{"id":35236,"date":"2022-09-29T10:25:22","date_gmt":"2022-09-29T10:25:22","guid":{"rendered":"https:\/\/vymo.com\/?p=35236"},"modified":"2025-09-30T13:27:20","modified_gmt":"2025-09-30T07:57:20","slug":"how-to-streamline-your-collections-process","status":"publish","type":"post","link":"https:\/\/vymo.com\/blog\/how-to-streamline-your-collections-process\/","title":{"rendered":"How to Streamline Your Collections Process"},"content":{"rendered":"<div id=\"bsf_rt_marker\"><\/div><p>[vc_row css_animation=&#8221;&#8221; row_type=&#8221;row&#8221; use_row_as_full_screen_section=&#8221;no&#8221; type=&#8221;full_width&#8221; angled_section=&#8221;no&#8221; text_align=&#8221;left&#8221; background_image_as_pattern=&#8221;without_pattern&#8221;][vc_column][vc_column_text]<span style=\"font-weight: 300;\">Selling loans is the top priority for every bank.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 300;\">But, the work doesn\u2019t stop there.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 300;\">Non-Performing Loans (a.k.a <\/span><i><span style=\"font-weight: 300;\">a sum of borrowed money whose scheduled payments haven\u2019t been made by the debtor for at least 90-180 days &lt;<\/span><\/i><a href=\"https:\/\/www.investopedia.com\/terms\/n\/nonperformingloan.asp\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 300;\">Source<\/span><\/a><span style=\"font-weight: 300;\">&gt;) is the biggest threat to banks globally, with the value of NPLs to small and medium non-financial corporations in European banks amounted to a whopping <\/span><b><i>117 billion Euros<\/i><\/b><span style=\"font-weight: 300;\"> in the 2021 financial year alone.<\/span><\/p>\n<p><span style=\"font-weight: 300;\">With the rise of Non-Performing Loans (NPLs) worldwide, banks need to reduce their exposure to risk by streamlining their collection processes.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 300;\">The first step towards that is to investigate the underlying causes of the problem:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 300;\" aria-level=\"1\"><b>Lack of regulations<\/b><span style=\"font-weight: 300;\"> leading to weak credit management mechanisms and absence of credit-score institutions<\/span><\/li>\n<li style=\"font-weight: 300;\" aria-level=\"1\"><span style=\"font-weight: 300;\">Weak and<\/span><b> outdated risk management<\/b><span style=\"font-weight: 300;\"> frameworks<\/span><\/li>\n<li style=\"font-weight: 300;\" aria-level=\"1\"><b>Competitive pressure <\/b><span style=\"font-weight: 300;\">to reduce costs and increase efficiencies that affect the due diligence process for loan provisions<\/span><\/li>\n<li style=\"font-weight: 300;\" aria-level=\"1\"><b>Lack of data<\/b><span style=\"font-weight: 300;\"> to personalize collection approaches according to the needs of each individual customer group\/demographic<\/span><\/li>\n<li style=\"font-weight: 300;\" aria-level=\"1\"><b>Limited visibility into the activities of sales agents<\/b><span style=\"font-weight: 300;\">, thus hindering timely management intervention<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 300;\">Most banks also don\u2019t try to understand the profiles of at-risk customers who directly affect NPLs, which worsens the issue.<\/span><\/p>\n<p><span style=\"font-weight: 300;\">According to a <\/span><a href=\"https:\/\/www.ey.com\/en_gl\/banking-capital-markets\/five-ways-banks-can-transform-their-collections-processes\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 300;\">report<\/span><\/a><span style=\"font-weight: 300;\"> from EY, <a href=\"https:\/\/vymo.com\/blog\/fix-field-execution-gaps-in-debt-recovery\/\" target=\"_blank\" rel=\"noopener\">debt recovery<\/a> processes in most banks are flimsy because they do not have the necessary tech capabilities to navigate the massive scale of NPLs that are coming their way.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 300;\">Here\u2019s what they had to say about how banks should reformulate and restructure their outlook toward collections:\u00a0<\/span><\/p>\n<p><i><span style=\"font-weight: 300;\">\u201cBy transforming the collections model \u2013 from a labor-intensive outbound approach focused on finding customers who can pay \u2014 <\/span><\/i><b><i>to a loss-preventative inbound operation in which banks offer pre-approved treatment strategies and personalized communications<\/i><\/b><i><span style=\"font-weight: 300;\"> \u2014 financial institutions can incentivize customers to proactively reach out to them. This approach would deliver more personalized, effective customer service, at scale. For example, the inbound offer could be no mortgage repayments for six months or a temporary reduction in the interest rate thereby reducing the payment so that the customer reaches out proactively to accept it or another solution.\u201d<\/span><\/i><\/p>\n<p><span style=\"font-weight: 300;\">Moreover, according to a report by <\/span><a href=\"https:\/\/www.mckinsey.com\/capabilities\/risk-and-resilience\/our-insights\/how-banks-can-reimagine-lending-to-small-and-medium-size-enterprises\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 300;\">McKinsey<\/span><\/a><span style=\"font-weight: 300;\">, \u201c<\/span><i><span style=\"font-weight: 300;\">by enhancing risk models and making more consistent decisions, banks can reduce the risk of nonperforming loans (NPLs) by 10 to 25 percent\u201d<\/span><\/i><\/p>\n<p><span style=\"font-weight: 300;\">To create efficient customer payment behaviours, agent collection behaviours, personalized approaches (which can directly lower the risk of NPLs), banks need tech and data that can:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 300;\" aria-level=\"1\"><b>Provide visibility into the most relevant on-the-ground metrics<\/b><span style=\"font-weight: 300;\"> to quickly set up, evaluate, and iterate plans<\/span><\/li>\n<li style=\"font-weight: 300;\" aria-level=\"1\"><b>Enable proactive, personalized outreach<\/b><span style=\"font-weight: 300;\"> that is based on insights into customer payment behavior and agent activity patterns<\/span><\/li>\n<li style=\"font-weight: 300;\" aria-level=\"1\"><b>Prompt next-best actions based<\/b><span style=\"font-weight: 300;\"> on data-driven intelligent suggestions that agents can take to reach desirable outcomes. These next best actions and nudges can also coach sales managers for better insight and control<\/span><\/li>\n<\/ul>\n<p><b>Optimize processes through system-triggered actions<\/b><span style=\"font-weight: 300;\"> for pre-due date and post-due date scenarios (through follow-up)<\/span><\/p>\n<p><span style=\"font-weight: 300;\">By creating efficient pathways to customer personalization, banks can reduce their exposure to NPLs and target at-risk customers more proactively in their collections process.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 300;\">In order to do this, banks need to strengthen their risk-management system, gather data that they can use to gain more visibility into on-the-ground metrics, use tech to understand next-best practices and optimize their decision-making processes.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 300;\">A smooth collections process is just as important to a bank\u2019s growth and stability as efficient lending!<\/span><\/p>\n<p><a href=\"https:\/\/vymo.com\/\" target=\"_blank\" rel=\"noopener\"><b><i>Learn how Vymo can help you here -&gt;<\/i><\/b><\/a>[\/vc_column_text][\/vc_column][\/vc_row]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[vc_row css_animation=&#8221;&#8221; row_type=&#8221;row&#8221; use_row_as_full_screen_section=&#8221;no&#8221; type=&#8221;full_width&#8221; angled_section=&#8221;no&#8221; text_align=&#8221;left&#8221; background_image_as_pattern=&#8221;without_pattern&#8221;][vc_column][vc_column_text]Selling loans is the top priority for every bank.\u00a0 But, the work doesn\u2019t stop there.\u00a0 Non-Performing Loans (a.k.a a sum of borrowed money whose scheduled payments haven\u2019t been made by the debtor for at least 90-180 days &lt;Source&gt;) is the biggest threat to banks globally, with the value [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":35871,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[47],"tags":[167],"class_list":["post-35236","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-collections-process"],"_links":{"self":[{"href":"https:\/\/vymo.com\/blog\/wp-json\/wp\/v2\/posts\/35236","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vymo.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vymo.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vymo.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/vymo.com\/blog\/wp-json\/wp\/v2\/comments?post=35236"}],"version-history":[{"count":5,"href":"https:\/\/vymo.com\/blog\/wp-json\/wp\/v2\/posts\/35236\/revisions"}],"predecessor-version":[{"id":37371,"href":"https:\/\/vymo.com\/blog\/wp-json\/wp\/v2\/posts\/35236\/revisions\/37371"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vymo.com\/blog\/wp-json\/wp\/v2\/media\/35871"}],"wp:attachment":[{"href":"https:\/\/vymo.com\/blog\/wp-json\/wp\/v2\/media?parent=35236"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vymo.com\/blog\/wp-json\/wp\/v2\/categories?post=35236"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vymo.com\/blog\/wp-json\/wp\/v2\/tags?post=35236"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}