EXUS Collections & Recovery Blog

Why Your Collections Department Needs Process Automation

Posted by Philip Nielsen on Tue, Jul 12, 2016 @ 09:00 AM

automatic.jpgOnce upon a time, the customer-bank relationship was single channel. Loan products were straightforward. And consumer debt relationships typically occurred between few parties. 

My, how times have changed. Collections is now:

  • Multi-channel, taking place across phone, email, social media and online self-service options.
  • Highly complex, with new debt products (like Islamic financial instruments) providing banks with new opportunities and collectors with new challenges.
  • More technical than ever, requiring advanced software and processes to address the burden of non-performing loans.

In fact, says CEB TowerGroup, “loan collections costs have been the fastest-growing segment in loan servicing.” Controlling these costs is a mission-critical priority for organizations that want to protect profits and grow. However, process improvements are not enough to close the gap.

That’s why organizations are turning to process automation.

Why Process Automation? 

Process automation gives banks a key advantage in the marketplace. The technology, says CEB TowerGroup, “facilitates end-to-end automation of processes in the collections process to help banks manage large volumes of loans.”

There are four collections phases that organizations can use process automation to optimize: 

  • Soft — The period before delinquency becomes a possibility. Demands a soft, customer-centric approach to preserve the relationship between bank and customer.
  • Pre-Litigation — An early delinquency phase before a debtor becomes so far behind payment that litigation becomes a possibility. Also requires a softer approach.
  • Litigation — The legal phase where the bank’s emphasis changes from preserving the customer relationship to the protection of assets, meriting a more direct approach.
  • Recovery — The final phase of recovering any assets possible from a delinquent customer, which requires the most pressure out of the four stages.

Organizations tend to manage these collections phases using siloed departments and technology that gets separated by organizational and geographic boundaries. Process automation systems help to address this issue by integrating tools, systems and data used by banks across the collections cycle into one cohesive system.

What Activities Does Process Automation Improve? 

Process automation delivers a number of benefits when applied to some or all of your collections cycle, allowing organizations to:

  • Complete key tasks in less time or automate them entirely.
  • Gain insight into the whole collections and recovery cycle at once.
  • Cut costs by eliminating wasteful, lengthy or repetitive actions.
  • Simplify each stage of the collections and recovery cycle.

It provides those benefits by streamlining or eliminating the manual performance of collections activities from the soft to recovery phase, like the following: 

  • Bankruptcy
  • Customer service inquiries
  • Delinquent loan collections letters
  • Foreclosure
  • Loan write-offs
  • Payment collection
  • Payment reminder calls
  • Pre-delinquency
  • Recovery from customer
  • Recovery from insurer / guarantor
  • Sending and receiving mid-to-late stage loan modification documents

It’s no longer enough to perform processes faster. Savvy organizations that want to transform their collections departments must automate processes entirely to see significant savings.

Learn What System Your Organization Needs to Thrive

Process automation is one of several technologies that should be in a best-of-breed loan collections system, according to CEB TowerGroup. The report is the first-ever technology analysis of loan collections systems by an industry analyst firm, and it evaluates 14 different vendors. Learn which solutions are “Best-in-Class” by downloading it today.

Image Credit: The Blue Diamond Gallery

Philip Nielsen

Written by Philip Nielsen

Topics: Collection and Recovery Operations