Refine Collections to Reclaim Repayments

February 1, 2012

As both credit unions and members recover from the Great Recession, a thoughtful approach to strengthening collections makes it possible to find solutions for members, reclaim loan funds, and refine lending operations.

So says “Collections in a Post-Recession Environment” from the CUNA Lending Council. This white paper suggests taking these collections strategies, culled from successful credit unions:

  • Replace the initial 30-day delinquency letter with a personalized note from a member recovery specialist. Analyses show that members rarely respond to canned letters, but they do answer personalized notes about half the time.
  • Contact members more frequently; possibly every other day. Once a week isn’t enough.
  • Keep delinquent accounts with the same recovery specialist as long as the member upholds promises to pay. This way, specialists get to know members, understand their difficulties—and call them on the carpet when necessary.
  • Adjust collection staff’s hours to adapt to the debtors’ schedule and availability. This may entail requiring employees to work some nights and weekends when debtors are more likely to be home.
  • Hire service-oriented people even if they lack collections experience. New employees’ fresh perspectives may help counter the pessimism that can set in when collectors work in a difficult environment with heavy workloads.
  • Give collections staff full access to the Internet. Screening social networking sites can pay big dividends.
  • List what should happen to delinquent accounts at certain time increments. This allows the credit union to review whether performance matches procedures and to monitor trends.
  • Offer a pay-by-phone option. This can greatly aid on-the-spot collections.
  • Meet with members face-to-face in foreclosure situations. Refer these members to community resources when necessary to demonstrate compassion.

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Handle Complaints The Right Way

Irate members are a blessing in disguise—they let you know where your credit union falls short and allow you to make amends, says John Tschohl, founder/president of the Service Quality Institute.

He cites a J.D. Power and Associates study of retail banks that reveals 25% of customers who experienced a problem in the previous 12 months definitely or probably will switch providers in the next year. And 55% of customers who had a problem or complaint weren’t satisfied with the resolution process.

Tschohl suggests several steps for dealing with irate members:

  • Listen carefully and with interest to what the member tells you;
  • Apologize without laying blame, regardless of who is at fault;
  • Put yourself in the member’s place and respond in a way that shows you care about his or her concerns;
  • Ask pertinent questions in a caring, concerned manner, and actively listen to the answers;
  • Suggest one or more alternatives to address the member’s concerns;
  • Stay calm, even if the member makes outrageous statements; and
  • Solve the problem quickly and efficiently—or find someone who can.

Just as important as doing the right things when soothing an irate member is not doing the wrong things, Tschohl says, such as:

  • Challenging someone who has a complaint. Even if the member is wrong, don’t try to prove it. Your goal is to solve the problem.
  • Letting the conversation wander off topic. Solve the issue at hand without dredging up other issues or problems.
  • Shifting the blame. This doesn’t help anyone.
  • Letting personal feelings get in the way. Stay calm and use courtesy and tact to diffuse the situation.

When you handle complaints the right way, Tschohl says, “you will be rewarded with a satisfied customer—and a customer who will be loyal to you and your organization.”

Next: With Passwords, ‘Popular’ Isn’t Good

With Passwords, ‘Popular’ Isn’t Good

Password. Monkey. ABC123.

If one of these terms is your computer password, change it now. They’re among SplashData’s list of the 25 most common online passwords used in 2011—and the most susceptible to online hackers.

Other common passwords include simple numerical choices such as “123456,” common names like “ashley” and “michael,” and patterns based on the layout of the keyboard (i.e., “qwerty” and “qazwsx”).

Other passwords making the list include “monkey,” “shadow,” “superman,” and “dragon.” And as more sites require more complex passwords, some letter and number combinations such as “abc123” and “trustno1” are being used more often.

“Hackers can easily break into many accounts just by repeatedly trying common passwords,” says SplashData CEO Morgan Slain. “Even though thieves have more sophisticated hacking tools at their disposal today than ever before, they still tend to prefer easy targets. Just a little more sophistication in choosing passwords will go a long way toward making you safer online.”

He suggests making passwords more secure by using passwords of eight or more mixed characters and not using the same username/password combination for multiple websites.

Top 10 CUs by five-year asset growth

CU Asset ($ millions) Five-year asset growth
1. Hoosier Hills FCU, Bedford, Ind. $367.8   180.9%
2. Beckstrand & Associates ECU, Salt Lake City 0.6 99.1
3. DFCU Financial CU, Dearborn, Mich. 3,033.5 66.7
4. Community Driven CU, Ypsilanti, Mich. 58.0 60.4
5. Latvian Heritage FCU, Grand Rapids, Mich. 5.9 43.6
6. Mt. Olive Baptist Church FCU, Arlington, Texas 3.2 41.9
7. One CU, Springfield, Vt. 120.7 41.6
8. State Farm FCU, Bloomington, Ill. 3,667.1 40.6
9. Light Commerce CU, Houston 3.1 39.6
10. Security CU, Flint, Mich. $358.8 37.8%













Source: Customized Comparative Analysis from CUNA’s economics and statistics department