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Exus Blog Article

How to Manage Complex Delinquent Credit Cases

2 minute read

Not all delinquent credit cases are created equal.

National and institutional non-performing loans and accounts are complex—and troubled. Major European economies like Italy carry unprecedented debt on the books. Regulators are demanding more of organizations than ever. And private utility and telecom companies struggle with high customer acquisition costs.

Consumers, while each an individual case when it comes to credit, have one thing in common: They use more channels than ever to the bank, pay, and communicate.

Collections and recovery departments must change to serve needs and navigate market conditions. One thing is certain: In the changing collections landscape, there are no guarantees anymore. That makes many delinquent credit cases extremely complex and difficult to manage.

Each organization’s needs differ depending on industry, regulators, and customers. However, there are several ways that any retail bank, telecom, utility, or collections organization can effectively manage complex delinquencies.

Communicate Across Preferred Channels

Today’s customer—individual or institutional—is multi-channel. It is critical that collections departments are too. They must understand that customers work, play, and communicate across more than just phone and physical mail and that this includes multiple social networks.

These channels aren’t just secondary to common communication methods. They may be the way customers get in touch. When one channel produces few results, another might prompt a response from a delinquent customer. Or, in the case of social networks, channels may present a new, more personal, and tailored way to engage with accounts—increasing customer retention and the likelihood of repayment.

All of a customer’s preferred channels offer key insights into their personality, ability to repay, and the challenges to repayment. Collections departments would do well to understand which channels customers prefer—and meet them there during the delinquency process.

Segment and Score Portfolios

Each customer’s story is unique and should be understood if your organization wants to improve performance on complex delinquencies. When delinquency happens, personal details allow you to collect more effectively while preserving customer goodwill where possible.

Customers may have multiple loan obligations and serious issues that present obstacles to repayment. By gaining deep insights throughout the loan process, you can effectively score customer risk—from loan origination and throughout the delinquency stages. To do this, collections departments must embrace robust risk-scoring technology.

Risk scoring allows portfolio segmentation. With portfolio segmentation, organizations can prioritize which delinquent accounts they should collect from first. This makes it possible to effectively manage collections department resources across more than one complex delinquency. 

Through risk scoring and personal customer information, collections departments can create a real-time picture of customer obligations, obstacles, and influencing factors. The result is better performance—even during delinquency. 

Use a Specialized Collections and Recovery Solution

To effectively track customers across channels, as well as score and segment portfolios, a specialized collections software solution is needed.

By delivering advanced risk-scoring models, scorecards and key customer insights, specialized software improves performance across accounts. It also streamlines collections and recovery operations in any organization by providing document and workflow management during each stage of the credit cycle.

Written by: Nikos Lambrou

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