Collections

Outsourcing As a Solution for Labor Shortage Amidst Rising Delinquencies

By: Wendy Elieff, SVP, Client Service and Marketing, TriVerity & The Loan Service Center

The “Great Resignation” is one of the pandemic’s unforeseen outcomes. Demand for workers remains high, despite the best attempts of many employers to attract and retain talent. Financial institutions are not immune and are trying to survive the current labor shortage while maintaining the experience their accountholders are used to.

The pandemic has also had a long-term impact on credit card delinquencies. At the start of the pandemic, there was a notable decline in delinquencies due to federal stimulus payments. But now that the government assistance has ended and consumers are returning to more normal spending patterns, delinquency rates are climbing back up to pre-pandemic levels. The June 2022 credit card delinquency rate finished at 1.54%, only a 20 basis-point gap away from the June 2019 rate. While higher wages might be helping to offset delinquencies, the ongoing effects of inflation, rising interest rates and the volatile geopolitical environment make it challenging to predict the sustainability of consumer spending habits and their ability to pay down their debt.

Given the current employee-favored market, credit unions might have to re-examine their approach to attracting and maintaining workers. How can credit unions develop member-centric strategies to collect on outstanding debts without alienating accountholders and possibly jeopardizing future business with them? Outsourcing could be the answer, especially if it provides access to skillsets and experience needed, such as portions of jobs that deliver delinquency management solutions.

Benefits of Outsourcing Collections
Delinquency management is an area that carries risk and requires staff with a specific set of skills and training that is increasingly difficult to find. This is an especially critical need right now, with the amount of delinquencies showing no signs of slowing down. Outsourcing portions of delinquency management jobs that are typically kept in-house can help credit unions keep high standards of client experience, as well as save money and reduce expenses.

Some benefits of outsourcing collections include:

  • Governance, risk management and compliance (GRC): Keeping up with changes in regulations is a critical responsibility for collection management. Partner with an outsourcing organization with established management capabilities and a proven history of performance, risk management and compliance results.
  • New hire risk and consequence: Avoid having an inexperienced staff member making mistakes. This will also save on recruitment and training costs, as well as on the time it takes for a collector to become competent.
  • Outsource specialized, regulation-based tasks: A certain skill set is required for collections professionals. If a credit union’s collections department loses employees or has been unable to hire staff with the right qualifications, developing a partnership with a company proficient in those areas is a win.
  • Reduce upfront costs of automation: Turning to an outsourcing partner can help reduce the upfront costs of acquiring automation by connecting to the technology they already have in place.
  • Relieve temporary or long-term job functions: By eliminating the need to hire and train for certain positions, credit unions can focus on the existing staff and what they do best.
  • Economies of scale: Your credit union will gain broader expertise, experience and access to innovation that might be otherwise unaffordable.

Outsourcing even part of your delinquency process can help your credit union thrive – and provide the exceptional service and experience your members expect. Download the “Navigating the Labor Shortage and Rising Delinquencies with Outsourcing” white paper today to learn more about how outsourcing your collections can help you overcome the current economic climate.

Wendy Elieff oversees the success of the Client Service and Marketing teams for TriVerity and The Loan Service Center, a PSCU subsidiary. Wendy has worked for CU TriVerity for the past 23 years. She is responsible for developing, implementing and monitoring cohesive marketing strategies to increase brand awareness, as well as building and maintaining client relationships by staying abreast of and responding to changes in the credit union marketplace.