A timely decision to pivot paid off for Convoke, CEO David Pauken said.
Convoke connects enterprises to vendors and other third parties so they can securely exchange data and documents. All information delivered through the exchange is stored in a secure repository.
Mr. Pauken said Convoke was founded in 2006 to solve a problem they saw in distressed debt. When financial institutions charge off debt, they sell to debt buyers. Those companies often have trouble obtaining the supporting documents and data, a problem made worse as debts were sold from buyer to buyer.
The company was soon profitable and was adopted by one of the largest financial institutions in the United States. Then the regulatory environment shifted with organizations such as the CFPB creating additional rules that affected the core business.
So Convoke pivoted into the collection space to provide value to financial institutions who were now responsible for the activities of the third party collection agencies they employed.
“I saw an opportunity,” Mr. Pauken said. “How do you oversee these vendors, when a large financial institution may have as many as 100 third party collectors?”
That began Convoke’s mission to collect the documents and data from originators and third parties in one place so the appropriate participants could analyze it and streamline the collection process.
There are plenty of details to monitor in the collection process, Mr. Pauken explained. For example, it is against the law for collectors to call after 9 PM. Pinpointing which individual agents of which collectors employed by larger institutions may have committed an infraction is not necessarily a quick process. Ensuring properly worded initial collection letters are quickly sent out is another issue.
“We upload organizational and third party information in such a way that it can be evaluated easily,” Mr. Pauken said.
The industry has taken to Convoke’s model, Mr.Pauken added. More than 300 third party agencies and six large financial institutions have signed on. In additional to traditional financial institutions, automobile finances, student lenders, hospitals, telecoms, utilities and online lenders all can make use of Convoke’s services.
Convoke enables third parties to do their jobs more efficiently because they obtain the documentation and correlate it so they can be confident in its accuracy. That is an important step, as people in debt may make a payment to a bank they are familiar with but not a third party whom they have never heard of. The bank may have cashed the check and not told the the third party, leaving the latter in the dark about the true amount owing.
Mr. Pauken described data security as a table stakes item for Convoke. Data security involves two distinct elements, protecting it when it is at rest and when in transit. When in transfer all data is encrypted. When at rest data is protected by IP address whitelisting, where only approved IP addresses can access the information.
“If the data security isn’t there our customers won’t even have a conversation with us,” Mr. Pauken said.
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