Collecting on delinquent consumer loans is a tough business. Economic conditions and other life events can have a considerable influence on the ability for borrowers to keep their accounts current. Ot...
Collections
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5 min read
Collecting on delinquent consumer loans is a tough business. Economic conditions and other life events can have a considerable influence on the ability for borrowers to keep their accounts current. Other factors such as staying ahead of the latest industry innovations, tightening budgets, encroaching regulatory burdens, and an unpredictable workforce, can wear on an organization’s ability to keep pace with an oftentimes volatile receivables environment.
This is where a Managed Service Provider (MSP) could really help fill the void in managing your delinquent loan portfolio, while enabling your organization to remain focused on servicing your members and growing your business. By ensuring you are leveraging the latest technology and having sufficient agents to work on more complex accounts to bring in the dollars, a dedicated MSP can deliver on all this and more.
Industry Expertise
A reliable MSP will have seasoned veterans that lead their respective organizations. These leaders have decades of experience managing collection portfolios across a variety of financial institutions (banks, credit unions, auto lenders, mortgage servicers, etc.). They’ve “been there and done that” many times over and have gained the knowledge and wisdom that can make the difference between lackluster performance or exceptional results.
These experts understand strategy, keep up with the latest technology, and are highly skilled at finding solutions to the most daunting collection challenges. Financial Institutions that leverage this deep well of knowledge and experience often find significant value in not just considering the guidance of these industry experts, but in more impactful ways that pay long term dividends.
Access to Advanced Technology
MSPs work hard to stay ahead of technological advances that help streamline production and deliver consistently robust performance. By employing innovative technology, automated workflows, and analytics that enhance collection strategies, clients can leverage these tools and capabilities that they might otherwise not have access to if managed within their own operations.
From the latest advances in digital communications, AI tools, and the like, MSPs can reap the benefits of improved efficiency, reduce human error, and foster data-driven decision-making capabilities, and pass those on to their clients. It is a win for everyone!
Trained Workforce
When delinquencies are on the rise, MSPs can scale up their staff quickly to meet demand while also being able to manage through the slow seasonal periods.
Having a pool of well-trained professional collectors at your disposal is a tremendous advantage. Rather than relying on a sink or swim, on-the-job approach to training, MSPs have professional training teams that deliver in depth training on all aspects of the collections process. This includes training on how to navigate systems, collection regulations and certifications (FDCPA, UDAAP, TCPA, etc.), negotiation skills, rebuttals, and role plays.
Because MSPs typically support many clients, their trainers remain fresh in their training capabilities, while staying current on the latest training delivery methods. With classes often exceeding twenty collectors, MSPs can deliver training at scale, and provide post-training new-hire nesting opportunities. This nesting allows new agents to operate in a structured environment in which to build their skills and confidence with direct support from mentors and supervisors.
Improved Resolution Rates
MSPs who operate in the collections space specialize in the development and execution of debt collection strategies, leveraging analytics, automation, live agents, and behavioral insights to maximize resolution rates. Their expertise enables them to optimize contact strategies that drive payments and yield improved collection outcomes.
Performance Reporting and Transparency
MSPs have developed sophisticated reporting and analytics capabilities that provide their clients with data-driven insights that help optimize strategies for continuous improvement. Outsourcing allows businesses to access detailed reports and analytics on collection performance, thus ensuring transparency and accountability.
With advances in data management, analytics and AI enabled technologies, MSPs continue to evolve their ability to dissect production results that reveal opportunities to fine-tune strategies and deliver better outcomes. Partnering with clients to evaluate new strategies and technologies enhances the overall value of the relationship.
Regulatory Compliance
A well-established MSP will have an in-house Compliance team who stays up to date with Federal, State and Local regulations. They will inform the business and clients on new or changing laws and regulations and will partner with their clients’ legal and compliance teams when needed.
This oversight reduces the risk of legal disputes and penalties for non-compliance. And having an extra set of eyes on this crucial element of the Collections process has proven extremely valuable to clients who appreciate a strong risk management posture.
Operational Efficiency and Cost Savings
Outsourcing debt collection lessens the administrative burden, reducing the need for a fully staffed collections department. Some Financial Institutions prefer to outsource their early-stage delinquencies and retain their best collectors for the more serious delinquent accounts. Others have found that outsourcing the entire collections process better meets their needs.
Regardless of the reasoning or need, financial institutions can trim their overhead expenses relating to staffing, technology infrastructure, and training, allowing them to allocate resources to core business functions.
Skip Trace Services
As delinquencies rise, so do the number of borrowers who skip out on paying their debts. MSPs that provide collection services will also have capabilities that support skip tracing on delinquent loans.
MSPs have access to a variety of tools as well as trained agents who know how to track down those hard to locate borrowers. Making use of tools such as data aggregators and independent people locate services, MSPs are able to deliver continuous value to their clients. In circumstances where a Financial Institution only has a need for skip trace services, and nothing more, established MSPs are there to fill this need.
Client Support
When problems occur, having a highly responsive client support team is a critical element of an effective MSP relationship. These skilled professionals know how to solve problems. They work diligently to keep clients informed of progress, root cause and timely resolution to problems when they occur.
Quality Assurance
MSPs operating at scale will have a dedicated team of QA analysts that monitor and score collector calls to ensure adherence to established policies, procedures, and regulatory requirements. This is a critical component of a managed collections service program and provides assurance to clients that their portfolios are managed carefully and in compliance with rules and regulations.
Voice of the Customer-Borrower Level
Understanding the customer is a critical element of support that an effective MSP provides to their clients. Tracking complaints and analyzing what borrowers are saying about their interactions or problems they may be experiencing provides the MSP with a systematic process for understanding a borrower’s needs, expectations, and preferences. Looking for trigger words helps identify where there may be simmering problems that need to be brought to the clients’ attention.
Embracing Managed Service Providers as True Partners
Financial institutions should view their Managed Service Provider as a strategic partner rather than just a vendor. A true MSP works collaboratively to align its services with the institution’s long-term goals, ensuring seamless integration and operational efficiency.
Beyond providing technical solutions, an MSP should actively listen to its clients, fostering engagement through initiatives like Customer Advisory Boards (CABs). These boards offer valuable insights that enhance service delivery, strengthen relationships, and drive innovation. MSPs that prioritize customer engagement demonstrate a deep commitment to their clients’ success, building trust and transforming institutions into long-term partners and brand advocates.
Additionally, MSPs that rely on third-party providers must uphold the same partnership principles. It is their responsibility to secure a voice at the provider’s table, ensuring both the MSP and its customers are heard promptly. By embracing this collaborative approach, MSPs empower financial institutions with strategic guidance, ensuring technology solutions evolve in tandem with industry needs.
Conclusion
Partnering with a Managed Service Provider is more than just outsourcing, it is a strategic move that enhances financial institutions’ ability to manage losses, control expenses, and optimize collections. MSPs bring industry-leading expertise, advanced technologies, and data-driven analytics that improve resolution rates while ensuring compliance with ever-changing regulations. Their ability to streamline operations, refine strategies, and deliver measurable results empowers institutions to focus on their core business while maintaining financial stability.
Beyond collections, the added benefits of Customer Support, Voice of the Customer insights, and Quality Assurance create a well-rounded, consumer-centric approach. These elements reinforce trust, strengthen engagement, and drive overall operational efficiency. A true MSP partnership is not just about recovering debt, it is about unlocking long-term success, fostering innovation, and elevating financial performance in a competitive landscape
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