Collection Agencies Could Hurt Your Bank
Working with a third-party collection agency is a bad fit for your bank. Especially if their methods do not match your organization’s customer values and compliance practices.
Once bankers hand over past dues to a commissioned third party, instead of using a robust banking software system with fully trained representatives, they have no control over their customers or the practices employed to reel-in bad debt. Because outside services do not match your bank’s moral principles they could harm or destroy your relationship with accountholders by disrespecting or angering those customers. In addition, by using disreputable practices, agencies could also put your financial institution in hot water with state and federal regulators over compliance issues.
From a business standpoint, bankers must understand that they may not retrieve more than 10% to 30%, if any; of the past dues. Most of the debt remains unresolved and the rest goes to the agency.
Banks reconciling debt successfully on their own retain control of costs and accountholders.
Curing the Debt Without Losing the Customer
When your staff is communicating with a past-due customer, is their primary mission to cure the debt? Or is their primary mission to right the debt ship of the customer, which in turn cures the debt.
If your primary objective is to simply alleviate the debt, maybe outsourcing the task to a commissioned third party is the best route. However, if your primary mission is to fix the problem causing the past due, and rebuild the relationship, a commissioned third party may harm that objective. Most clients are liable to feel offended when contacted by aggressive agencies. They often feel betrayed by their bank, which they view as a trusted advisor.
Instead, taking best-of-breed software resources can simplify the complex bank-collection process and ease much of the administrative burden allowing more time to communicate with past-due accounts. It can do this while keeping the best people on the job (your team) with the best probability at meeting your organizational objectives regarding customers.
IBS provides extremely vigorous and flexible capacity for integrated leading core processing platforms today:
Reaching and Understanding Your Customers
You work hard to bring in customers. By automating the process with state-of-the art technology and improving training you can improve delinquency rates and avoid the need to seek outside help to track down bad debt.
A successful course of action emphasizes the bank’s overall philosophy by providing specific tools that help you seek remediation of past due accounts. This means really understanding the problem, which only direct communication can provide. Improving the process also requires technology so you can truly listen to what your customer is saying, as well as what they're not saying.
Communication with past-due accountholders is a key but frequently today’s credit professionals use outmoded message options that may not give their institution the best customer-relationship channels to meet collection and compliance requirements. Using sophisticated messaging options, including mobile texts, leverages existing technology to efficiently merge your institution’s values with appropriate debt information. This helps quickly delivers a powerful message to your debtor.
Developing a blended strategy, based on powerful contemporary technology delivers stable compliance solutions, increases collector-to-debtor communication time, and supplements your overall strategy. In addition to providing the right technology, IBS offers clients with ongoing and dependable training for your staffs. Our Online Self-Guided User Training Modules provides interactive training at no additional cost to support IBS clients, allowing platform users to take the online classes based on their availability.
Instead of seeking help from an outside agency, your training can use cost-effective technology to meet your compliance pressure while honoring your long-established service culture.