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Should Your Financial Institution Outsource Collections?


outsource collectionsA pressing challenge for most financial institutions today is the steady increase in collections activity. In a press release from May 2013, Experian® reported that auto loans that were 30 days delinquent increased by 1.3% and loans that were 60 days delinquent increased 12.4% during the first quarter of 2013. Repossessions also rose 16.9% when compared to the first quarter of 2012.

“Obviously, we never want to see a rise in delinquencies or repossessions, but when you compare the current findings with previous years, they are still lower than the recession-level rates,” said Melinda Zabritski, Experian’s senior director of automotive credit. “As we continue to move forward, we should start to see more increases as some of the subprime loans coming onto the books begin to deteriorate.”

While delinquency isn’t as high as it was during the recent recession, it’s still a very large problem that financial institutions deal with on a daily basis, and it continues to impact their bottom line.

Some trends we have seen when looking at how financial institutions handle increased delinquency, include:

  • Adding more collections staff to manage the increase in workload

  • Increases in staff overtime to include evenings and weekends

  • A shrinking resource pool of trained professionals who are experts in customer service and collections and understand the regulations surrounding this line of work

  • The challenge of balancing the financial institution’s image and maintaining relationships and trust, while helping delinquent borrowers get back on track

  • The high costs of developing adequate technologies and processes, which pose a substantial barrier to effectively managing collections efforts from a cradle-to-grave perspective

The convergence of these market factors has resulted in uncertainty: Where and how does a financial institution allocate existing resources for an efficient return on their collection efforts? If this is an issue your financial institution has failed to resolve with an in-house solution, your best bet may be to outsource collections.

Outsourcing of routine processes—like collections—allows financial institutions to:


  • Focus on growth areas and overall strategy for generating revenue

  • Spend less time on back-office processes so more time can be spent on services that will benefit their borrowers and grow their customer base

  • Take advantage of specialized talent that is dedicated to collections and utilize technology that they may otherwise not have access to

Learn about the top 5 benefits of outsourcing collections.

By utilizing outsourced collection services, your financial institution may reduce errors and improve accuracy and process consistency, which leads to increased borrower satisfaction and overall improved levels of efficiency.

Outsourced collections may be done in a first- or third-party environment—whichever you think is a better fit for your financial institution and your borrowers.

First-party collections services enable your financial institution to outsource your collections calls to a team of professionals that act as an extension of your collections team—messaging, letters, and collector scripts are all branded in your name.The objective is to make contact early, obtain payment, and prevent the account from progressing into a delinquent status, while creating an experience that is consistent with what borrowers would have when dealing with an in-house collections team.  

Third-party collection services enable your financial institution to outsource collections calls in a format where the borrower is completely aware that they are dealing with collectors from an entity other than your financial institution. The advantage of this format is that when borrowers are contacted from a third party, they clearly understand how seriously you are approaching the situation. The primary objectives for third-party collections are to make contact, obtain payment, and prevent the account from progressing into a delinquent status or to drive additional recovery dollars.

Collecting past-due loan payments can be an arduous, time consuming task. That’s why SWBC provides outsourced collection services to our financial institution clients. It doesn’t matter whether your loan portfolio is large or small – we have a solution that fits any sized financial institution.

Learn more about in-house vs. outsourced collections. Download the collections comparison guide today.

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