Decentralized collections
North Carolina credit union leverages strong member relationships for a successful collections strategy.
If collections are moving to automated, multi-channel messaging directed by a small team of specialists, $41 billion State Employees’ Credit Union, Raleigh, North Carolina, is a bit of an outlier. It’s running a decentralized, primarily manual collections operation across its 268 branches. Its 2,600 lending officers are the collectors for the loans they make, explains Alan J. Salzano, SVP/loss mitigation. “Success in collections starts with underwriting,” he explains. In other words, if you make the loan, you’re responsible for the consequences.
That sounds a bit old school, and it is, deliberately, says Salzano. “We’re keeping the activity local and close to the members. Our people often know the borrower who is missing payments and may know the circumstances or at least who to talk to. We’re sticking with a strong relationship strategy. The local presence brings a lot of knowledge and awareness of territorial economic challenges, and that helps us be more sensitive in working with members through hardships. Remote collections would not necessarily provide this level of understanding and consideration.”
The lending officers generate their own letters—on paper, with postage stamps. And they make their own phone calls, dialing the phone number on the loan documentation and talking to the member or leaving a message. The personal touch is paying off in avoiding losses, Salzano reports. The credit union’s charge-off ratio is 0.43%.
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