Bank debt recovery is growing, mostly because of a poor economy affecting both consumers and markets around the world. Banks and credit unions are adding new techniques and strategies to improve bank debt collection.
Banks are witnessing continually growing loan and credit card defaults, as well as checking account charge offs, due to years of steady rising consumer debt, as consumers face trying to just pay for the necessities. Because of this, banking and credit unions are incorporating new strategies to help improve debt recovery success.
Below are a few recommended bank debt recovery tips, which will definitely help increase your debt collection success.
- Offer flexible plans for customers experiencing financial hardship.
- Create “hardship” programs for borrowers who are late with their payments.
- Offer a new payment schedule, and/or lower payments, fees and interest rates when you anticipate customer payment problems.
- Create an avenue of communication where customers can freely talk about their issues. You can prevent much larger problems from occurring later by being proactive earlier.
Along with your existing internal debt recovery processes, these strategies are meant to “flag” potential problems sooner, and prevent them from growing into larger delinquencies later.
When To Consider Outsourcing Bank Debt Recovery to Collection Agencies
Another “must-do” for institutions with growing bank debt collection problems is quickly getting rid of, and outsourcing bad debt accounts.
Employing some of the tips suggested earlier, you’ll be better equipped to identify, early on, the more difficult accounts, and distinguish them from the customers that you can work with internally through payment arrangements.
These more challenging accounts must be identified early on in the process, and outsourced to a collection agency. Failure to do so decreases the possibility of ever getting paid on them. It will also cost you much more in wasted time, resources, etc. Failing to do so, not only decreases your likelihood of getting paid on them at all, it costs you far more in time, resources, etc.
Some collection agencies offer programs designed to restore negative accounts and retain banking customers before the account is closed or charged off. In fact, research shows customer retention equaling 70% or better can be achieved, as well as restoration of negative account balances when contacted pre-charge off.
The crucial element is reaching these customers before the account is charged off, not afterward. In addition to the incentive to clear up their negative account balance, it is also proven that after a past due account is closed and charged off, these delinquent customers typically seek new bank accounts at other institutions.
Once this happens, there is little interest in that customer bringing their delinquent, charged off account, current.
About The Author
David Montana is a recognized expert, consultant, author, and a veteran for 30 years in collection agency services. He likewise offers additional useful tips and options on collecting debt.
About Kollect Systems
Kollect Systems is an innovative tech platform provider with BankTech and FinTech software solutions which leverage AI based decisioning and workflow technologies to help lenders perform Debt Collections & Recovery (BankTech) processes effectively and for mid-size to large scale enterprise companies (FinTech), to automate Receivables, e-Invoicing & Payments better.
Kollect’s Solutions :
- KollectApps for Lenders (BankTech)
- KollectValley for Finance (FinTech)
- Data Integration & Analytics
Schedule a Free Consultation
Got a Question?
We’d love to hear from you. Send us a message and we’ll respond as soon as possible.