plan and so that you can repay the energy company, and it’s securing it against your goods. So, that could be televisions, fridges in the household, games consoles or if it was for example a penalty charge notice, which is for traffic violations or a parking fine, that would be securing it against your car, so your registration plate, and that's effectively how virtual enforcement works.

So, the virtual visit, the Zoom call as it were, is just a replacement for the face to face, but the actual process is quality assured all the way along the way, and it’s something that we believe is going to be an industry adopted solution over time, simply because it's more convenient and it's more cost efficient on both sides really.

Tim Butara: Yeah, it's a massive win-win for every party involved, basically. But actually, I want to take a step back and you mentioned that the platform is basically powered by Salesforce which is a highly capable technology solution which offers a wide range of other solutions and I want to ask you, what does Salesforce bring to the table, like what are the main elements of the Salesforce platform that enable a good experience for debtors and for the creditors basically?

Tom Goodwin: So, our Salesforce DevOps team are based in Nottingham and we’re effectively building our tech platform on Salesforce, because it is widely used and it also allows us to partner with, I suppose the best of the thinking from Silicon Valley. So, we're really bringing a Silicon Valley solution to the UK, to an industry that is relatively fragmented and there aren't any kind of really big established technology companies in this space. So, investing-- building your own solution would obviously require a lot of investment, you know, you need certain kinds of skills that you might find in the technology hub of east London, but it’s not something that the debt collection industry would typically see as their core competency.

Now, our platform is built on Salesforce and it has a number of different advantages, and so one of those advantages is because we're dealing with personally identifiable information then we actually need a secure process to transfer this case information between say, an energy company and ourselves. So, we're able to do that using secured APIs, and using Salesforce to hold the case information allows us to make use of different features within the Salesforce ecosystem and kind of append that to our solutions and service offering for creditors. So, one small example would be predictive forecasting, using Salesforce Einstein, which is effectively a scoring tool.

So, what we would use Salesforce Einstein for, is to create a propensity to collect models at the point at which we receive the caseloads. So, if you have a hundred cases transferred from let's say an energy company again, we would know on receipt of those cases using this scoring system, which ones we should focus on to collect money and which ones based on say credit bureau information would flag that actually this is a vulnerable customer. So, that would be a case where for example, you have someone with multiple debts from multiple places or they've had a certain income loss and we'd be able to tell that basically using the tools that Salesforce offers.

Tim Butara: Wow! That sounds awesome, and that's a very good example. I think this is exactly something that I was looking for, like, I was interested if an industry that's as old-fashioned as debt collection is using digital and to what extent it's using it, because this sounds to me like just a very basic case of something that's data-driven.

Tom Goodwin: Exactly. So, when you talk about digital technologies and platforms and quite often, you're talking about businesses, to take an example, a recent one from London about Deliveroo. This is a platform that allows you to have a takeaway delivered to your house, by someone working in the gig economy cycling from a restaurant towards you. But building a platform solution for debt collection, works much on the same principles but of course, in this particular industry, people don't often like to think about debt and they don't like to think about the debt collection process. So, it isn't really a focus for companies with the Silicon Valley mindset or it isn't the focus for, let’s say venture capitalists looking to invest in disruptive new businesses in London. But much of the same logic applies, that you can actually use modern technology to deliver win-win solutions, cost efficiencies and basically make the whole process more effective.

Tim Butara: So, this was already a nice segue into my next question. So, actually the industry is already using a lot of latest digital technologies that are widely used by most companies that are much more attractive in this sense, in the digital aspect. But more generally speaking, what's the state of digital transformation in debt collection? You just mentioned that it’s still not that focused there because, there's not that much opportunity there but surely there has to be some changes, probably propelled also by your court case and everything going around it.

Tom Goodwin: Yes, certainly. So, it's not that there aren't innovators in the space, there certainly are, and it's not that there aren't some extremely good companies in this space, because they certainly are as well. But when you're dealing with people's livelihoods, and dealing with the collection of unpaid debts, there are sensitivities and it's right that there are regulatory and legal hurdles to clear before kind of transforming the industry with digital technology, as it were. But there does seem to be an appetite in general for change and certainly, if you look at public perceptions of the industry, they’re somewhat unfair because, I think in the public mindset, people would typically think of debt collectors as tall imposing male figures knocking on your door to intimidate you into handing over cash or goods.

Potentially, that might have been true historically and there might be some poor practice in the industry still, but I don't think that's representative of the industry as it is at the moment, and I think that allowing some of these kind of digital technologies to play a role will actually help to change the perception of the industry, and that's a good thing, especially for the enforcement agents on the front line. Because the enforcement agents on the front line are really the ones who are working long hours to try and deal with quite stressful situations, to get the best result for both the person who is actually facing the debt collection action. But also, they have to explain why you need to repay this debt because the creditors that are looking to be repaid, they’re energy companies, they're collecting local taxes and providing services for no money in this instance and so, often what happens is that, if you have a lot of these debts unpaid as is happening at the moment due to coronavirus, you effectively have to increase the prices for the people that do pay or some of these companies will fail or you'll see job losses.

So, there are kind of repercussions if everyone stopped paying their local tax or their energy bills then, that has unseen effects that cause quite a lot of hardship elsewhere as well and so, I think that there is a kind of a win for society in finding a way to kind of smooth over and improve the processes that are in place and that's really the ethos of Just, that we're looking to improve the way things are done and in doing so, to create solutions that work for everyone along this supply chain.

Tim Butara: Yeah, as you correctly pointed out, one of the key things that you're trying to achieve and one of the key things of your mission is actually achieving this shift in perspective, and one thing that I think that you're doing really well is, you're actually introducing a more ethical approach into the whole industry, correct?

Tom Goodwin: Absolutely! So, that's the heart of our kind of value system as a business, and I think that is an idea that’s come of its time as well. So, you see that in many different industries at the moment, and you might be aware of the B corp certification that's growing in popularity. A lot of companies now are really looking at social purpose and that's hugely important for everyone. It's very important for the younger generations especially because, it's well known that kind of millennials and gen Z, however you want to name kind of the younger participants in the workforce, it's well known that they want to work for companies with callings rather than just focusing on making money, which I suppose is the 1980s, 1970s kind of mentality of corporations.

So, yeah having a wider social purpose is very important to us and I think it's quite a human thing really. Everyone wants to feel that they’re working in an industry and in a company that is delivering a social good. I remember very clearly, when I was speaking to one of my friends and they said, ‘so what's this new job?’ And I said, ‘well it's in the debt collection sector.’ It was the first time that somebody actually socially distanced from me. Because they took a few steps back and it shouldn't be that way because debt affects all of us and it’s obviously more present if you've got a mortgage to pay and you've just lost your job, your source of income.

But it's quite easy to fall into debt. So, it can be as simple as ignoring letters because you don't like receiving the bills and then one day, the letter turns up that says your debt's been passed on to a debt collection company and then you're in the debt collection process. Or for example, it might be that you've recently moved to London and you don't speak English because you're learning English and that's why you've moved to London and then you actually have to deal with this particular process in rented accommodation, and no one's explained to you how things work and so, this is something that means you're falling into a debt collection practice, so, it's not as black and white as simply not paying your bills or overspending or something like this.

Tim Butara: Yeah, there's always more than one side to the story, right? And with these sensitive industries and these kind of, these industries that aren't viewed as super noble, maybe to say like that, I think people are very much inclined to kind of ignore that side of the story. So, in this case the creditors’ side of the story, they would only focus on the debtors but maybe with what you're doing at Just, with all the changes that you've achieved in the last year, yeah, as you said, the ruling was finalized just a few months ago actually, in January. So, it's still a completely new, the hottest, like groundbreaking thing and I hope that this sets a new precedent for the industry - because yeah, let's face it, it’s not just this industry that's more focused on ethics, right? It's like a large-scale business shift toward more ethical, more human-based approaches. We're seeing much more accessibility, stuff like that on the web, a greater focus on the users, their privacy, so it only makes sense that this would also be reflected in an industry like debt collection.

Tom Goodwin: Absolutely!

Tim Butara: And okay, I already made a transition into my final question for you today Tom, and I think we already kind of touched upon it previously, but let's round up the call with this. Where do you see the industry, so debt collection, headed in the future, let's say in the next couple of years?

Tom Goodwin: Well, I think absolutely the first thing to say is the whole industry really needs to unite to try and clear the current backlog of cases, and that's been prompted by 12 months of on and off lockdown in the UK and various different measures that have meant that actually, you have a lot of problems stacking up in terms of debt for energy companies, for local government and also for the UK government at the moment. So, that's going to be a mix of identifying and supporting people who have become vulnerable. We had a recent report by our regulator the FCA which said, that one in four people in the UK are at risk of what's known as vulnerability in debt.

So, identifying these people and providing them with support, right advice from debt charities is going to be hugely important. And the other side of that is ensuring that the creditors are repaid from those who are able to repay that out and that is effectively something to support businesses of all descriptions who, during this period have had to forebear on debt. So, they've been unable to rely on that source of income whether it comes from penalty charge, notices for local councils, or gas and water bills for a utility company, many of these businesses and organizations have taken a financial hit and they really need to try and rebuild their balance sheets.

So, as enforcement activity, as debt collection resumes, they will be looking to effectively recoup some of that money. And as I mentioned earlier, the long-term impact of not being able to recoup that money is going to be business failures and job losses, and nobody wants to see that. So, that's really why the creditors also need the support and I think, it's also why the wider public should take an interest in this particular industry.

So, as I say I think the industry is already shifting gear. There is innovation happening, and I think, as many sectors have seen, coronavirus has kind of sped up some of the processes and I think that's definitely going to happen over the next decade and that we'll see the impact of coronavirus in terms of innovation going forward. And in terms of the changing and the shifting regulatory and legal environment, I have to say that we've seen some indications especially following the kind of the Brexit experience that the UK governments are actually going to be quite supportive of innovation and so, at the moment, they're looking at investing in technology businesses and fintech businesses and they're looking at supporting businesses across the country.

So, I think that should be something that also will have a positive impact for financial businesses and the debt collection industry too. Long term, if we can tackle some of the challenges of problem debt collectively, working across the industry between the charities, between the debt collection businesses, between the creditors and government, then I think the economy will recover much more swiftly and that's ultimately a good news story for everyone. We've seen with the pandemic that it has prompted people to think differently and to try and work together to tackle a common problem, and I think that is something that is coming down the road.

Tim Butara: Yeah, very good point and I’m totally up for that outcome that you're hoping for. Totally with you on that one. Great way to close the episode Tom, just before we wrap up our call, if people want to reach out to you or if they want to learn even more about you or Just where can they reach you?

Tom Goodwin: So, I’m pretty active on LinkedIn. Feel free to track me down there just search for Tom Goodwin Just and you should find me, I hope. Otherwise, you can also follow us on LinkedIn. So, Just the enforcement market integrator. We’re quite active on LinkedIn as well, or you can find us online at www.justdebt.co.uk and contact us there.

Tim Butara: Thanks again Tom for taking the time to speak with me today, it was really cool to get to speak with somebody about such an important and maybe a sensitive topic. So, yeah thank you for that. And to our listeners, that's all for this episode. Have a great day everyone and stay safe.

Outro:
Thanks for tuning in. If you'd like to check out other episodes, you can find all of them at agiledrop.com/podcast, as well as on all the most popular podcasting platforms.

Make sure to subscribe so you don't miss any new episodes, and don't forget to share the podcast with your friends and colleagues.