In the wake of this most atypical year, it’s more important than ever for credit unions to improve their collections efforts while still providing exemplary member service to retain and grow their client base and improve their bottom line.
To achieve these goals and thrive in the months to come, collections teams need to focus on improving member service, empowering borrowers by providing robust self-service options, and building a collections operation that strives for continual improvement toward these goals.
In this article, we’ll discuss intelligent communication strategies that can help improve your credit union’s collections efforts.
The Value Of Omnichannel Communication
In our constantly-connected world of smart phones and digital interaction, consumers expect to have access to anything they need at their fingertips. As technology continues to provide more communication options between you and your members, it’s vital that you keep pace with your borrowers’ communication preferences.
Emails, phone calls, digital apps, and text messaging are all methods of interaction that your members expect to have available. It’s important to provide these options consistently across multiple channels, as some members will prefer one method while others may require multiple points of contact to gain top-of-mind awareness.
Having an omnichannel communication strategy can help your borrowers make payments in the method they prefer, significantly improving their member experience.
The truth is, most people don’t want to talk to collections agents. The majority of people who are in arrears are well aware that they owe money, and they don’t want to be hassled. Instead, they want to determine the simplest and most direct way to repay their debt.
They also want to be able to do this on their schedule, often from their cell phone. Fortunately, self-service portals allow members to access their account information, resolve payment issues, enter promises to pay, and (where allowed) negotiate a settlement without having to speak to an agent.
According to FICO, “Experience has shown that when people interact with collections through a self-service channel or portal, they have a higher level of customer satisfaction. In addition, promises taken on a portal generally have a lower default rate than one taken by a collector, which also frees collection staff to work other cases.”
Traditional collections strategies like sending letters and staffing call centers can be relatively expensive, and decreasingly effective. A recent report by the U.S. Postal Service found that only 41% of millennials read, review, or sort their mail on a regular basis, compared to 72% of baby boomers.
Incorporating text message communication into your collections efforts is a smart move because it allows you to get your borrowers’ attention quickly and gives them the opportunity to provide immediate feedback.
It’s a less expensive option than sending a letter, and directing the information to their phone means they can seamlessly make a payment from the same device. Here are some of the best applications of SMS services for debt collection:
Text payment notifications: SMS software enables you to automatically send payment reminders to borrowers, helping you reduce collection costs and encourage past-due borrowers to pay their debts on time.
Send missed payment reminders: Sometimes, life gets ahead of borrowers and they just need a friendly reminder that they have missed a payment. It’s also a good idea to follow up with relevant information about how to make the missed payment.
Text payment confirmations: Your borrowers will appreciate the well-timed thank you, and having documentation of their payment that is easily accessible.
Outsourcing Your Collections Efforts
Collecting on delinquent accounts is a major undertaking that requires a substantial investment in staff, technology, and compliance expertise. Outsourcing your collections efforts can help your credit union effectively manage delinquency and reduce the cost of your collections program. A scalable and customized collections program allows your credit union to determine what is best for your overall strategy.
SWBC has partnered with FICO to provide innovative and intelligent communication services. This solution allows credit unions to orchestrate outbound and inbound interactive voice response (IVR), text, and emails to contact members and auto-resolve delinquency issues.
This innovative, multi-channel contact approach promotes and provides self-service options for members, with the opportunity to speak with a live agent, if needed. This advanced communication technology provides members with a positive experience that builds confidence, trust, and loyalty, and increases real-time payments and promises to pay.
SWBC offers a scalable solution that saves our outsourced collections clients an average of 35-50% annually when compared to in-house efforts. Check out our collections cost comparison calculator to see how much you could be saving today!
Jeff Mortenson is Vice President of Client Relations for the Financial Institutions Group at SWBC.