Debt recovery systems that financial institutions use must be compliant and reliable now more than ever. Debts owed by business or consumer clients represent great value to any bank or credit union.
Collecting payments on outstanding debt ensures that banks and credit unions don’t incur the expense of writing off bad debts.
Money owed to banks and credit unions continues to grow in the U.S. Approximately 77 million Americans have a debt in collections, which amounts to 35% of consumers. Meanwhile, the Consumer Financial Protection Bureau has reported that U.S. consumers submit more complaints about debt recovery practices than any other banking product or service.
This information is critical to helping banks and credit unions view debt gathering as a key piece of the credit cycle, not just the final step. The role of collections is an important service that helps financial institutions maintain loyal clients and open more funds for future lending. A strategic payment recovery process can help borrowers to develop healthy habits around loan repayment.
The debt collection process is defined as a set of synchronized, suitable, and timely activities performed to obtain full repayment of loans from clients. The intention is to convert the financial institution’s receivables into liquid assets as quickly and efficiently as possible, and to maintain a positive customer relationship that sets the stage for future transactions.
CARM-Pro vigorous bank loan collection and recovery software helps banks and credit unions increase revenues and reduce costs through improvements in compliance, resource efficiency, and superior reporting.
Interaction with Client
Even a partial decrease in loss rates for large portfolios can produce a noteworthy and recurring decline in credit losses. Maximizing return on investment by minimizing unpaid loans and managing conventional credit risk as well as profitability factors such as customer retention and resources are key components of a financial institution’s debt recovery process.
Along these lines, the process requires significant interaction with the client, beginning with a careful analysis of the lender’s situation and continuing through timely and frequent contact over the duration of the loan.
Many collectors do not have right tools to improve delinquency rates and maintain borrowers as customers. Delinquent borrowers are still valued customers. Without a consolidated comprehensive view of the customer’s relationship with the financial institution, financial institution personnel are unable to make quick decisions or offer customers a best-fit solution and clear delinquent accounts.
Without a consolidated borrower-centric approach, debt officers can unintentionally sanction different agents to communicate with the same customer. These repeated aggressive calls by different agents leaves customers aggravated and the possibility of having customer service rated poorly and relayed over social media to the larger public. In addition, there is a distinct possibility of the customer switching loyalties in search of better customer experience.
We can help you transform to our robust collection and recovery system. We can help with data rollback and escrow source codes as well.
Improving Bank Collections in 4 Steps
Many bank debt-recovery systems are not very effective and occupy several incongruent applications with slight integration between them. Many do not have consolidated data portals or centralized operational control, which creates data inconsistencies and loss. Collectors sustain added expenses include the maintenance of these systems and IT staff training in addition to administering this intricate infrastructure.
There are many things to consider if your financial institution is considering a change from your legacy system. Such as knowing whether the current system automates debt and asset recovery operations providing substantial operational, regulatory and financial advantages to your bank or credit union.
Here are four quick steps to improving the debt recovery process:
- Align consumer strategies and practices with your organizational strategy, structure, and priorities.
- Develop a decision-making strategy using advanced analytics and alternative data sources.
- Streamline workflows and operational structure.
- Demonstrate consistency throughout the process.