Consumer delinquencies have been rising over the past few years. This presents a unique challenge for many credit unions, since the optimal balance between effective collections and maintaining member loyalty needs to be struck. Credit union delinquency management is essential not only for profits, but also for the long-term success of members.
With the cost of living going up in many parts of the country, and wages struggling to keep pace, credit unions will likely see more delinquencies in the near future. To help your credit union prepare for this challenge, we recommend three actionable strategies.
1. Maintain Accurate Contact Information
If your debt collection messages bounce or never make it to members, there’s no opportunity for repayments. That’s one of the reasons why maintaining accurate contact information is essential for credit unions. Successful credit union delinquency management depends on reaching out to the right members at the optimal time.
Ideally, your credit union should have accurate member contact information for multiple communication modes. This empowers your collections strategy to follow an omnichannel approach, which makes it easier to connect with members through their preferred channels. To help reduce member frustration and wasted outreach efforts, here are a few best practices to consider:
- Periodically ask members to update their contact information through your website, regular communications, and any in-person meetings.
- If you do not have contact with the member anymore, consider using skip-trace tools (e.g., software that searches databases to update contact records) to authenticate information and fill outreach gaps (subject to applicable privacy and debt-collection requirements).
- Validate your contact details via digital strategies like address validation and email verification.
2. Prioritize the Member Experience
A great member experience, even after someone has missed a payment, is important to avoid charge-offs. Debt collection strategies should focus on extending empathy to members. This means taking time to meet the unique preferences of each member while offering a frictionless experience to resolve outstanding financial obligations. Here are a few ways credit unions can enhance their member experience, even when a payment is missed:
- Offer Self-Service Options: More members today prefer self-service, so credit unions should provide a self-service portal that makes the repayment process easy.
- Embrace Digital Channels and Flexible Payment Types: Many credit union members prefer to be contacted through email and text messaging. Additionally, you may wish to support digital wallets and auto-pay features to offer an even more flexible repayment experience for your members.
- Consider Using Chatbots: It’s normal for some members to be hesitant about talking with a human about financial obligations. AI tools like chatbots can offer them a means to obtain answers to common questions and explore options without feeling stress or shame.
3. Leverage Digital Debt Collection Software
When members miss a payment, their repayment experience should be a natural extension of the servicing experiences they’ve received from your Credit Union. To do that, we recommend digital debt collection software that leverages machine learning technology to optimize your recovery strategy. This type of software automates digital communications for delinquent accounts to free up time for your staff to help members with more complex cases. For example, Retain uses advanced machine learning to identify the optimal channel for each member. By sending members a personalized and branded communication through their preferred channel, credit unions are more likely to improve their recovery rates.
Retain white-label debt collection software can also reduce the cost for credit unions to collect on delinquent accounts. Credit union full-time employees will spend less time sending out collection messages to members. And since the debt collection software can easily scale, credit unions may not need to hire additional full-time employees to cover a rise in delinquent accounts.
Bring More Members Current with Retain
Retain white-label debt collection software is designed to strike the optimal balance between collection performance and the member experience. It’s a solution used by credit unions to deliver a personalized experience to members while reducing operational costs. Ready to get ahead of rising delinquency rates? Talk with our team to learn more about how we can help improve recovery rates.
