This automated debt collection software article explores the features and benefits for banks and credit unions. It provides key information for bank and credit union debt collectors seeking a collections process automation solution to improve their collection efforts to reduce bad debt and optimize cash flow.
How Bank Customers’ Rising Payment Default Impacts the Collections Industry
The rise of credit use by companies, business owners and personal debtors prompted by the COVID-19 pandemic has increased customer payment default. The market surge of required debt recovery efforts in current economic and political conditions makes banks and credit unions vulnerable to higher compliance scrutiny. This exposure to government regulations is compelling bank and credit union debt collection professionals to automate debt collection operations.
More than ever, bankers are using proven automated debt collection technology such as CARM-Pro™ Collection and Recovery Manager – Professional by Intelligent Banking Solutions™.
Automating Debt Collection Practices with CARM-Pro Enables a Collections Team to:
- Improve their debt management systems and accounting operations
- Increase collection capacity to recover more past-due invoices and overdue debts
- Implement management strategies based upon predictive analytics
- Enhance each customer relationship using advanced process automation tools throughout the debt cycle to improve customer communication and recover each unpaid invoice
- Comply with all required debt recovery actions and processes
What is an Automated Debt Collection Management System?
An automated debt collection management system uses debt collection technology to reliably customize, streamline and automate many collection process activities. Debt collection automation software programs are leveraged by bank and credit union agents responsible for collecting any past due debt owed their financial institution.
Many required and repetitive tasks of the collection process can be fully automated with a powerful automated debt collection system, while some actions require human intervention.
For example, automated debt collection and analytics tools support critical financial processes and collector business decisions by:
- Ensuring the proper order and manner of each required collection step via assigned task lists
- Simplifying and streamlining a debt collector’s steps and interactions with customer accounts
- Documenting reports of when each debt collection process step and payment processing happened
- Alerting other debt collection professionals if a required management step did not happen
How Banks are Using Debt Collection Automation To Increase Collections
Maintaining debt collection compliance requires that bank and credit union collections agents must abide by strict – and often conflicting – federal and state regulations. Automation of this process is the most proven way for financial institutions to consistently enforce required debt recovery actions.
Compliance Features of CARM-Pro Debt Collection Automation Software Can Help Collection Departments to:
- Perform (or prevent) recovery actions (calls for payment, etc.) based on specific timelines and debtor/account statuses
- Maintain documents and reports that detail completion of all required steps
For example, CARM-Pro™ automating debtor management software programs ensure that debt collectors only communicate with fully automated communications through the attorney of a client who filed bankruptcy, and not directly with the debtor.
Bank and credit union collection agents can leverage the CARM-Pro automated debt collections platform to:
- Eliminate the risks of improper or missed steps, reports and documentation
- Proactively pre-notify customers according to client communication preferences about billing of payments due, to increase money collection
- Maintain relationships with clients by creating custom payment plans and training debtors to pay your financial institution’s debts first, via automated collection enhancement and compliance tools. CARM-Pro’s advanced features enable regular payment reminders; prompt recognition for honoring payment; and consistent reinforcement of the bank’s intention to follow through on debt recovery.
CARM-Pro™ – Collections and Recovery Manager Professional by Intelligent Banking Solutions™ enables bankers to automate debt collections far better than less sophisticated debt collection platforms that cannot manage this level of debtor contact.
The shift in U.S. national leadership and its corresponding political landscape is prompting expectations of increased banking industry regulation, including more stringent Consumer Financial Protection Bureau (CFPB) compliance enforcement.
As part of compliance enforcement on a number of consumer financial markets, the CFPB has historically levied billions in fines and penalties – largely on bank and credit union debt collectors – for CFPB violations.
The anticipated sharp increase in CFPB regulation of bank and credit union debt collectors amplifies the need for an automated debt collection system such as CARM-Pro™ Collections and Recovery Manager – Professional by Intelligent Banking Solutions™.
From strategy to delivery, CARM-Pro provides the best solution in the debt collection software market.
Benefits of an Automated Debt Collection Software Solution
Debt collection automation software is much more than a data management solution for financial institutions. The technological advancement of automating debtor management is a wise business strategy that leverages technology to achieve desired end results.
The opportunity is to balance the benefits of automation with factors that enhance human ability. This balance enables all users – from agents to customer debtors – to benefit from the efficiency of collection process tools and technology for everything from billing to invoices to payments.
How Banks and Credit Unions Can Benefit from Using CARM-Pro™ Automated Debt Collection Software:
- Reduce costs with lower investment in full time equivalent (FTE) staff, and improved compliance
- Increase account management capacity by double, triple or more with current or fewer employees
- Remove the risk and expense of failure to comply with regulations such as FDCPA
- Simplify and streamline debt collector tasks, thus increasing FTE productivity by allowing agents to work more accounts, service clients faster, and improve their debt collecting ability
- Grow the financial institution in a number of ways, such as geographic area; product set (such as lending to high-risk, higher-interest debtors and leveraging powerful collections technology to manage that higher risk); acquisition of other banks or credit unions, etc. – often without increasing collections staff – due to integrations of high performing automated collections software
- Simplify training of new debt collectors and allow for use of temporary staff from within or outside of the bank, since automation simplifies the collection process and reduces noncompliance risk
- Support collection policies and procedures with simplified and streamlined collection processes that ease new employee training and ongoing staff supervision
- Use several communication channels, such as SMS / text message, email, recorded voicemail message, and traditionally mailed letters to contact debtors outside of banking business hours. This access to people via expanded contact channels and timeframes results in a higher probability of reaching debtors and successfully collecting payment without adding staff or an evening shift.
- Simplify debtor payments by providing people with pay-now links to click via SMS/text or email
- Sequence and organize work according to the financial institution’s policies and brand values
- Improve collector efficiency and effectiveness by enabling consistent follow-through on collection demands and debtor promises
- Assign accounts to appropriately-qualified debt collection agents through automated order and selection of debt types. For example, entry level collectors may be assigned 1-15 days past due consumer loans. A senior level collector may be assigned more delinquent or complicated accounts based on scoring factors such as probability of debtor contactability, collectability and risk
Automated Collections Software Scores Debtor Features for Debt Collectors
- CARM-Pro™ Collections and Recovery Manager – Professional by Intelligent Banking Solutions™ is an automated debt collection system that can score and sort debtor accounts by key factors such as contactability, collectability, and risk. Financial institution users can further customize CARM-Pro™ with their internally created scoring parameters for debtor attributes. For example, debtor scoring based on number of days delinquent, amount of change in FICO score since loan origination, etc. CARM-Pro allows collectors to perform customer segmentation and run analytics on various collection scenarios.
- CARM-Pro™ scoring automation efficiency enables banks and credit unions to assign collectors to work the appropriate types of accounts based on their debt recovery skill and experience
- Each time an account is brought current, CARM-Pro calculates the average number of days late. This enables collectors to decide whether to take action now or delay action, if there is a strong probability or history that the debtor will soon submit their payment plus more money in late fees. This data sorting advantage is only possible with technology that can automate debt collections.
Benefits of Contemporary Systems That Automate Debt Collections
The benefits of a modern automated debt collectionsystem such as CARM-Pro™ Collection and Recovery Manager – Professional by Intelligent Banking Solutions™ can save bank debt collections professionals vast amounts of incremental time and expense as they strategize and work multiple debt accounts.
Debt Collection Strategies that CARM-Pro Collection Management Software Tool Supports:
- Automated debt collection can combine accounts from multiple servicing systems; include past due or current debt status; and include positive balance deposit accounts. When collectors can comprehensively review all accounts for each debtor, they gain a deeper understanding of the debtor-to-institution relationship, which can inform and influence collection strategies
- Debt collection automation can gather information needed for collections from external sources, to ease the manual burden of researching bankruptcies, deceased, contact information, people that debtors are related to, work with, or live near
- An automated system can interface and integrate communication with vendor resources such as attorneys, inspectors, repossession agents, and collateral appraisers regularly, to simplify the collection process and ensure consistent accuracy without the risk of human error
Not All Automated Debt Collection Software is Equal
Past due debt recovery is not unique to the banking industry. A variety of collection systems, artificial intelligence tools, and advanced analytics exist across several industries, and for various related collection activities.
What is unique to the debt collection industry – and bank debt collecting in North America in particular – is the growth of key factors such as regulatory scrutiny of critical documents and business processes; overall debt size; and the number of debts a debtor has with a financial institution.
Additionally, unlike agents with typical debt collection agencies, banks and credit union debt collectors seek maintain long term relationships with customers and members. For example, bankers collecting on their own debt are very different from people in collection agencies who collect on the debts of other organizations.
Financial institutions can benefit most from automated debt collection software built specifically to support their unique needs for debt collection process automation. Software developed by industry experts dedicated to simplifying the installation process, and maintaining a supportive ongoing vendor relationship.
Some collection systems are built for a specific debt types, such as credit cards, negative balance deposits, mortgages, and indirect loans. For these types of loans, the optimal solution is not typically full debt collection automation.
Some collection systems are a small component of a larger suite of financial service product offerings. For example, a company may have one or two large central products for banking, plus multiple medium-size products, and hundreds of small products – including a small collection software system. The research and development, support, and service that this type of firm can devote to its small debt collection product typically lacks depth and sustainability, results for a client bank or credit union.
Some financial institutions in North America use specialty servicing platforms for specific types of lending such as mortgage lending, commercial lending, consumer lending, and credit cards. It is vitally important that banks and credit unions use a debt collection system that is adept at consolidating all of a debtor’s disparate account information into a full 360-degree view of each debtor’s outstanding debt.
Features of CARM-Pro™ Automated Debt Collection Technology
Proactive professional bankers value CARM-Pro™ as an automated debt recovery system that delivers comprehensive solutions to the challenges of debt management and collection strategy enforcement.
CARM-Pro™ Collection and Recovery Manager – Professional by Intelligent Banking Solutions™ seamlessly integrates with all core banking systems. In contrast to the basic collection module native to core banking system software, the benefits of proven CARM-Pro™ collections automation technology far outweigh the costs.
CARM-Pro™ technology is a single-focus banking software solution that empowers users to increase account capacity by automating tasks to recover more money in less time with fewer people. It also enables bankers to lower their threshold and grant loans to customers with a weaker credit history.
This robust cloud-based or on-site debt management tool is built, maintained, marketed, and serviced by privately-owned, U.S.-based Intelligent Banking Solutions™.
Key Features of CARM-Pro™ Automated Recovery Systems Technology
Each key feature outlined below is an example of how single-platform CARM-Pro™ enables bankers to efficiently collect on overdue invoices and improve client engagement.
- Readily provides bankers with access to the system and their files without investing in costly equipment or the internal infrastructure required to support it
- Is fully compatible with industry technology and document management standards (Microsoft Windows, generic browsers, Microsoft SQL Server database.) Clients gain full access to unlimited reports.
- Automatically imports all debtor contacts and account types (loan or deposit, past due or current), from all current account servicing systems
- Enables standard interfaces and real time integration with most major core account servicing system providers
CARM-Pro’s Multiple Communication Channels Enhance Customer Service to Bank Clients
- Enables streamlined communications with clients, including collector-initiated communications using communication channels h as emails and letters, mobile phone, SMS texts and calls
- Allows for unlimited pre-defined debtor lists that contain any account or debtor information sorted in any way, for purposes of specialty debt management and recovery
- Consolidates accounts from multiple servicing platforms into a single collection solution, providing the opportunity for collectors to comprehensively view each debtor
- Provides collectors with full access to a 360-degree view of all debtors and all accounts receivable
- Automates monitoring of debtor status changes such as bankruptcy, liens, litigation, etc.
- Enables users to fully-configure data screens and organize work in whatever way they prefer
- Enables customized reports of debtor history notes, as well as client-defined standard history notes – with or without run time data prompts
- Initiates phone calls with single-click dialing, recording of calls, and supervisor call listening
- Enables debtors to pay by phone instantly 24/7, via checking or savings account or card
- Provides non-collectors the opportunity to process payments via phone calls
- Integrates and leverages full skip trace inquiries, such as monitoring for bankruptcy; deceased records; collection scores, judgments and liens, property and car details; addresses, phone numbers. (Collectors can initiate individual debtor inquiries, as well as inquiries regarding relatives, associates, nearby neighbors, and contact risk)
- Creates Effective Use Analysis to evaluate an institutions’ monthly use of CARM-Pro features, offering suggestions for how to take full advantage of the robust tool’s capabilities, and identifying the organizational benefits of using these additional features.
- Provides a robust library of standard reports, and unlimited creation of ad hoc reports
- Ensures that client data is never locked in any way; so clients can use any report writer to access and analyze any data maintained in their CARM-Pro™ software system
- Is fully client configurable with fully automated and collector action-initiated data screens, standard ticklers, standard history notes, letters, and workflows)
How CARM-Pro™ Fully Automated Work Flows Improve Receivable Management
CARM-Pro™ data can be updated from external, non-core sources (skip trace, collateral appraisals, and third-party services such as attorneys, appraisers, and other collection resources)
Fully automated CARM-Pro work flows also:
- Integrate and update workflow statuses based on new data, to progress workflows through the collection process and alert people of necessary service steps
- Generate and distribute debtor communications such as emails, SMS, and letters
- Create tickler reminders for collectors about manual tasks to complete (standard and custom next-step ticklers)
- Identify debtor groups to receive calls, and delivers recorded voice messages with RPV that supports transfer to a collection agent and allows supervisors to monitor calls
- Update key data based on regulatory or institution-defined rules or parameters
- Assign accounts to collectors per institution defined inclusion or exclusion parameters
Frequently Asked Questions
Automated Debt Collection Software
Debt collection software enables collection agents at community banks and credit unions to recover more debt with higher compliance in less time, with lower investment in FTE employees. It also enables financial institutions to reassign employees to revenue-generating tasks such as recovery of charged off debt. In addition to many other benefits, automated debt collection software such as CARM-Pro™ Collection and Recovery Manager – Professional by Intelligent Banking Solutions enables collection departments to double or triple the client account capacity of current or fewer employees.
A bank or credit union that collects on its own loan is a “first-party” debt collector, while a third-party collection agency is an outside collection business that has either been hired by the loan originator to collect payment on its behalf, or has purchased the loan (debt) from a bank or credit union, to collect it.
An automated debt collection software system such as CARM-Pro™ Collection and Recovery Manager – Professional enables bank and credit union professionals to recover more debt in less time, while maintaining compliance with government regulations. CARM-Pro’s powerful risk-mitigating automated collection management system also supports lenders’ ability to grow bank loan portfolios by pursuing higher-risk borrowers with lower credit scores. CARM-Pro’s custom configurations are tuned to meet an institutions specific collection process, while its work flows enforce compliance while streamlining the total process. CARM-Pro’s comprehensive system of user-friendly, intuitive, and customizable automated tools also promote excellent bank customer service and eliminate outdated processes such as aggressive calls to debtors.