New Institute to Research Distressed Customers’ Mindset

To those who agree that traditional approaches to financial education have generally failed, the newly created Consumer Credit Research Institute is a timely endeavor.

Encore Capital Group of San Diego said it established the customer study center in an effort to promote financial literacy through a better understanding of distressed customers and the way they make financial decisions.

According to executives, the institute plans to take “a scientific approach” to examining the behavior of this “growing segment of the population” whose financial wellbeing is crucial to the housing market recovery.

The institute’s stated goal is to come up with improved solutions for financially troubled individuals who routinely fail to properly manage their personal finances and need assistance to break out of “chronic debt cycles that can lead to ongoing financial stress.”

Christopher Trepel, CCRI managing director and Encore’s chief scientific officer, who will lead these efforts, maintains distressed customers represent an “often neglected customer segment” in dire need for help in achieving long-term financial health.

To help advance “thinking in the areas of public policy, financial education and business operations,” the institute will cooperate with academics, nonprofits, government agencies and universities across the country.

CCRI will also benefit from its association with Encore, one of the country’s largest publicly traded consumer debt buyers, and its subsidiaries that are specialized in providing data analytics and other behavioral science based resources. For example, Encore said it already has amassed significant data about low- and moderate-income Americans and their household consumption and savings behavior.

As of now, according to these insiders, consumer decision-making is often poorly understood by policymakers due to lack of reliable insights and data.

Gained knowledge and better understanding of how the emerging distressed customer segment of the population operates, executives say, will lead to new expertise in financial recovery in times when “traditional approaches to financial education have generally failed to prevent aggregate customer indebtedness.”

The institute’s founders expect to be able to maintain CCRI operations cost effective through the use of technology and outsourcing part of the operations to India.