Grow Revenue, Control Costs, and Increase Membership
How smarter collections activities can help your credit union.
Blog post by Marney MacFadyen, Vice President of Sales, Credit Control, LLC. Marney is a life-long fan and supporter of credit unions. Credit Control is the NAFCU Services Preferred Partner for Consumer and Commercial Loan Recovery Services. http://www.nafcu.org/CreditControl/
One of the most enjoyable aspects of my role as a NAFCU Preferred Partner is that I get to talk to so many credit unions around the country. Most often, I talk with loan recovery specialists. They tell me about the Consumer Financial Protection Bureau (CFPB) and how it impacts their ability to do their jobs, or about best practices and benchmarks they have found useful, or how they help their credit union colleagues understand what they do and why it’s so important. These stories drive everything I do.
For many people, “collections” is a dirty word. Most have some negative perceptions of the people who work to recover past due loans. And occasionally, we see an article or news piece spotlighting the misconduct of a rogue collector. Understandably, many credit unions are concerned when they see news like this, and out of an abundance of caution may be reluctant to collect from their members for fear of negative backlash or legal liability. As a consumer and commercial loan recovery veteran, I can say with complete confidence that there is a right, just, and helpful way for all credit unions to assist with and recover problem loans.
Another common story I hear in my travels is that credit unions are focused intently on member retention, revenue growth, and expense control; a thoughtful internal recovery strategy can become a new and essential profit center. By leveraging recovery activities, a credit union can take advantage of these 5 key benefits:
1. Member Retention – this may be unexpected, but watch what happens to your member retention efforts when you catch potential problems before they occur, assist members in trouble, prevent delinquencies, and reward members for positive payment habits.
2. Business Intelligence – recovery employees can provide valuable data, analytics, and insights into which loan products may be more risky than others.
3. Education – a great public service to your members as well as a great brand awareness technique – providing financial literacy tools, programs, and materials to members is mutually beneficial.
4. Member Growth – by establishing collaboration between Recovery and Lending, a credit union can better evaluate, support, and implement new loan product roll outs attracting new members.
5. Additional Income – These balances can be significant, but when credit unions pursue written off accounts, dormant judgments, and small balances, they bring unexpected but deserved money back to their membership.
When you add up all these benefits as well as the material impact on a credit union’s balance sheet, it becomes quite apparent that a well-designed and well-managed recovery solution can be incredibly valuable in almost any credit union. Of course I’m always available to answer your questions and hear your stories.