Outsourcing as a solution for labor shortage amidst rising delinquencies

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.

 

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