Conflict of interest between loan originator - a bank or fintech lender and collection agency may seem invisible.
Both of them care to maximise the amount of money collected and therefore deliver additional value to their liquidity (on a side of lender) or to their revenue (on a side of collection agency).
The interest difference come from the difference of the usage of the funds.
Lender needs to get the money for additional liquidity to lend money and to be able to distinguish a good borrower from borrower with high risk of not being able to repay. Any of this two options bring him a high reward, more people he can lend the money he got or bettwer underwriting to understand the market and how to grow on it.
Collection company is seing the advantage of collection from to the point it maximizes return in % of the money invested in collection company by its shareholders or investors to the point it maximases total profit from the proceedings.
Therefore there are some accounts that could be collected but are not by collection agency and there is so many accounts that could be advanced and so many underwriting models that could be improved once cooperated with collection agency on after collection cooperation.
Once taken in account the whole system of trust, whole system of loan underwriting could be advanced and NPL ratios decreased.
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