telephone calls, are going kinder and gentler at more banks, accelerating a trend that began about five years ago.

Fast disappearing are the days when bill collectors used heavy-handed threats to coerce debtors. Today's collection agents may be called "relationship managers" or "financial counselors," and their job is not only to collect payments, but also to cross-sell products to delinquent customers.

Several companies pioneered this approach in the early 1990s -- including Integratec, a collections firm founded by card industry veteran Wayne Johnson, and Commercial Financial Services, the defunct purchaser of charged-off card debt once owned by William Bartmann. But this year, traditional banks started embracing the practice in a widespread way. Bank of America Corp., for instance, has begun a lengthy renovation of its collections department, aimed at building relationships between collectors and specific customers.

The new, more professional image of in-house recovery departments was clearly on display this week during the Consumer Bankers Association's first conference on collections, which drew about 230 bankers and vendors.

Bankers at the gathering in Vienna, Va., described their painstaking efforts to recruit and retain tactful employees whose roles, they said, will grow in importance in the event of an economic downturn.

"Never in the history of our company has (the collections) department been more important," said Harold Perkins, senior vice president and manager of consumer collections at Amsouth Bank, Birmingham, Ala.

Joe Belew, president of the Arlington, Va.-based Consumer Bankers Association, said the collections conference was organized in response to rising levels of consumer debt.

"There is more credit out there than ever before, and more people are slipping into the subprime category," he said.

Traditionally, bill collecting has been regarded as one of banking's more reviled practices.

But the picture painted by conference speakers showed that collections departments have begun adopting the softer marketing touch of other bank operations.

Executives said they saw Bank of America as a front-runner. Its collection associates are dubbed financial counselors, while debtors are known as "potentially profitable customers," said Michael O. Radesky, senior vice president of Bank of America in Brea, Calif."We are not looking (to hire) people with collections training," Mr. Radesky said, but rather people with sales skills who can market products while they remind debtors of their obligations. (See related story below.)

"In most cases, I wish that customers didn't know they are talking to a collector," Mr. Radesky said.

At most banks, collectors are paid bonuses for reaching individual and departmental objectives.

Some banks are experimenting with further incentives. Wells Fargo & Co., for example, has begun awarding bonuses to automobile-debt collectors monthly rather than quarterly.

The promptness of the reward contributed to their success, said Peter J. Patrick, vice president and division manager of Wells Fargo Bank in Walnut Creek, Calif.

Wells employees can earn up to $1,500 a month, or $500 more than last year's cap.

Wells collectors earn about $36,000 a year, but they could earn up to $54,000 with incentive bonuses, Mr. Patrick said.

The program has lit a fire under the staff, Mr. Patrick said, and Wells Fargo now recovers on average more than 50% of its losses.

In 1998 it charged off $102 million in auto loans, but its collections department recovered $48 million. "Without the incentives, we might be down in the 30% range," Mr. Patrick said. By contrast, outside collection agencies that work on older Wells delinquencies recover between 5% and 8%.

Mr. Patrick, who is responsible for auto lending collections, said public recognition of employees' success is also important. His unit posts a list of collectors who meet or exceed 25% of their monthly goals in the first week. Occasionally, Wells offers an extra reward to collectors who are able to fulfill their goals by the 15th of the month.

The employee turnover rate in bank collection departments exceeds 100% a year, which translates into high expenses, said Michael J. Romaniw, president of Career Assessment Center of Virginia Beach. Each loss costs a company 25% of the employee's base salary plus 30% of his or her benefits, Mr. Romaniw said.

With this in mind, Bank One in Phoenix devised a plan to hold on to its collectors. In April the Bank One Corp. subsidiary began deferring a portion of collectors' monthly reward so that "a bucket of money is paid out over time," said Craig B. Blight, first vice president.

Other rewards at Bank One include contests in which collectors can win a car wash given by their supervisors.

Few if any institutions are conducting collections through the Internet, but the medium holds great potential for debt recovery, said John Mays, a consultant for BenchMark Consulting International of Marietta, Ga. His company conducts the Consumer Bankers Association's annual survey on collections.

Mr. Mays said he expects more companies to begin trying on-line collections within the next year.

Reaching delinquent customers via e-mail makes sense, he said, because bill presentment and payment are already being offered electronically, and collectors could piggyback on those initiatives.

The Internet presents several advantages for collectors, Mr. Mays said. For instance, most people do not change e-mail addresses very often, and e-mail reminders may be perceived as less intrusive than phone calls.

Some lenders are experimenting with the idea of charging to recoup the cost of collection activities aimed at them, such as $5 per letter requesting payment.

Mr. Mays said one small finance company, which he would not name, has been doing this for about 18 months on seriously delinquent accounts, and some large lenders are looking into it.

The precedent for this approach comes from the automobile lending industry, where contracts sometimes stipulate that borrowers must cover fees related to repossessions.

Other companies, including GE Capital, are looking at ways to reduce overhead in their collections department. At the conference, Keith Massiah, a legal compliance manager for the General Electric Co. subsidiary in Atlanta, made a presentation on how lenders can reduce their exposure to legal risks in dealing with customers who file for bankruptcy.

Last year GE Capital agreed to pay $100 million to settle legal complaints accusing it of wrongfully collecting payments from bankrupt debtors.

Since then it has revamped its collection practices, transferring some collections activities overseas.

About six months ago GE Capital opened an operation in India, "where labor is cheap," Mr. Massiah said. That operation is handling approximately 5% of GE Capital's delinquent accounts, and "if it works out, we will give them more accounts," he said.

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