HERNDON, Va.-Two CUSOs with seemingly unrelated service areas are working together to improve on something increasingly important-collections.
DigitalMailer is a digital communications CUSO in Herndon, Va., whose major shareholder is Northwest FCU. Ron Daly, president and CEO of DigitalMailer, said the $1.8-billion CU came to DigitalMailer requesting help reaching its members five days after they become delinquent on loans. It responded by creating an e-mail template that can be branded for any credit union.
"The information is built into an e-mail and the reminders are sent out," he said. "The reminders can be made at any number of days, but the five-day period works well."
How well? Northwest had 3,500 members who were placed on the five-day delinquent list in January. After DigitalMailer sent the reminder, all but 428 paid promptly. Daly said a key to the effort is the reduction in workload for an often overworked and understaffed department.
"This helps the collections department and the ROI is incredible, because the cost of 3,500 e-mails is nowhere near the cost of sending 3,500 letters," Daly said. "Our program takes advantage of the speed of e-mail, and the fact most members pay when the credit union reaches out to them. Of course this doesn't address hard-core delinquent members who are chronically 120 days late.
The process is "very simple," Daly noted, requiring data from delinquency reports to be imported into the e-mail templates. "We have six very large credit unions that are live right now and there is room for more," he said. "Every loan application collected today has an e-mail address from the member, making it very easy for credit unions to work with this program."
DigitalMailer's e-mail reminders went live at Northwest FCU in July. The program had a 63% response rate in August-meaning nearly two-thirds of those who had fallen behind were paid up and no longer were in collections. For both December and January, it was 72%.
As a result, Daly said Northwest FCU was able to save money by not adding two positions in collections, as it previously had budgeted.
DigitalMailer is working with CU Collections, a CUSO in Manassas, Va., that is an outsourced collections department. Daly said DigitalMailer takes the collection reports from clients of CU Collections to winnow down the number of live calls and follow ups needed.
Ken deMello is president of Innovative Strategic Solutions, LLC, a wholly owned CUSO of FedFinancial FCU, Rockville, Md. The CUSO focuses on credit unions between $20-million and $200-million in assets. One division of Innovative Strategic Solutions is CU Collections, which has 21 CU clients.
"We are constantly looking for new ideas to bring into our credit union, and when we saw it in action we were impressed," deMello said.
How To Speed The Process
Presently, CU Collections is directing referrals to DigitalMailer, but deMello said the ultimate goal is to provide information to DigitalMailer electronically to speed the process.
The problem at present is getting the data from CU Collections' clients and providing it directly to DigitalMailer, because credit unions store the necessary data in different ways.
"Any CU that has one to three people in their collections department, we are an alternative," deMello said. "We make phone calls and send letters, everything a collections department would do, but six days a week and into the evening, and usually for less than paying salary and benefits to employees.
