Seven Steps to Develop Better Retail Bank Collections & Recovery Departments
Technology transformed the financial services industry. However, debt collection and recovery at some banks still remains outdated with manual processes instead of fully automated with robust software that has the capability to track delinquent accounts in a compliant manner.
In addition, collection and recovery software can automatically track late customers and issue phone calls, letters and emails. Its greatest feature however, is freeing up collectors to work on more vital issues.
Given the diverse maturity levels at which a bank maintains its effort s toward implementing best practices, the following general guidelines might help improve the process.
- The initial step in streamlining your collection-conversion process is to start billing and collecting electronically. You can produce and e-mail invoices from accounting or word-processing software. You also should take advantage of online banking to accept preauthorized ACH payments. This capability allows financial institutions to set up automatic payments from regular customers and speed debt recovery.
- If your organization does not have a fully developed debt gathering and recovery department, start small with a long-term goal and make step-by-step improvements to processes and systems.
- Provide consistent communications at every phase usually defined as soft, pre-litigation, litigation, and recovery. Each phase involves a consistent approach for the customers involved. Conditions for moving from phase to phase must also be clearly predefined.
Better utilization of your financial institution’s software could decrease billing slippage, waivers and refunds − together contributing to increased profits and margin improvement.
Improving the Experience
- Improve the customer experience by identifying and managing risk at its origination. This permits collectors to become familiar with specific customer situations, allowing for some creativity in working out payment arrangements. This approach also means agents are cross-trained in handling all delinquency levels and most recovery issues.
- Earlier delinquency targets and parameters establish a culture of zero delinquency tolerance and contribute in identifying past-due loans quickly. The possibility of recuperation of delinquent loans is higher during the early stage.
- A robust system helps review any debt owed the bank or credit union. If the client owes the financial institution, for any reason, CARM-Pro can accommodate that past due debt and analysis.
Centrally Defined Tools
- Put in place centrally defined debt-gathering tools. For example, the pre-litigation phase may specify the overdue amount repaid incrementally with a discount. Acceptable promises to pay needs clear definitions in terms of the amount and timing of repayment. Allow for the manual override of strategies to guarantee the correct handling of exceptions, but with careful monitoring to assess the effect to the credit quality and operational costs.
- Invest in continuous learning, which includes effective and targeted communication scripts: Every agent contacting a customer represents the bank and must convey the right message and handle customer issues efficiently. Collectors need feedback about day to- day performance to know that they are doing their job effectively. Receiving supervisory feedback also demonstrates to them that others are interested in what they are doing. When performance is satisfactory, feedback improves self-esteem and personal competence.
Our Online Self-Guided User Training Modules provides interactive training, to ensure consistent and compliant representation, at no additional cost to support IBS clients, allowing platform users to take the online classes based on their availability.