By Ray Birch
TALLAHASSEE, Fla.—Extremely close communication with members and a greater emphasis on data analytics are the keys to collections during the COVID-19 crisis, says United Solutions.
Anne Marie Foote, director of client relations for United Solutions, shared with CUToday.info strategies credit unions should deploy in order to stay on top of collections as the process becomes more difficult during the health crisis.
According to Foote, one of the biggest issues facing credit unions is determining which members need extra assistance due to a pandemic-related employment issue, versus those borrowers who are simply ignoring their obligations.
“They’re trying to figure that out,” said Foote, whose company handles collections for credit unions across the country. “A chronic delinquency, certainly, is not eligible for COVID-19 relief. CUs are requiring documentation of COVID-19-related employment issues in order for some members to be eligible for assistance.”
The Response
In response, Foote said many credit unions are digging more deeply into their data to determine the root cause of the delinquency.
“They’re using business intelligence reports or SQL queries of core data to track member habits and discover where one-offs occur,” explained Foote, noting the focus is on behavior out of normal patterns for a borrower. “They are looking at member income—direct deposits changing amounts or no longer coming in, and they may detect unemployment compensation.”
Foote added credit unions are looking for all signs of change, even a new home address.
“A change of address, for example, could indicate the member had to move to lower their living expenses,” she said.
Foote agreed much greater analysis is needed now by credit unions as they execute collections—not only to make sure they collect effectively and provide assistance where needed, but to avoid legal ramifications.
“Being in uncharted territory with the pandemic, legalities are tied to company responses,” she said. “In a litigious society, CUs have to take all circumsta
Anne-Marie Foote
nces into consideration when they adopt a strategy to react to rising delinquencies.”
The Big Change
The biggest change credit unions—and United Solutions—have been making in the collection process, emphasized Foote, is stepping up contact frequency.
“Credit unions are having us contact their members more frequently—whether it be a friendly reminder or taking a stronger tone,” she said.
Foote added friendly reminders are more than just a reminder today, they are often accompanied by “action steps,” including asking for more concrete information regarding the member’s inability to pay, asking them to file for unemployment if needed, and outlining a payment plan.
Foote said not all credit unions are taking the same tack, with some backing off to give members a break, while other CUs step up efforts out of concerns greater delinquencies may be on the horizon.
“Not all credit unions are handling this the same way,” she said. “Our credit unions know their members, so they are adjusting procedures that will fit each of their unique memberships. But the best practice is always to be proactive, if possible.”
The Worst Thing to Do
What’s the worst thing credit unions can do regarding collections today?
“Ignore the situation,” said Foote. “While we hope the pandemic will pass soon enough, credit unions still need to listen to members and regional experts to determine best responses. Collections should never be a wait-and-see situation. Plan the payment and pay the plan is the best course of action.
“Things may or may not get better, but they will change,” Foote continued. “Take the right steps to reach out and stay top of mind with members so payments are being made even in difficult times. Keeping the lines of communication open with your members will help you be in the front of the line for payment.”