100% Committed to Bank and Credit Union Collection and Recovery

Collection Compliance and Success for 2015

The perfect storm has been brewing. It created a set of conditions that are challenging most institutions collection operational performance. The storm components:

  1. Collection Compliance
  2. Shrinking Budgets, less technology staff
  3. Social norms, debtors view toward their debts

Collection Compliance

If you or your team are responsible for collecting past due debts for your institution and you have had that responsibility for more than two years, then you have seen a tsunami of collection compliance change. The very bright investigatory and monitoring lights of regulators, insurers, investors, guarantors all have shown deep into your collection operations.

When you wade through the “compliance” documentation, and determine what steps you believe your institution must take to comply, are you able to implement the needed collection compliance changes with your staff; or are you dependent on your collection system vendor to make system changes to accommodate your required new changes?

Be it vendor required collection system operational changes, or more comprehensive overall system updates, does your collection system change as often as regulations; as often as operational changes are required to comply?

A few short years ago, an institutions collection system could run under the same overall operating configurations for extended periods, for years, and reliably perform the necessary collection automation job. Today, external entities are changing and demanding more from collection teams than ever before.

Your technology must change to ensure your compliance!

Shrinking Budgets, Less Technology Staff

Tight net interest margins, growing compliance obligations, marginal economic growth and competitive pressures all combine to keep technology budgets tight at most institutions. “When” new technology can fit into an institutions technology plan is now often an aspect of the new technology sale.

Timely access (or lack of) to staff technology resources, to incorporate collection compliance changes complicates the overall compliance effort.

Although a common view is “if it does not generate revenue, it is not funded”. However, inefficiencies, non-compliance fines and penalties often hurt the bottom line more than a new initiative grows the top line.

Training seems to be a budget dinosaur. Combine two or three generations of staff turnover since a new system was deployed, add a few major release in that same time frame, and you create an environment where powerful technology is woefully underutilized, perhaps even seen as inadequate.

Is you institution getting the most out of your collection system; or is it far more capable than your institution knows?

Social norms, debtors view toward their debts

Often institutions have a very deep and storied history, traditions of service, of community value, of long term win-win community and client relationships. These deep rooted values forged many operating policies.

Much of today’s society has a different value system than their parents or grandparents; that “traditional value” customer that many institutions policies were crafted to serve.

A member of “the Greatest Generation” could walk into their institution; feel a bit uncomfortable about asking for a mortgage. Yet realistically place a strong down payment on a home, know that they can comfortably make the payments; and do it all with a hand shake.

Today, often debt holders can look at the market value of their collateral (of which in reality they put nothing down), make the decision to “walk” as the economy has eroded the value where “it does not make financial sense that the debtor keep paying on that loan…”

The concept of an automated call, to the greatest generation, in and of itself may be offensive. Today, an automated text to a contemporary debtor’s cell phone may be the only true way to communicate with that debtor.

Are your institutions policy makers, deeply rooted in your institutions deep traditions, harming your institutions financial performance by governing collection techniques effective for today’s debtor?

How can your 2015 take a fresh, pro-active look at solving “perfect storm” set of conditions?

  1. If your collection system provider did not update your software this year, and/or last; find a new vendor. Your collection compliance world changed dramatically in that same period, and you cannot comply without the support of your vendor.
  2. Get technical resources for your collection system. Get allocated internal IT resource time, to make collection system changes as needed; or expand your collection system vendor “support” agreement to include services. Collection compliance changes trigger collection policy changes that must initiate collection system changes. Non-compliance is too expensive.
  3. Attend your vendor’s client conference, gain access to product experts to learn how to fully employ their latest technology.
  4. Web training is typically very cost effective; and self-guided training is both cost effective and “calendar” friendly (allowing attendees to take modules at their pace). All of these minor IT budget items push the productivity needle along; prevent collection compliance fines and penalties (by giving users knowledge to quickly and independently accommodate compliance changes).
  5. Analyze your debtors; develop a/the profiles; to which you review your collection strategies tuned to this profile. Calling land lines Monday-Friday 8-5 to dual income wage earners that never answer a land line is not very effective. Communicate to them, when they will communicate, via a method that they use.