Is the clock running out on your collection strategy?
Alternative payment methods such as mobile wallets, and UPI are gaining popularity as we inch towards a digital India. Nevertheless, credit card payments see a robust growth, at 25%. In 2018-19, consumers spent 30% more using their credit cards than they did the previous year. With growing credit card payments, there is a surge in outstanding debt too. There has been a substantial jump in credit card loans lent by banks in the last couple of years. In the US, credit card debt is at its highest, topping $1 trillion.
Managing delinquent accounts is no easy feat. It takes valuable resources away from core banking functions, as banks are not equipped with collections technologies that a collector, or a specialized outsourcing provider may have access to. But first party collections are beneficial to the bank for many reasons. They help maintain client relationships, and increase customer retention. Moreover, when banks collect debt firsthand, without involving third party collectors, they retain 100% of the collected amount.
So, how should banks go about debt collection and recovery?
Give them options
One of the main reasons banks are unable to collect on larger debts is because customers feel that debt payment is a Sisyphean task. When you make it easier for them to pay, for instance, by breaking down the payments into smaller chunks, you are less likely to see defaults. Banks should clearly communicate terms of payment, and available alternative options to make debt closure attainable for the customer.
Technology to the rescue
At the end of the day, it is important to keep your customers happy. Investing in innovative automated technology solutions can make debt collection easier for both the borrower and the lender.
Automated payment solutions allow centralized debt management, gathering critical data in a single location. This helps lenders predict collections problems in advance, and minimizes payment declinations. Skip tracing tools, which assist in collection of vital customer data such as credit score, address, and assets held, help speed up the process of recovery by locating hard-to-find debtors.
Customer service is king
Last but not least, empathy plays a crucial role in customer service. It ensures that customers keep communication lines open throughout the payment cycle. With the expertise of professionally trained collection agents who are adept in building customer relationships, the chances of recovering debt improve significantly. This is one of the major benefits of outsourcing to an expert solutions provider. Collections tools that enable call quality monitoring and service agent feedback mechanisms, further simplify and streamline the collections process.
With innovative IT tools such as over-limit queue, and reminder-call applications, that enable an efficient CLM, Allsec provides sustained debt collection and recovery.