Innovative collections solutions for 2021 and beyond

There’s no doubt that 2020 has been a disruptive year for individuals, businesses, and financial institutions across the board. Social distancing measures put in place to help mitigate the effects of the coronavirus have resulted in consumers who are more comfortable navigating digital landscapes; labor market disruptions have contributed to rising economic hardship for millions of families; and credit unions have had to adjust to new ways of being available to support their members. 

Technology has been one of our strongest allies in the fight against COVID-19. If we had encountered the virus 25 years ago, before the digital wave transformed nearly every aspect of how we interact, do business, and live our lives—there’s no telling where we would be today. Fortunately, living in the digital age has armed us with solutions for nearly every problem we’ve been faced with this year. When businesses had to close, we transitioned to working from home. When a visit to the grocery store was outside of our comfort zones, we were able to order groceries online. When credit unions had to close branches and limit in-person services, advances in FinTech enabled effective communication with members using new platforms.

In this article, we will discuss how credit unions have been leveraging technology to adapt to the disruptions of 2020, and give you tips for adopting innovative collections solutions to be more accessible to your members when they need it most. 

Banking is Going Digital

One of the most significant effects of the coronavirus pandemic has been an increased familiarity with and desire to interact digitally. Because of the streamlined user experience and ease of access, more members than ever have become comfortable with the idea of interacting with their credit union on a mobile platform. This has resulted in a shift away from in-person banking. 

According to Medium, “Paying a visit to your local bank branch is becoming a thing of the past; in fact, by 2022, it’s expected to drop by 36%. In the same amount of time, mobile transactions are projected to grow by 121%, eventually composing 88% of all banking transactions.”

Since digital platforms enable more cost efficient transactions and result in cost savings when compared to traditional physical banking, credit unions are also reaping the benefits of digital communication. As we look forward at 2021 and beyond, experts expect to see a sharp rise in mobile and online communication between credit unions and their members. 

Effectively Managing Rising Delinquency

Even before COVID-19 hit, consumer debt—the  natural precursor to delinquency—was on the rise in America. According to BusinessInsider, “U.S. consumer debt ballooned to a record in the first quarter [of 2020], before the worst months of the coronavirus pandemic. Total household debt increased 1.1% to $14.3 trillion through March of 2020 … The total balance is now $1.6 trillion higher in nominal terms than the previous record of $12.68 trillion in the third quarter of 2008.”

Credit unions can ensure they have the capacity to support the increased number of accounts that may be falling into delinquency by leveraging multiple communication channels and contact strategies, such as text, email, interactive voice recognition (IVR), along with their voice calling campaigns.

Intelligent Automation and Omnichannel Communication Solutions

Your members have high expectations for their entire member experience, whether it takes place online or in-person. They want to be treated with respect, and that means expecting convenient, discreet, self-service options to resolve account issues, having the option to speak with a representative when they need to, and be comfortable throughout the process.

Intelligently automated customer communication services enable efficient, effective communications with members. By logically automating routine conversations, agents can focus their time and effort on higher risk and more complex accounts. Pre-configured decision flows and scripts based on user data can help conduct the flow of conversation with your members toward resolving payment issues.

According to FICO, incorporating intelligent automated customer communications into broader collections strategies has been an elegant and cost effective solution for their clients across the globe. “In China, this is how FICO clients weathered the early days of the pandemic. For one client, faced with 20-times inbound call volume and zero agents, automated communications handled 100% of calls with no downtime. In the UK, where most collection operations have been able to switch a good number of their agents to working from home, automated omnichannel communications are essential for coping with increased volume and can handle 50% or more of inbound contacts.”

Less Intrusive Communication Strategies 

The pandemic is an event none of us have experienced before. Delinquency is something that many credit union members have never experienced before, either. There may be some embarrassment associated with getting a collections call. Using less intrusive methods of communicating and providing self-service options can go a long way in helping credit unions to build trust and loyalty from their members during difficult times.

Outsourcing Collections Efforts

Collecting on delinquent accounts has always been a complex task that requires a substantial investment of resources in both personnel and technology to effectively manage. Outsourcing your collections efforts can help your credit union manage delinquency, while simultaneously reducing the cost of your collections program. 

SWBC recently partnered with FICO to help provide innovative and intelligent communication services to our credit union clients. This solution enables your team to orchestrate outbound and inbound interactive voice response (IVR), text, and emails to more effectively reach members and auto-resolve delinquency issues. This innovative, omnichannel contact strategy provides self-service options for members, and gives them the opportunity to speak with a live agent, if needed. This digital tool provides a positive member experience that in turn builds confidence, trust, and loyalty, while also increasing real-time payments and promises to pay.

To learn how SWBC can help you decrease delinquency while improving your borrowers’ experience, click here.