The financial services industry is continuously evolving, and it is essential to optimize collections strategies to maintain liquidity and minimize risk. One of the most critical choices for credit un...
Collections
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3 min read
From our earliest days of figuring out how to work Zoom and Teams from our impromptu home offices to helping our children navigate online classrooms, the COVID-19 pandemic rapidly accelerated our collective competence using digital platforms to interact with the world.
Today, even the most reluctant adopters of digital technology are now competently using video messaging platforms, mobile apps, and web services to tend to daily tasks. Gen Z may be the digital native generation, but COVID-19 created an entire society of digital adepts.
How can your financial institution adapt its collections communication strategy to meet the expectations of the new wave of tech and internet-savvy consumers? Here are some tips!
Developing Digital-First Collections Communication Strategy
Developing a digital experience for your borrowers enables them to begin interacting with your financial institution on one channel and continue it in another while having a seamless experience across the board.
As technology creates more contact options between you and your borrowers, it’s important to keep pace with their communication preferences. Automated calling solutions, text messages, and emails are now the norm when reaching out to borrowers that are past due.
In some cases, these technologies allow borrowers to fully resolve late payments with self-serve options. These borrower self-serve choices may include making a payment using a debit card or checking account, promising to pay in the future, requesting a payment extension, and even scheduling periodic payments.
Offering a digital experience is a big value-add for financial institutions. However, it’s not just the borrowers who benefit from this approach. A digital communication strategy will help your institution improve performance, make more meaningful connections with your borrowers, and empower them to make better-informed decisions that help you drive growth and improve service.
What may be rare is finding a single system that manages and coordinates all your digital communications.
By orchestrating a suite of digital-first communications for collections, financial institutions can be better prepared for portfolio growth. Whether the expansion is territorial or due to loosening credit standards, a digital-first approach allows collections departments to scale much faster.
Why should you incorporate digital communications into your collections communication strategy?
Digital communication has become ubiquitous among all generations. Even before COVID-19 transformed communication by limiting face-to-face interactions, we were used to texting friends and family to chat throughout the day. Americans have also become more reliant on using text and email in professional transactions and communication, as it allows us to tend to business quickly and efficiently.
For financial institutions, incorporating texting and email into your communication strategy for borrowers who are past due on payments is a smart way to improve your collections efforts while still providing exemplary borrower service to retain and grow your borrower base.
Here are a few reasons to take a digital-first approach in your collections communication strategy:
1. Texting and email can be perceived as less invasive
Most past-due borrowers are well aware that they are in arrears. They don’t want to go back and forth with collections calls. Instead, they want to determine the simplest and most direct way to repay their debt—on their schedule, often from their cell phone. Texting and emailing are usually the most convenient options, making you more accessible to your borrower.
2. Texting and email save your institution time and money
Texting and emailing are typically less expensive than traditional collection methods, such as sending a letter or making a phone call. Directing information to your borrower’s phone or email allows them to seamlessly make a payment from the same device, which helps encourage prompt payment.
3. Interactive voice response (IVR) systems help borrowers navigate collections calls
With natural language interactive voice response systems, borrowers can easily navigate the menu options to resolve their payment issues. These outbound and inbound calling solutions allow for consistent communication, authenticate borrowers, and on top of providing borrowers with an automated process to resolve their late payments, in most cases, gives the borrower an option to speak to a collection representative.
Conclusion
Having an innovative collections communication strategy is a critical aspect of staying relevant, engaging, and providing value to your borrowers.
Consistency and redundancy across multiple channels are important parts of a successful collections communication strategy, as some borrowers will prefer one method while others may require multiple contact methods to gain top-of-mind awareness.
Having regular communication touch points using multiple channels can make a substantial difference in your borrowers’ experience.
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