With a recession on the horizon, the landscape for financial institutions will become more difficult for the rest of 2022 and into 2023. Rising delinquencies, tighter margins driven by an inverted yie...
We’ve all been on Zoom calls this year in which real life has made its way into a business meeting. You see a toddler’s hand reach across the screen or a cat trying to jump onto a keyboard while someone is giving a presentation, and you realize—we’re all humans who are doing the best we can to adjust to and carry on with our lives in the midst of a chaotic year.
The humanizing element of getting a small peek into peoples’ world for a moment has me thinking about the importance of authentic connection as it applies to financial institutions communicating with and supporting their account holders.
How often do we spend time with an account holder and only complete their requested transaction? It’s our responsibility as financial service providers to “have a conversation” and determine our borrowers’ other financial needs, especially if that conversation could help a financially burdened borrower avoid going into or get out of arrears.
In this blog post, we’ll discuss the difference between transacting and conversing, and give you tips for how you can use authentic communication to improve your institution’s collections efforts.
Connect to Your Account Holders with Empathy
As the arbiter of home and auto loans, the caretaker of checking and savings accounts, and the primary contact for financial questions, you play a major role in your account holders’ financial wellbeing. With millions of people out of work and hundreds of thousands directly impacted by the coronavirus pandemic, you don’t want to miss the opportunity to truly connect with consumers by coming off as too “salsey” or tone-deaf.
Instead, empathy is going to be key when it comes to having a productive conversation with borrowers who are past due on their payments. "I just lost my job and can't possibly pay you now," is a tough sentence to hear, but there are some empathetic responses that produce results:
Express that you're sorry to hear of the borrower's troubles; unfortunately, many others find themselves in this predicament.
Tell the borrower that since your institution understands this issue well, you work with borrowers to find a good compromise.
Depending on the outstanding balance, propose a reasonable amount for the borrower to pay today and a payment plan to pay off the rest.
Once you have an agreement on some payment today and a plan for the future, tell the borrower you will call again in 90 days to review the plan, with the hope that the borrower will be established in a new job by then.
Related Reading: Connecting With Account Holders in Times of Crisis
Practice Active Listening
Everyone wants to be heard. Listening—truly listening—to your borrower’s situation will help to build the trust and rapport that is so essential to any successful relationship. Get to know your customer well, because what they say—and don't say—may help you discover what is financially important to them. Listen with your ears AND eyes. Take notes, paraphrase, and clarify to ensure you are listening to them—not just passively hearing what they are saying.
Show Some Effort
People can tell when they’re being treated as the next call on a list, and it doesn’t exactly motivate them to want to work with the person on the other end of the phone. Before a collector picks up the phone to speak to a borrower, they should do their homework.
Having a complete picture of the borrower’s payment history will help assess risk, and provide insight about what's going on and how to approach the situation. It will also show the borrower that you’ve already put in some time and effort to help them arrive at a solution.
Be Mindful of Your Borrowers’ Time
Just as you have other customers to assist and a long to-do list, your customers likely also have time restrictions. Be cognizant of those, and keep your conversation brief and simple.
Converse with Past Due Borrowers on Their Preferred Channels
In the past decade, the digital transformation has reshaped how borrowers expect their financial institutions to interact and communicate with them. As your member base shifts to a larger number of millennials and their younger Gen Z counterparts, traditional forms of communication will likely fall on deaf ears.
This is not just a trend among younger Americans. Social distancing measures put in place to help mitigate the effects of the coronavirus have resulted in borrowers across all demographics being far more comfortable navigating digital landscapes.
Consistency and redundancy across multiple channels is an important part of a broad 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 help financially burdened borrowers access the information and resources they need to get out of arrears.
SWBC offers a scalable solution that saves our outsourced collections clients an average of 35-50% annually when compared to in-house efforts. Visit our website to see how much you could be saving today!
Douglas Kendall is a VP for Business Development in the FI space. Doug is primarily responsible for client relations, engagement, and sales surrounding SWBC's Financial Institution Group—a suite of risk and account management services designed for financial institutions that want to more effectively manage the way they interact with consumers.