January Is Humanizing Post-Charge Off Collections

Nobody wants to fend off calls from collectors. Not only are those phone calls notoriously ineffective, but they also seriously annoy consumers… and often damaging their relationships to associated institutions.

Debt recoveries (or post-charge off debt collections) put consumers and credit unions into a bind. Credit unions need to get their payments, but they also have to prioritize the member’s experience and financial wellbeing.

That’s why January’s (formerly Debtsy) approach makes sense for all parties—especially as opinions about calling change.

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High-level takeaways:

  • Traditional collections and recovery methods are inefficient and introduce both reputational and compliance risk.
  • Automation and self-service options improve both member experience and collections ROI.
  • January is accomplishing all of the above with a fascinating digital-first strategy.

Download January’s cutsheets here on Collections and Recoveries.

Don’t Call… Go Digital!

Increasingly, people prefer text-based communication over phone calls. Also increasingly, people don’t pick up calls from numbers they don’t recognize.

Those two truths point to a very revealing trend:

Phones simply aren’t the best way to collect or recover from members anymore. Digital means such as emails are both more effective and more courteous.

Furthermore, digital collections and recoveries are lower cost and more scalable. So, if efficiency and ROI factor into your goals, that’s definitely worth noting, too.

 

Improve the Member Experience

The team at LiveSurvey would be the first to tell you that a credit union’s NPS score changes depending on who they survey. Consistently, members whose debt is in collections rate their credit union worse than those with better financial standing.

So, keeping members happy when their debt is in collections is key to improving the credit union experience for the most at-risk members. A better post-charge off recovery strategy may actually prevent member attrition.

For debt collection and recoveries, “better” is about more than just ditching phone calls. It’s about meeting the member halfway—not just on preferred digital channels, but in a more human way.

Here’s what we mean:

 

Drive Performance and Reduce Risk

January told us they’ve been able to improve collections ROI by 40%, and almost always digitally. (They mentioned that Alliant, Randolph Brooks, and Baxter have all seen similar benefits.)

But how do they do it?

Whereas most collections companies rely on frequent calls and mailed letters, January uses a scalable, digital-first approach. Emails point borrowers towards a self-service portal that puts the power back in their own hands.

From there, borrowers can review their accounts and create payment plans, settlement offers, and disputes. These options contribute to an improved member experience.

It’s a far more inviting experience. First, clear debt resolution options are member-friendly. Second, members can engage with emails on their schedule, rather than answer calls on the caller’s schedule.

Another bonus is that January’s system is digital, and therefore automated. It adds consistency and efficiency to a process that usually suffers from human error and its associated compliance and reputational risks.

Finally, January has shown that the digital self-service model improves gross recoveries, too.

Currently, January offers only solutions for recoveries. However, at the request of multiple credit union partners, they’re building out a solution for collections as well.

 

The Takeaway

Credit unions can better support the financial wellbeing of their communities improved debt management solutions. And, by putting more power back in the hands of their members, credit unions will improve the lives of their most at-risk members.

Collection strategy is often left out of the digital transformation discussion. But after looking into January’s approach, we think it deserves a place in there.

It’s ironic, perhaps, that trading in live agents for automation is how January humanizes post-charge off collections. Yet, it truly shows how far digital technologies have come!

 

Additional Resources

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