The future of collections technology and borrower interaction

You keep hearing about the digital revolution—technology is becoming more and more integrated into our daily lives. The way financial institutions transact and communicate with borrowers has evolved as well, largely due to changes in technology and a shifting consumer mindset. 

There is a push for credit unions to continue finding ways to innovate and stay relevant amongst the competition. The effect that Amazon and other digital retailers have had across many industries has resulted in resetting the average consumers’ expectations. Consumers want options. And the wants of each generation of consumers can be different. It’s frustrating; trust me, I get it. 

Changes in communication brought about by new technologies of the digital revolution also apply to how you administer and communicate on your accounts that are past due. Thankfully, technology has afforded us ways to become more efficient, more personal, and focused on giving a borrower options that they may not even mind that you’re reaching out to collect payment. 

Thanks to automation, machine learning, and technology that can be integrated into core systems, the future of interacting with borrowers during the collections cycle is looking very promising. Here’s what I mean. 

Borrower Contact Preferences

Different people prefer communicating through different channels. As technology creates more contact options, it’s important to keep pace with borrower preferences. Phone calls, emails, and text messages are all expected options for borrower-institution communication. Consistency and redundancy are both preferable and possible, with some consumers stating their preference for a given method and others requiring multiple contact methods to gain top-of-mind awareness.

In 2015, MarketingSherpa commissioned a study to understand how consumers prefer to be communicated with across more than a dozen channels. With more than 2,000 responses, the majority of U.S. adults prefer email communication—to the tune of 72%! And the astounding fact was that regardless of age group, email was the preferred method to communicate with a company. The late millennials and early Gen X-ers were the biggest champions of email communication at a whopping 87%. 

So how does this data apply to the collection world?  


It’s clear by now that credit union members, like almost everybody else in the country, are attached to their mobile phones and devices.  As we’ve already discussed, traditional bank competitors and technology firms offering text-to-collect payment options and other specific digital applications are eager to assist today’s consumers if we do not meet their needs.

According to a 2019 TechJury article:

  • 5 billion people in the world can send and receive SMS messages.
  • SMS messages have a whopping 98% open rate.
  • Text messages have a 209% higher response rate than phone, email, or Facebook.
  • 90% of SMS messages are read within 3 minutes.

To make sure your collections team is competitive, you should consider offering text-to-collect and other mobile based services. If your credit union allows members to accomplish their financial tasks from their mobile device via a communication platform that they prefer, such as text messaging, they’ll have no reason to take their business elsewhere.

Mobile Payment and Communication Solutions

It should come as no surprise that consumers rely on their smartphones to get through the day. According to the Pew Research Center’s 2019 research, the vast majority of Americans – 96% – now own a cellphone of some kind. The share of Americans that own smartphones is now 81%, up from just 35% in the Center’s first survey of smartphone ownership conducted in 2011. 

The numbers tell a revealing story. It’s evidently clear that in order to effectively reach your customers, creating tools and services that are mobile accessible, is a central aspect of an effective omnichannel communications strategy.  

In order to keep up with the times and your members’ behaviors, it is practically mandatory to implement mobile payment services in today’s collections environment. But, one-time implementation isn’t enough. You must commit to update offerings as the mobile world evolves. Some items to keep top of mind include:

  • Knowing when and where consumers will most likely use their smartphones to make loan payments
  • Understanding what factors impact the usage and engagement of your consumers
  • Learning how the demographics of your borrowers interact with mobile technology

An omnichannel strategy involves allowing your borrowers to access payment services from a variety of channels, including a website, a mobile application, social media networks, call centers, and physical branches. To further empower collectors, each channel should also provide metrics so that you can gather data and determine usage and engagement.

Keeping up with the pace and lifestyle of your borrowers is not always easy—especially with the rapid pace of advancements in tech. However, connecting with borrowers on their preferred terms is a critical aspect of staying relevant, engaging, and valuable to your members.

Advancements in technology have created shifts in borrowers’ communication preferences, and when it comes to collecting payments, it’s important to reach out to borrowers in a way that will encourage engagement—and payments! 

Learn more about in-house vs. outsourced collections. Download the collections comparison guide today.

Jeff Mortenson

Jeff Mortenson

Jeff Mortenson is VP/client relations for AutoPilot® services. Jeff is primarily responsible for client relations surrounding SWBC's financial institution group's AutoPilot services; a suite of risk and account management ... Web: Details

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