MIAMI-Big banks are acting more like credit unions, at least it when it comes to collections, and their efforts are apparently paying off. With unemployment near double digits nationwide, many customers are newly delinquent and in positions to which they are not accustomed.
"Now they are finding themselves in difficult situations and in difficult conversations with collectors," Kathy Castle, managing associate at Auriemma Consulting Group said, reinforcing the need for collectors to be flexible during the recent National Collections & Credit Risk Conference here.
Transforming Collections Staff
At some larger banks, collections staff has seen little turnover, so employees have not adjusted to the new economic reality. Many collectors at Comerica Bank, for instance, have been with the institution for 25-30 years,noted David Huiskens, SVP at Comerica Loan Center. After re-evaluating the staff's skillset and training them to become more personable, softer and giving them more options to offer for repayment, the bank's entire collection team was transformed.
"They're not really collectors anymore because of these first time or visitors to the collection queue. They are really customer service representatives," Huiskens said. "We're finding that many of our customers will keep their accounts with Comerica current and let everything else go south. It certainly shows that there is a tie from a relationship perspective."
Part of the training program being used at Zions Bancorpation includes quickly identifying those newly delinquent individuals and tailoring interaction between collector and customer for that situation. The vast majority of those folks, SVP and Credit Risk Manager Jason Brock pointed out, are simply victims of consequence and not trying to avoid paying what they owe.
Taking More Time, Showing More Empathy
"Our more experienced collectors have been good about learning to take more time and have more empathy for customers," he said. "Most of the customers we are dealing with are not 'out to get us.' They are just struggling."
A large number of credit unions have already taken this approach. Collections departments have been re-trained, re-focused and even re-named to be more member friendly and focused on solving problems rather than just collecting on past due accounts.
Joel Smith, collections manager at Jackson, Tenn.-based Leaders CU, indicated that the $112-million institution had already implemented most of these strategies, but the CU still has its share of collections woes. The biggest problem: getting members to respond to outreach efforts. To stem losses, the CU carefully monitors accounts for those who may be having problems and then alerts staff to ensure that if a troubled member walks into a branch, they don't leave without getting some assistance. "We're all looking at the same accounts, but if you're not paying attention, you can have a member come in to a location and you just fail to contact them," he said.
