Odds are, you’ve heard of the phrase “people helping people”. It’s a philosophy that credit unions have taken to heart by putting their members first. This mindset can be difficult to balance in credit union debt collection. Credit unions want to recover as much as possible, but it’s just as important to preserve the relationship built with each member.
Many traditional collection strategies like phone calls and physical mail can undermine the hard-earned member trust that credit unions value. However, there are ways for credit unions to make their debt collection strategies more effective. Join us in exploring three tips that emphasize honoring relationships while improving collection performance.
1. Move to a Digital-First Debt Collection Strategy
More consumers (especially younger generations like Gen Z and Millenials) find phone calls and physical mail to be intrusive. It’s part of the reason why spam filters and call screening software have risen in popularity. Plus, these forms of manual outreach are expensive, often leading to credit union staff members being unable to process it all on their own.
The answer to this problem is taking a digital-first approach to credit union debt collection. Here are the key pillars of what this looks like:
- Omnichannel Presence: A core principle of digital debt collection is meeting members where they are. This means using digital communication channels like email, text messages and voicemails drops that align with different member preferences.
- AI-Powered Message Delivery: Debt collection software like Retain using AI to determine the right channel, time and message for each member to help optimize engagement.
- Lower OpEx: By using debt collection software that automates sending messages through digital channels, credit unions’ staff have more time to focus on helping members with the most complex cases. It also allows the business to scale up accounts being serviced without increasing headcount.
2. Offer a Self-Service Portal to Enhance the Member Experience
When someone falls behind on payments, it’s not uncommon for that person to feel ashamed or embarrassed about it. Add in the personal relationship credit unions foster with their members, and it only adds to the resistance members might have about discussing their debt with staff. Self-service portals add a judgement-free space to debt collection strategies that empowers members to manage their debt.
According to TrueML research, roughly 59% of consumers in debt want more flexible payment options. In fact, McKinsey research found that consumers digitally self-serve their debts at higher rates, are more likely to pay in full and have higher levels of customer satisfaction. Self service gives members access to their debt 24 hours a day without the “shame factor” mentioned above.
Every time a credit union empowers a member to “self-cure” a debt through a portal, it saves on operating costs. Self-service payment portals can also be set up to give every member the same disclosures to minimize the risk of human error with compliance.
3. Leverage Digital Debt Collection That Leads with Empathy
Many credit unions approach debt collection strategy through the lens of “saving the member”. The ultimate goal is to find a way to get every delinquent member back into the community. One of the best debt collection strategies to do this is to lead with empathy. Being empathetic to a member’s situation leads to higher recovery rates and strong brand loyalty.
Debt collection software like Retain acts as an extension of your team to offer empathy to members. A digital-first collection approach archives this by:
- Honoring member communication preferences. The majority of consumers prefer being contacted by digital channels from businesses.
- Leveraging AI to personalize outreach. It helps members feel valued by their credit union by providing a customized experience they deserve.
- Empowering members to view and manage the details of their debt when it’s most convenient for them. This frees up staff to assist members who need the most one-on-one attention.
Members don’t want a one-size-fits-all approach to any aspect of the credit union experience. Digital debt collection that’s powered by AI makes it possible for your business to be more flexible and empathetic. Every member is being communicated with as an individual, in a way that’s relevant to their preferences and needs.
Get Better Recovery Results and Better Member Retention with Retain
Retain by TrueML Products is white-label debt collection software designed to help credit unions collect more while spending less. Improve the management of your early-stage delinquencies by automating digital communications. Personalize outreach based on engagement from your members and millions of consumer touchpoints.
Ready to improve repayment performance without increasing operational costs? Get in touch with the Retain team today to learn more.
