Collections – clearly it is all getting cloudy – [FULL INTERVIEW]

0:03
So hi, everyone, I’m here with Mark Morrall and Ian Simpson today, they’re from Indigo cloud. Mark is the MD and Ian is in charge of business development and client relationships so, and in the cloud, or in this sort of like the SAS collection, system, type market, and they got their own product they’ve been working on. So both of you, thanks, thanks very much for joining me today, I really appreciate it and welcome. I’m gonna suppose the reason why I was kind of keen to chat to you really was, you know, we’ve seen quite a lot of change in the market over the last over the over the last five years, where there’s been sort of like this big change and move away from what we’re really titled, kind of like large collection systems, and these, like, newer collection systems being developed in the background has become a very dynamic market, you know, with sort of, like, you know, new new new providers and new systems sort of nipping on the heels of really what was what were quite established providers before, I suppose, as one of those sort of smaller providers or newer providers, I would say, what what are some of the things you’re seeing in terms of like, where they think there’s an opportunity in the market, some of the things that maybe aren’t being delivered, where you think that this kind of approach is really quite really having success, I think you hit

1:13
the nail on the head there, Chris, by using the words, you know, the larger ones, the monolithic suppliers, they were the people who were dominating the market for many years. And they’re servicing a much, much larger sort of enterprise level clients. So you know, your, your big clearing banks, or whatever. But what we’ve kind of found is that our product is 100%, cloud based. So that kind of the flexibility and the the agility that you get from that is very different to the kind of service that you get, when you buy a large on site installed server. You know, there’s the move with the cloud based technology, you’ve gone from, sort of containerized, if you want to call it that, services that you have on a server that sits in your in your basement, in your set or in your your IT service room, you then have moved to like a slightly more microservices, where you’ve got that, but it integrates with other things. And now you’re such as Indigo cloud mock, took much much more about this than I can entirely serverless, sitting 100% and wholly in the cloud. And that allows companies with a you know, a lot less sort of physical footprint, and certainly a lot less people to be able to get to the same kind of services that would have been provided by the bigger ones. In the past,

2:37
how much have you seen the the environment kind of change as a result of the pandemic? You know, so suddenly, you couldn’t access the server room? Or are you it wasn’t as easy to be able to do it, you know, people were in the office to be able to provide the support, like direct support. I mean, this, it feels like there’s been this sort of big move to the cloud. And it’s sort of been enabled by that. I know, it was there before. But it feels like that was a bit of a turning point, in terms of like, people were looking for things to be set up quickly and sort of, you know, get get get on stream with digital services quickly. I mean, do you think is that been a big enabler? I mean, have you been seeing that more interest? You know, really being driven by that? Yeah, for sure.

3:13
At the start of the first lockdown, we went back during that first six months, we had a record number of inquiries, mostly from smaller businesses to be fair, but it suddenly became apparent that they needed something, and that this is the same throughout in the industry, I think they needed the ability to work from home very quickly. And as you said, the technology had always been there. But all of a sudden, it was imperative and we have a load of inquiries, load of new customers come on board during that period.

3:48
And I think after that, as well, what we’ve seen not only just the pandemic, but also sort of after it is a distributed workforce. And then distributed services are also becoming much more the model. You know, you’ve had things like certain support services for collections, like sort of payments and payment methodology, well, they’ve changed in 10 years, all on their own anyway, you know, the move away from kind of like a hard payment if you like, so people sending in payments, or people making cash and moving to online payments. And, and also, to use the word manuals, you know, you’ve got everybody who lives on their handheld devices now, you know, it’s much more than norm for payment is much more than other contact. I don’t even you know, I’m not a millennial by any means. But I don’t even carry a physical card around with me anymore. I pay for everything using my phone. And that’s what we’re kind of finding is also supporting the pandemic driven stuff.

4:48
I mean, it sort of reduces the requirement for for local infrastructure right as well. So for example, I’m thinking about it from an agent point of view. You had to have the right version of Java that was sitting on there. Yeah. the right system that was on there. I mean, you remember all the conversations used to have to go through in terms of like that sort of, like network side of things versus browser based? I mean, I mean, is that, is that coming up as being an advantage? Because I mentioned you don’t have to deal with any of that. Yeah,

5:14
absolutely. And it’s even going further than that we as a, as an organisation, we don’t have a single physical server. Everything we do is on the cloud, all of our product is obviously on the cloud, but all of our accounting packages, our CRM, everything we do is cloud based, we live and breathe on it. So it means for us, we we don’t, we literally don’t need a technical IT department, we don’t need legal engineers, managing the networks and the servers and patching. You know, we don’t need to worry about the patching or any of that stuff. Obviously, the PCs need patching, and we manage that through cloud based management tools as it as it happens. And that’s the same for for our customers in the certainly a lot of the smaller businesses, I guess, you could spin up a business now, in a matter of weeks, without you don’t need to worry about you don’t even need to worry about premises anymore. You can work from home, you’ve got no network to think to worry about No, no servers or anything, and then all of your software is just available, you know, on a subscription basis. So yeah, it’s it’s been, it’s been a huge change over the last five years, I would say.

6:22
And where are you seeing that the growth of the market? Um, I just, you know, having seen quite a few collection shops, I mean, that, you know, there’s still spreadsheets are still around in some of the places. I mean, I mean, how much of how much opportunity, there isn’t just putting better workflow in place? You know, obviously, I mean, where does where does that fit into was, I suppose the, the market, it was like, you know, where’s Where’s where’s the opportunity?

6:48
I think, I think for us, the opportunities is twofold. You have got people who have in the, in the collection space, and certainly also within either the financial services, the FinTech, or the smaller, dedicated lending space, who were using maybe older systems who are using stuff that worked for a while, but are not becoming fit for purpose anymore. You know, um, you know, there are lots of different ways of now doing inbound and outbound comms with customers, that some of these older systems don’t have the kind of the ability to communicate in the same way that that web dev view our product does. But also don’t have the ability mentioned patching, for example, don’t have the ability to update in the same way, because it’s all based on a service sitting somewhere, and you use it until you can’t use it anymore. And then, Chris, you’ve got people who’ve got spreadsheets, you’ve got people who are managing that there’s a lot of commercial collection, recovery work, you know, insolvency and company insolvencies, whilst they’re not going through the roof, I was actually having a chat with an insolvency company this week. And what they’re actually seeing is there’s a lot of companies that are right up to the line and that are struggling. And there are a lot of zombie companies out there where they don’t even know that they’re, you know, they could fall over. So it’s people like that, where we’re able to come in or, you know, products such as ours are able to come in and help them sort themselves out quickly and efficiently. Because that’s, it’s about the internet’s speed to recognise your problem and rectify it as well.

8:33
And once you see the main problems with their collections processes, is it just as it I mean, unlocked axon approximately, I suppose, you see that you are brought in to fix Is it is it basic workflow? Is it comps? Is it you know, what are the big things that that are really missing in those kind of kind of areas?

8:50
I mean, what would you say? I would say it’s, there’s a lot of manual systems, or there’s a lot of systems that are built, almost replicating a manual system digitally, if you like,

9:01
yes. Yes, I mean, historically, there’s been, there’s been the big players in the industry, and the smaller businesses have, as we’ve just discussed, but smaller businesses have been using spreadsheets and there was, there wasn’t much in the middle for the you know, from the very small collection agencies, up to the big players, there wasn’t much in the middle for anybody. So you either had to just plod along with your cheap old DOS based system or spreadsheet or whatever it was, or spend lots and lots of money for an over engineered system that won’t half of which you’ll never use. So that’s the gap for us. And our, our ambition, if you like is to make some of those more enterprise type font features and functionality available to the smaller businesses now obviously, all of them they’re not all relevant and they’re not one affordable but as much as we can. We want to bring all of that functionality down to the smaller businesses. And you know, I think I believe It’s been underserved for, for you for decades, probably. So that’s where we sit sort of SMEs.

10:08
And there’s, there’s conversations that I’m having as well around, you know, ROI for this kind of thing. Because as Mark said, there’s, there’s all sorts of things people haven’t been able to access, because the spend from some of the providers of these services, and the pricing models are all geared at larger volume players. So you’re not able to kind of, you’re not able to get into the playground and play, because you can’t afford to even get the bare the bare minimum level of service. Go ahead.

10:41
Sorry, there’s also cost of acquisition and development costs. But bear in mind, because the one thing that cloud has done is it’s made it easier, and not necessarily cheaper, but probably what I’d say more cost effective, to spin up a service and develop a prototype system and, and get something out there to market and, and that goes, just test the same for, whether you’re selling a product or whether you’ve got you having something built bespoke for you. You don’t need a team of developers anymore. You do. But it’s a different there are different sets, different skill sets that you need. Now, you certainly don’t need engineers, so much. We, for example, when we first started out we had our from our initial design to our first production system took us six months, which was which was incredible. You couldn’t you just couldn’t have done that in, in before the cloud. And it was the early days of Visio, by the way, were quite interesting, because it would like it has all things. Microsoft version one is always a bit a bit flaky, but we’ve got there and and and it is a brilliant product. And it’s it’s constantly evolving. And what’s changed

11:56
that is sort of like take out that development costs. Is it reserved? That’s the sort of taken out that allows you just to set these things up much quicker. I mean, is that is that what’s what’s been the what’s been the game changer in terms of enabling that?

12:09
Well, it’s developed, the development is still the development, there’s, there’s no, there’s no difference there necessarily. But it’s the ability to spin up a couple of tests, test machines and test servers and or even deliver them as services as opposed to software on a standalone service. So it’s the it’s the delivery, I guess the delivery and the infrastructure behind it. That is that it’s become easier to maintain and easier for developers to work with. And the deployment model is much simplified. You don’t have to worry about getting into networks and upgrading servers and all the rest of it. Yep.

12:53
Yep. And how do you think the other big advantage is scalability, but also adding in new features? I mean, is that something that mean, you talked about new features? Mark? They’re just a bit about? How would you give some of those new features? I mean, does that does that cascade across all clients? I mean, we’re getting tools like this one stop shop where, where you have almost like standard services, but they sort of grow. And that’s the advantage versus having, you know, bespoke bespoke versions of the system. I mean, I mean, where do you sort of see it evolving from here?

13:25
Well, we try and resist bespoke coding if we can, because it’s just it just complicates complicates things. So we are very much a single solution. But it’s, yeah, well, yes. And no, this is this is how it gets delivered. But if you want any changes, we’ll certainly consider them. But though, they’ll, they’re all configurable. And if we build this for you, then it will also be available, available for all of our other customers, if you want. However, if you want something completely bespoke and you know, for your own benefit, then we can talk about that.

13:59
And that’s where that’s where cloud really comes into its own. Because not only are you making, adding sort of distinctiveness and development to a customer, effectively, most of the time, you’re actually adding that same distinctive and development to all of your customers. So your as a client, let’s say you’re a small financial service, let’s say you’re a Fintech startup, we can come to you with and say, here’s a new development that we’re going to be rolling out to the platform, you know, you can have that added or it will become part of the features in the background. So you don’t also have to have people constantly looking and saying, all right, what do we need to do going to the developer, having the conversation with the developers scheduling and all that kind of thing? So it’s community is a misleading word because nobody’s data is linked. But it’s more about the fact that it, because you have everybody looking at it. And also, you know, we’re also constantly looking as well. And, you know, we’re not, we don’t drive all our product development from our clients by any means it’s, you know, marketing, the guys do a lot of that. And then we roll that out to people. So it’s this constantly evolving service, which you don’t get, if you buy a package that sits on your server, you know, you don’t get into the same degree, certainly, you have to wait for updates, software’s optional purchases, you know, the sales guy coming in all that kind of stuff.

15:33
A lot of us will have processes in collections. And it’s the way it’s always been like that. And that, and I think that’s the best way because I’m invested into that process. But sometimes you might want to take a step back and say, well, actually, the process could run equally as well, if not better, and it would fit into like a standard framework that then gives you resiliency going forward for the next 510 years. And you can change it right. And and that always becomes this is where you end up getting bespoke type systems is because people want to stay over here, what they know, rather than actually changing their process and go into something that actually is probably better thought through and still works the same, right?

16:07
We we have that quite quite often. Actually. We have an example. Just last week on call customers asking the prospect was asking, How do I? How do I check my accounts to see if the payments have come in on a given day. And we’re saying we don’t really need to either come in or they don’t, and the system will take care of it. If it’s if it pays, then fine. If it doesn’t pay, then your workflows will take over and the system do what you’ve configured it to do. Oh, but how do I check? How do I go through each count to make sure they’ve come in? Why would you want to sort of thing? And that’s just as I’ve always done? Yeah. So what what they hadn’t kind of grasped is that if you set it up properly, and this is thought to be the same, for all systems really set it up properly, you just should never need to look at it, you know, you ought to be able to set especially with you know, the integrations with emails and SMS and WhatsApp and all the rest of it, set it off running on workflow. Those run overnight, those run automatically and the letters get sent out emails go and a human should never really need to look at an account manually, unless, unless something’s happened on it. And that’s, you know, just prompt them when they need to do something, but otherwise, just let the system do its thing.

17:20
I mean, do you think, do you think we, we have got a tendency to make collections too complicated and sort of, like, a lot of us in the industry have been there a while and we talk about the, you know, things on the edge of it? Right? So it’s around, you know, decisioning matrices, we’re making almost like as complex as we possibly can. And, you know, you probably will get a bit guilty of that, at some point you think, do you think it’s, it’s too complicated? And actually, we just need to, for the vast majority of us make it a lot simpler minutes? When is that? Is that a fair criticism? Maybe of us, and we just got to think about things maybe a little bit differently.

17:51
Well, for my, I’m gonna get I’m gonna, I’m gonna assume for Ian’s were of an age where when I was a collector, there wasn’t very, very little regulation for one thing. So you know, it was almost like the Wild West. So I, and I kind of left the industry just as the regulation had start to come in, and all the rest of it. And then we had a compliance officer at one point, which was, which was new to everybody. And that changed the game for a lot of companies. And wheeze, what, once when we started this business, we saw more new companies starting up as b2b collectors, because it was just too difficult to get a CSA, CSA licence just took forever. So the compliance has been a massive change. And, you know, this is not a recent thing, clearly, but and I think, in going to your question, I think the complexity probably feels like it’s kind of being driven by the desire to do something different than the competitors, because all the big players, you’re right, debt collection is a fairly simple process at the ultimate. But every system did the same, it does the same. And the processes are identical. So how do you find a niche? How do you, you know, what’s your you USP? And so I think I’m not saying the complexities been invented, but it’s gonna have a need to try and distinguish to

19:22
a degree what Mark says, I think and also, if you look at things like on the consumer side, for example, if you look at now how, you know, kind of vulnerability is, is key far more key, the very old phrase used to be cash is king, you know, identifying vulnerability. First of all, that was a very manual process, because it was all about, you know, how do you talk to people? How do you find out? Well, now you’ve got ways that they can be identified, you know, you’ve got the vulnerability registration, you know, you’ve got the ways that flags and markers and things and so That kind of sort of engineered with a small II complexity that you kind of needed at first. And I do think there are people who’ve been guilty of kind of letting that roll on a little bit. And then you bring in something new. So you know, it was all about it was all about robots that it was all about. It’s all about AI, that is all about these other things. But at the heart of it, all of those things will calm down. And then you get quite, they just turned into or should turn into quite a simple process. But I think I think you’re right, Chris, I think there are, there are people who can let things stay complicated, because it kind of suits. But once something, once you identify an issue, once you identify what the noise is around an issue or a process, then there’s almost always a simple way through it, once you’ve identified what your chemo because

20:56
I just kind of wonder, I mean, a lot of these conversations there, you can have really interesting intellectually, it’s a very interesting conversation to have it about the complexity and how you can do this. And, you know, but it might only be applicable if you’ve got really large volumes as an example. And, you know, and if you don’t have large volumes, and it might just be intellectually interesting, but does it really make a difference? And maybe there’s only three or four things that actually make a difference? I do think vulnerability is probably one of them. Yeah, and that’s, that’s, to me, that’s definitely that’s come through, but it’s, it’s just becomes quite straightforward process in many ways. And, and you don’t have to have all of the features just to really get the value. A lot of it’s about having processes at work, right?

21:33
Yeah, having processes that enable you to do you know, what you need to do, collections is all about establishing relationships with customers. So it’s all about how you’re contacting that customer, how that customer wants to be contacted, and how you best resolve the issue for that customer, identifying things like vulnerability, as part of that process, you know, days of people going to speak to somebody and then sticking on a payment plan for the next five years, they’ve all got, though, you know, it’s now about just enabling companies to do that quickly and efficiently. Because, you know, the other, the other sort of benefit to both cloud computing and kind of the drive of simple process is about the cost to serve for that customer as well. And the cost for the company themselves. Cost of living is increasing, but also so is the cost of having a business, the cost of running that business. And you’ve got to get that balance, right and over engineered processes, on the whole add to cost, add to your OpEx. And that’s the kind of thing you’ve got to keep an eye on as well.

22:47
It’s interesting now that you mentioned them, contacting the customer, how they want to be contacted, because that’s actually a relatively new thing, isn’t it? You know, that’s, that’s probably probably the big thing at the moment, I would suggest it, it’s all about the customer? And how can, how does that customer want to engage with us not? How do we, how do we find the customer? And how do we convince them to pay? It’s about how can we make it easier for them to contact us. And that’s, that’s still emerging. And that’s, you know, things like WhatsApp, and Facebook now is a quite popular tool. And that I think, will continue. And that’s a that’s a good thing. It’s a good thing that customers is the forefront of it. And where

23:27
do you sort of see it evolving from here, if you look out into the future in terms of collections and sort of like you to simplify processes or building relationships? I mean, what, where did where do you think it goes goes, goes next from here, do you think we’ve been we have been on a journey for the last five 510 years? I mean, for sure. You know, we’re now talking about, maybe we need to have simple processes, but basic processes that work maybe it’s around having better communication with customers earlier communication, those kind of things, when it’s when all that seems sort of still quite, still quite basic. But where does it evolve? You think from here? I mean, what what’s the future of collections, do you think?

24:01
I think so we’re starting I think ai ai for the next five years is going to be massive, artificial intelligence machine learning. It’s, it’s the it’s the current big thing, isn’t it? And obviously, you’ve got crypto around the corner, once that becomes embedded. But AI is going to be the massive thing. The thing that drives AI, of course, there is data. So to make to get the best out of your AI, you need to be willing or able to share data in massive, massive volumes. And he’s no good just doing but it doesn’t really help company where we’re if we’re Smalling, if we’re serving smaller businesses that have got maybe 200,000 cases. It’s just not going to work for the smaller, smaller people at the moment. So we need to find a way to leverage a shared pool of data if that’s possible. You know, on anonymized, obviously, but yeah, For short, ai,

25:02
ai, things like open banking, things like an open banking in the proper sense. And the more we move away from, certainly within the banking industry, and within that those sort of circles, the more away, we move away from having things that are replicated on decades old business practices, you know, like payments, taking three days to clear and all that kind of stuff, the more that that all that stuff becomes just natively held, and then people just get used to it being accessed. I’ve done a fair bit of work with me in America. And bizarrely, they’re much more open to the whole open banking, where your lender then looks at your bank account than we are. UK. Yeah,

25:51
you do kind of one dominant, do you ever sort of sit there, it’s probably, for me, she’s about three in the morning, at least anywhere else, when you wake up, I think I wouldn’t have been amazing if everything could link together. So open banking, you started to see information getting linked together. But actually, if, if everything could be linked together. So take, for example, you can like the debt advice sector as an example, and you suddenly see or credit bureaus, we started to do this, but if if we really could have integration, how powerful that could be, in terms of like, linkage to, you know, to government type stuff, but also vulnerability stuff, I mean, and it goes all the way along, because, you know, rather than having separate silos of information, you know, entering data multiple times, it would just be, could be incredibly powerful. I mean, I know there’s privacy, hesitation around doing it, but it feels like that’s the way the world is going.

26:39
That’s the way the government are kind of sort of pushing your government with this mould, you know, that’s, that’s the way with, you know, certainly with things like breathing space and breathing space. Notice, that’s, that’s a really good example of how it’s now not just down to the customer, to say to somebody, you know, I’m talking about death advice on one breathing space. It’s about how that information is now being shared out to all possible creditors. And you’ve all got to do that. So it’s not reliant on the customer telling people anymore. And that’s the kind of the, that’s the way that’s going. But also, to be perfectly blunt, you know, the customers that were that most of our clients are speaking to now, a far younger than we are. Yeah. And so they don’t, they don’t have any experience of the kind of the non native digital way of doing things. Yeah. You know, try to explain to, to, you know, my daughters about how things were, they look at me, like, I’m insane. And that’s just the way it is the the moment that that you know, the people who push things forward, the people who create things, the moment that you lose that sort of, Let’s even say pre 90s kind of people, then you’ll find they’ll be I think enough to that’s why you’re seeing things like I mean, what is your is, what, 10 years old bug 12? Yeah, look at the changes in the last few years, the exponential increase the way that a few years ago, if you talked about cloud with government, local government, or banking, people like, oh, it’s not secure. But now, because it was all about ring fencing, your own particular application. But now when you look at the kind of the stuff that’s been natively built into Cloud, from security, people are much more, much more comfortable with it. And that’s because those things are now being driven by people who live and breed that world and always have. And that’s where we’ll start to see over the next few years, that kind of massive increase in, in cloud, you mentioned things like, you know, netbooks, and I’ve got G Suite, I’ve got a MacBook that’s got very little memory on it. But soon, there’ll be built and designed with just that in mind, and people won’t have the internet. I mean, the phone is a really good example. I save tonnes on my phone. My daughters, don’t they all store it in a different kind of application. Yeah.

29:14
Well, Mark and the and thanks very much for for the chat. So very interesting. It’s, um, you know, I think I think I take my takeaway, sort of like, it’s back to basics and getting that right, but you can do that in a cost effective way. And so like, and then get ready for what’s coming down and what’s coming down the pipe fitters, which is, you know, and there’s probably benefit in that as well. big benefit. Yeah, sure. Yeah. Yeah. Well, really appreciate it. Thank you very much. Great to speak to we’ll chat to you soon. Okay. Bye, thanks.