The COVID-19 pandemic has drastically changed member behavior and affected how credit unions will operate in the future. While consumers’ spirits have been boosted about potentially returning to work and establishing some semblance of normalcy in their lives, recent studies show they are still cautious when it comes to buying big ticket items such as a car or non-essentials until they feel more secure with their jobs and income.
According to the latest survey from TransUnion, 66% of the 59% of Americans whose income has been impacted by COVID-19 are concerned about paying their current bills and/or loans. Of these respondents, 12% say they are taking advantage of accommodations offered by their lenders such as forbearance, and 31% plan to pay just a partial amount on their next loan payment.
As the pandemic continues, consumer caution will likely continue to have a major impact on the credit union collection department. Members’ expectations of the credit union branch experience may be more focused on feeling safe, as well as receiving personal understanding and support for the impacts COVID-19 has had on their lives. Successfully managing member service, financial relief programs and risk will require credit unions to take an even more proactive and human-centric approach.
Reliability, Consistency and Sense of Community
Credit unions should consider the following strategies for meeting collections and recovery needs in a changing world:
- Assure members of on-site protections and procedures your credit union is taking to help ensure their safety while in a branch.
- Offer payment extensions or other flexible payment programs to work with members’ needs as they recover financially.
- Study loan payment activity to determine which members may benefit from early notices.
- Educate and train credit union staff in expressing concern for and assisting members’ financial well being. Gather facts with empathy, and try to verify member information by asking open-ended questions, such as “What is your address?” rather than”Is your address correct?”
As the nation moves forward post-COVID, members may have moved geographically for employment or economic reasons. Finding a member can be one of the greatest challenges in credit unions’ debt recovery efforts. In addition, even when a member has been located, there is no guarantee of securing payment.
Maintaining accurate member information and determining their obligation to pay is essential for successful collections and resolving delinquent account balances. The better you know your members’ files and history, the greater the likelihood of finding short- and long-term payment solutions. Frontline staff should verify members’ information and their preferred method of communication at every opportunity.
An ideal account is one that includes a good credit bureau score and up-to-date contact information, but many accounts require quite a bit of detective work in order to reach a member. Here are some steps credit unions can take to maintain current and thorough records:
- Review member applications. Are they complete? Do they include a cell phone number and email address?
- Look back at member collection notes to reference previous conversations. Was the member’s location verified in every contact? See what type of communication (phone, email, or mailed letter)has been the most successful in reaching the member.
- Do the collection notes indicate the member’s commitment and ability to repay the debt? Consider his or her age, geographic location and depth of debt as factors.
- Check the records to see if the member has applied for new credit at your credit union.
- Consider gathering missing data such as phone numbers, addresses, certain DMV records etc., from public information sources and online databases. While these pieces of information may have limited value, they may be able help fill in some blanks. Military locators can also be useful, as well as public utility records and even magazine subscriptions.
During these challenging times, collection industry experts are highlighting the need to maintain a positive consumer experience while keeping focus on the repayment of outstanding debt. According to a recent article from The Financial Brand, this calls for “transitioning from simply collecting a debt to enabling financial betterment.” It is more important than ever for credit unions to put the “people helping people” philosophy on which the industry was built into practice as we collectively navigate a post-pandemic world.
Wendy Elieff oversees the success of the Client Service and Marketing teams for CU Recovery and The Loan Service Center, a PSCU subsidiary. Wendy has worked for CU Recovery for the past 22 years. She is responsible for developing, implementing and monitoring cohesive marketing strategies to increase brand awareness, as well as building and maintaining client relationships by staying abreast of and responding to changes in the credit union marketplace.