The economic impact of Covid-19 has been immense. Many people are struggling to repay loans, so governments and banks have implemented loan restructuring programmes, furlough schemes and payment holidays. However, pandemic-related economic support will not continue permanently, so what will happen when it ends?
To fight back against the potential rise in the number of non-performing loans, banks and credit management organisations will need to improve their collections processes by implementing a digital-first strategy. There are various ways digital collections solutions can help these organisations to handle the increased collections volume and workload in 2021 and beyond.
One way is by reducing the cost of collections. Financial institutions and collection agencies have unique debt recovery and write-off concerns and regulations, so they need an industry-specific solution. VeriPark has built VeriLoan, a powerful end-to-end digital loan origination, servicing and collection solution, specifically for the lending industry. VeriLoan’s collection module automates the entire collection process, enhancing cash flow and lowering expenses.
Digital collections solutions enable financial institutions to manage end-to-end collection processes in a single automated platform. Customers expect to be able to restructure loans or make payments via any physical or digital channel. The service requests captured from any channel become easily available in customer relationship management (CRM) systems and can be immediately assigned to specific agents thanks to 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, minimising agent involvement, handling time, errors and transaction processing times.
As a result of integration with the core banking system, external systems, Dynamics 365 CRM and other third-party applications, all contact centre agents, branch employees, direct sales agents and other customer-facing team members can access a 360-degree single customer view from a central and unified interface. This makes data accessible to those who need it through their browsers, Microsoft Outlook or tablet apps.
Digitising the collections process also allows financial institutions to easily build complex debt collection flows. A basic collections journey might start with the bank or the credit management company scheduling a proactive reminder to be sent to a segment of customers whose due date is approaching. If customers do not repay the loan on time, the system can send additional reminders by text, email or push notifications. If the borrower intends to pay, the system can send a payment link, but if they do not respond, the system can initiate an investigation or take other remedial actions. Financial institutions can also create and assign new tasks, such as a follow-up phone call from a collections officer, or set up triggers that will initiate a new collection workflow.
Banks and credit agencies can expedite loan repayments by migrating to self-service channels, such as banking apps, web pages or digital collection portals, and offering various digital payment options, including bank transfers, digital wallets and mobile payments. Instant and 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 loan collection success, financial institutions must effectively segment their customers into different ‘debt buckets’ based on their account profile and history, the amount due, and various other factors. VeriLoan’s Collection Engine provides them with access to detailed insights into the customer lifecycle, allowing them to build both a 360-degree overview of individuals and a holistic 720-degree view of the accounts, services, personal preferences and other information about members of their household. The objective is to identify potential customers who develop a long-standing relationship with the bank and implement a collection strategy per segment. Otherwise, organisations risk damaging the relationships with customers in high net-worth households who could bring a lifetime of business.
Contacting customers via their preferred channel(s) is also crucial. Different customer segments use different channels and tools – those that are tech-savvy tend to read emails frequently and keep smartphones within close reach, whereas others need assistance from customer support agents. VeriLoan’s digital collections solution helps financial institutions to create and execute a personalised communications plan for each targeted audience, optimising their communication schedule and tools.
VeriLoan’s digital collections module also enables creditors to gain a single consolidated overview of a consumer’s financial situation by combining customer information with open banking data from multiple institutions. This allows them to carry out thorough affordability checks and apply relevant rules across multiple products to ensure loan collection processes comply with regulations and the terms of the customer agreement.
Selim Hasan is sales director for VeriPark UK and Canada
This article was originally published in the Autumn 2021 issue of Technology Record. To get future issues delivered directly to your inbox, sign up for a free subscription.
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