MADISON, Wis. (12/30/11)--The economic fallout from the Great Recession continues to impact credit union member households and add urgency to the work of credit union collections departments, according to a new CUNA Lending Council white paper.
"Collections in a Post-Recession Environment" is based on information gathered from lending and collections leaders at six credit unions as well as two experts from companies that provide outsourced collections services for financial institutions.
The white paper explores how credit unions can update procedures, use technology, engage members early in the collections process, design loan modifications and take other steps to refine collections.
Credit unions also report that a segment of members who have delinquent loans in the post-recession environment are from formerly affluent households and may still have relatively high credit scores. These households were able to use their assets to cope with financial demands as they adjusted to being unemployed or underemployed. But as assets are exhausted and members are unable to find jobs, they fall behind on payments, their loans enter collection and they may file for bankruptcy.
SchoolsFirst FCU, an $8.3 billion asset credit union in Santa Ana, Calif., takes advantage of technology and call center tools to increase productivity, the paper said. An automated dialer boosts the number of outbound calls made by collections specialists, while phone system metrics measure their productivity. Workflow management software guides staffing to ensure employees are available to handle members' inbound calls. Collections' ability to meet member needs is measured through member satisfaction surveys.
The challenging post-recession environment offers an opportunity for collections to prove its worth to the credit union, according to Jessica Anderson, collections manager at $400 million 121 Financial CU Jacksonville, Fla.
"Collections has always been on the back burner," Anderson added. "We know it makes a difference, but we've never seen the true impact of collections' successes or losses until we've reached these economic times."