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Trends 2023: Economy, Regulations are Top of Mind for ARM Market

Ray Peloso
January 19, 2023
ARM Trends 2023

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The state of the U.S. economy, as well as various regulation issues, will play a major role on the ARM industry in 2023. How will the economy affect businesses and consumers throughout the year? Will this hasten an industry consolidation? And what should organizations expect when it comes to regulations? Let’s take a look. 

Economic Outlook 

The economic struggles that permeated 2022 are expected to continue into 2023. And it is affecting businesses and individuals alike. According to a recent report, 32% of adults have paid a bill late in the past six months. Among those, 61% paid late because they don’t have the money on hand. And 40% of adults are less able to afford their bills compared with one year ago. 

Often, that means individuals will turn to their credit cards to help deal with having less available cash. And, according to a Wall Street Journal article, credit card use is on the rise. Total card balances in the U.S. hit $916 billion in September, nearly identical to December 2019 levels, according to the credit-reporting firm Equifax Inc. Balances are up 9% from January and about 23% higher than their pandemic low in April 2021. 

However, economic difficulties often create more activity in the ARM industry. Individuals are often less able to pay bills, which results in more charge-offs and higher delinquency rates. Organizations must prepare to handle the potential surge by getting the right solution and staffing plans in place. 

Market Consolidation 

Economic conditions in 2023 will likely push the ARM industry to continued consolidation, which seemed to begin around the turn of the millennium. 

According to a report by the Kaulkin Ginsberg Company, the number of ARM firms fell by 39.8% between 2000 and 2021. Much of this consolidation is due to technology systems becoming more complex as well as new regulations continuing to restrict ARM processes. Improving and upgrading systems puts a strain on already tight budgets, something that is more difficult for smaller players to justify. Therefore, larger players will be better positioned to improve operations and efficiency, leaving smaller players in the lurch and vulnerable to being absorbed by larger competitors. 

Technology Adoption 

Companies in the ARM industry will turn to technology to drive efficiency and control costs, including robotic process automation (RPA), artificial intelligence (AI), and machine learning (ML). By choosing solutions built with these technologies, ARM organizations will discover more efficient ways to work as well as ways to prioritize accounts in the most effective way. In addition, the use of advanced segmentation has also drawn interest from ARM industry leaders. With advanced segmentation, organizations can benefit from additional, more detailed data on not only how to profile customers, but also how best to interact with them. Advanced segmentation also helps analyze accounts and surface those higher-leverage accounts that are most likely to pay. For example, after implementing an advanced segmentation strategy, Accelerated Receivables Solutions (ARS) saw a 120-percent increase in account payments and a 2x increase in contact conversion rate. 

Regulatory Issues 

Despite the ruling U.S. Court of Appeals for the 5th Circuit that the funding structure for the Consumer Financial Protection Bureau (CFPB) is unconstitutional, current regulatory principles aren’t going away. 

According to a Bloomberg Law report, the CFPB released a statement that it “will continue to carry out its statutory mission enforcing federal law and protecting Americans from predatory financial institutions. Illegal practices are still illegal, and the CFPB is going to hold companies accountable when they break the law.”   

The CFPB has filed a petition for the Supreme Court to review the 5th Circuit panel’s opinion and has asked the Supreme Court to hear the case in its current term and issue a ruling by June 2023. And it may have just gotten a boost to its case. 

In her ruling in the case of the CFPB v. TransUnion and Danaher, Judge Elaine Bucklo from the Federal District Court for the Northern District of Illinois wrote: “The Bureau receives its funding pursuant to a statute passed by Congress, which Congress has the power to amend or repeal. [In short], an act of Congress provided for the CFPB’s funding, satisfying the Appropriations Clause’s simple mandate. That Congress funded the CFPB outside the normal appropriations process does not create a constitutional problem.” 

This means that organizations must still abide by the Fair Debt Collections Practices Act (FDCPA) and Regulation F. And any investment in collections and recovery solutions for first-party vendors or debt collection solutions for third-party vendors must be compliant with existing regulations. 

On the Horizon 

The state of the economy, as well as new technology investments, will likely provide significant change for organizations in the ARM industry for 2023. ARM organizations that embrace technology will discover that employees are more efficient and productive. And these innovative organizations will embrace new ways to understand and connect with customers, improving the overall experience and seeing a greater return on their technology investments.   


This is the second in a series of articles exploring trends in the healthcare, ARM, government, and payments industries. Stay tuned for the next article.  


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