Delinquent accounts cost Credit Unions time and money. Most members who find themselves late on their payments are going through some type of urgent situation: health problems, divorce, unemployment. Today, Covid-19-related problems may compound those concerns. Because Credit Unions are focused on “members helping members,” job one for loan collectors is to pinpoint the reason for the default. Then, a more personalized method of conversation can begin, with the ultimate goal of a quick debt resolution.
Text Messaging is one way to nurture personal communication with all members. Those with loans however, require additional information that Text Messaging can provide. For example, text payment reminders can help to reduce collection costs and encourage members to pay their debts. Sometimes, late payments are merely due to forgetfulness.
Analyze the Credit Union member data: Of those with loans, how many are on autopay? Who isn’t? Who is habitually late and could benefit from autopay? Are there habitually late payers who seemingly are resistant to autopay but would benefit from a text reminder? Pre-emptive Text Messaging is appropriate and can help a chronically late payer get on-track.
Overall, financial institutions will see repayment from only 20 percent of accounts that have been delinquent for more than 180 days, The Credit Research Foundation reports. Therefore, preventing that 30-day late account from becoming on that’s 180 days late is a huge win. Just remember, personalization is key: Members on autopay shouldn’t get payment reminders, for example, but they should receive notifications if their payment methods on file are due to expire.
Once an account is in arrears, the attempt to understand a member’s circumstances is central to the Credit Union’s core principles. Often, a Credit Union employee is assigned to a past-due account, so the member has a named point of contact to help navigate those waters. Although many clients refuse to answer calls or emails, they will often respond to texts. That provides accountability on both ends from start to finish, and the relationship can quickly focus on returning the member to good standing.
Text Messaging can play a key role in connecting with members who are behind in loan payments, while demonstrating that their Credit Unions are resources dedicated to helping get accounts current. By establishing relationships with members, most delinquent accounts will turn into good loans again in a short period of time.
Texting members reminders creates a sense of urgency that stresses the importance of timely payments. The inclusion of due dates and other pertinent information can help persuade members to submit payments on time.
Text Messaging to groups can reach all members immediately, but the technology also can provide very specific messages tailored to individual member circumstances. From gentle payment reminders to personalized messages aimed at helping delinquent payers regain their financial footing, Text Messaging is the perfect tool for communicating and building relationships with members.