Curbing Losses in Debt Collection With Technology

To curb loan losses in the future, banks can improve their debt collection models by using data, technology, and automation.

FREMONT, CA: Banks must rethink their debt collection strategies and techniques before facing a wave of non-performing loans (NPL) in the coming months. There is a saw-toothed economic recovery in the global economy. Every bank faces a similar problem regarding ongoing customer support as the cost of non-performing loans rises. Banks must set aside record sums for NPL losses if customers fall behind on their payments. Hundreds of thousands of retail customers and small businesses (SME) will require financial assistance to avoid collections, so banks must now develop unique debt treatment strategies.

Banks must rethink their collections models to survive by implementing some solutions.

Collections recoveries: Collections can arise from an outbound model to an inbound one that prevents loss. In addition, banks will be better prepared for uncertain times if they implement an inbound model now. In this challenging time, an inbound repayment model also gives bank employees a sense of purpose - knowing they're doing right for customers. Job satisfaction, as well as attracting new talent, will be enhanced by this sense of purpose.

Process automation: For banks to ensure fair and consistent treatment for customers in the months ahead, they will be under intense regulatory scrutiny. Banks can remove human bias and arbitrary judgments from their decision-making processes to avoid regulatory fines through process automation and predictive analytics. The end-to-end collection process, as well as the subsequent customer outcomes, must also be reviewed through integrated testing programs.

Inbound digital channels: The bank must demonstrate a better understanding of its customers' circumstances and needs across all channels to develop a successful inbound debt management strategy. Banks can create greater awareness and understanding of debt modification options through their digital channels by better using digital channels to communicate with customers about debt modification options. A successful inbound campaign depends on banks utilizing virtual agents and chatbots more effectively. Consequently, customers will have a more efficient and streamlined experience when calling their bank.