Norway Invades Germany to Reap ARM Rewards

With the largest population and economy in the European Union, Germany is an attractive market for expansion of financial services, including debt purchasing and collection. Oslo, Norway-based ARM firm Lindorff Group recognized the opportunity and is pushing hard into the country with recently-announced collection agency acquisitions.

Lindorff announced last week that it had made its second ARM acquisition in Germany by snapping up Aktiv-Inkasso Pleil AG, based in Heppenheim (“European ARM Giant Buys German Collector, Looks to Consolidate ARM Market,” March 7). The announcement came only two months after it bought Cologne-based collector Dausend Group.

Lindorff is already one of the largest ARM players in the world, with more than 2,000 employees in at least a dozen countries in Europe and 2007 revenues of more than $530 million. But it was lacking significant operations in the largest of the EU states.

“To be a true European ARM provider, you must have a presence in Germany,” Arve Paulsen, senior vice president at Lindorff, told insideARM. Paulsen noted that existing clients were asking about its German operations as consumers there have taken on more debt.

A September 2006 research report by Datamonitor revealed that consumer credit uptake in Germany lags behind other EU and Western nations. The report blames a number of factors ­­– such as poor economic performance, persistent unemployment and low consumer confidence – for the slow growth, but it principally blames “a culture that is adverse to debt.”

But change is occurring in the German consumer credit market as international lenders grow in the country. UK powerhouse Barclaycard has been investing heavily in Germany, pushing its entry-level credit card to consumers there. In a new study, Datamonitor predicts that by 2011, payment card (including debit card) transaction volume in Germany will reach $925 billion.

Lindorff said in its press release on the Pleil AG deal that it will consolidate the German ARM market. Paulsen downplays consolidation as the prime purpose of the acquisition, but says Lindorff will become the largest collector in Germany.

“We bring a new approach to collections in the markets we enter,” he said. “By improving the collection process, we think we will become the dominant company [in Germany].”

Paulsen said that the “Nordic Approach” to collections involves heavy use of data and technology. But his firm also treats the debtor as a customer so as to not alienate them from Lindorff’s client.

This approach has worked very well in other markets Lindorff has entered, says Paulsen. As the group increases the services it provides, it is important to keep their clients’ customers happy. “We are a full service provider along the entire credit chain,” said Paulsen. The group has been expanding its service offerings – mirroring large American ARM firms’ pushes into BPO services – to include billing, invoicing, first party collections, payment reminders, and even accounting services.