Why should financial institutions digitize loan collections?
The economic impact of Covid-19 has been immense. Many people struggle to repay their loans, which is why governments and banks have implemented loan restructuring programs, vacation programs, and payment holidays. However, the economic support linked to the pandemic will not continue permanently, so what will happen when it ends?
To combat the potential increase in the number of non-performing loans, banks and credit management organizations will need to improve their collection processes by implementing a digital-centric strategy. Digital collections solutions can help these organizations in a number of ways to manage the increasing volume and workload of collections in 2021 and beyond.
One way is to reduce the cost of collections. Financial institutions and collection agencies have unique debt collection and write-off concerns and regulations, so they need an industry-specific solution. VeriPark has created VeriLoan, a powerful end-to-end digital loan creation, management and collection solution specifically designed for the loan industry. VeriLoan’s collections module automates the entire collection process, improving cash flow and reducing expenses.
Digital collection solutions allow financial institutions to manage end-to-end collection processes on a single automated platform. Customers expect to be able to restructure loans or make payments through any physical or digital channel. Service requests captured from any channel become readily available in customer relationship management (CRM) systems and can be immediately assigned to specific agents through a single framework running on the back end. With straight-through processing, the collection process can be automated from start to finish without any manual intervention, minimizing agent involvement, processing time, errors, and transaction processing times.
Through integration with the central banking system, external systems, Dynamics 365 CRM and other third-party applications, all contact center agents, branch office employees, direct sales agents and other members of the customer contact team can access a single 360-degree customer. view from a central and unified interface. This makes the data accessible to those who need it through their browsers, Microsoft Outlook or tablet applications.
The digitization of the collection process also allows financial institutions to easily create complex debt collection flows. A basic collection journey can begin with the bank or credit management company scheduling a proactive reminder to send to a segment of customers who are approaching their due date. If the customers do not repay the loan on time, the system can send additional reminders via SMS, email or push notifications. If the borrower intends to pay, the system can send a payment link, but if it does not respond, the system can initiate an investigation or take other corrective action. Financial institutions can also create and assign new tasks, such as a follow-up phone call from a collection agent, or set up triggers that will initiate a new collections workflow.
Banks and credit bureaus can speed up loan repayments by migrating to self-service channels, such as banking apps, web pages, or digital collection portals, and by offering a variety of digital payment options, including bank transfers, digital wallets and mobile payments. Instant, automated reminders delivered through self-service channels lead to near real-time interactions with customers and can prompt them to send payments sooner.
To ensure successful loan collections, financial institutions must effectively segment their clients into different “debt categories” based on their profile and account history, amount owed, and a variety of other factors. VeriLoan’s collection engine gives them access to detailed information about the customer lifecycle, allowing them to create both a 360-degree overview of individuals and a holistic 720-degree view of accounts, departments. , personal preferences and other information about the members of their household. . The objective is to identify potential customers who have developed a long-standing relationship with the bank and to set up a collection strategy by segment. Otherwise, organizations risk damaging relationships with high net worth household clients, potentially earning them a lifetime.
Reaching out to customers through their preferred channel (s) is also crucial. Different customer segments use different channels and tools – those who are tech-savvy tend to frequently read emails and keep smartphones handy, while others need help from agents. Customer Support. VeriLoan’s digital collection solution helps financial institutions create and execute a personalized communication plan for each target audience, optimizing their timing and communication tools.
VeriLoan’s digital collections module also enables creditors to gain a single consolidated view of a consumer’s financial situation by combining customer information with open bank data from multiple institutions. This allows them to perform in-depth affordability checks and apply relevant rules across multiple products to ensure loan collection processes comply with regulations and customer contract terms.
Selim Hasan is Sales Director for VeriPark UK and Canada
This article originally appeared in the Fall 2021 issue of Technology Record. To receive future issues straight to your inbox, sign up for a free subscription.
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