Loan disbursement, as we know it is only the beginning of a hopeful span of repayment period where a lender expects to receive small debt recovery payments. However, when left unmonitored, this period can run havoc on the revenues of the loan dispensing company.   

NBFCs, MFIs and other lending institutions often come under the purview of regulatory authorities, where their collection processes are scrutinised. As a financial lending company, you must strengthen your loan recovery strategies to earn steady revenue streams. A targeted debt collection strategy not only helps reduce costs and saves time but also maximises resources.  

7 Ways of Loan Recovery Strategies for Banks

Here are a few ways to ensure no delay in recovering debts…

Auto Generation of Pending Debt StatementsAutomating statement generation and sending payment notifications to customers is a great way to take some burden off the shoulders of debt collection agents. These auto-generated payment messages can be sent to borrowers through SMS or mail. Automated reminder systems can send thousands of customised, personalised messages via a customer’s favourite communication channel. Not only is this kind of automation more accessible at the lending headquarters with minimal paperwork and manual tracking, but it also saves borrowers a trip or two to make physical payments. 

To further streamline the debt collection process, lenders can integrate a UPI payment option into the message they forward to the borrowers, allowing them to repay the loan instantly.

1. Multi-channel Contact Strategy

Digitisation of the debt collection process helps lenders achieve their debt recovery goals quickly. Companies can record a borrower’s contact preferences and follow their protocols to reach out to them. Digital channels are the most hassle-free way of contacting borrowers today. There is a dire need to integrate contact preferences and behavioural segmentation into debt recovery strategies.

A customer-sensitive multi-channel contact strategy helps gather responses from borrowers better than traditional methods. Advanced analytics, machine learning, and automation can deliver tailored messages at considerable time gaps through the customer’s preferred channels. 

Investing in data analytics, AI, and automation can successfully identify and segment customer types and preferences. The cost of implementing a robust multi-channel strategy remains insignificant compared to the returns it offers issuers.

1. Enhanced Self-Service Capabilities

It is true that a customer-oriented collection strategy boosts collection success rate and reduces operating costs. Using self-service capabilities turn around the debt collection processes ad for the better. 

These options allow borrowers to follow a do-it-yourself approach to clearing past-due balances. Using creative web tools in a software-as-a-service debt collections model, lenders can improve the customer experience, manage compliance, and automate the collections process by integrating self-service capabilities into the system. Not only does this kind of option help lending companies save money in the long run, but it also enhances the customer experience. Speed loan repayments from delinquent borrowers with self-service options.

1. Tech-Driven Debtor Tracing

Often, loan repayment defaulters relocate without furnishing a forwarding address to the lending company which sanctioned them a loan. This makes it difficult for a lending company to recover bad debts. Commercial lending businesses can use tech to locate debtors through a reliable tracing service. Using multiple data sources like address links, date of birth matching, occupier searching, deceased data, judgement data, telephone and electoral roll, lenders can quickly trace a debtor down and recover bad debts. 

1. Real-time Monitoring of Customer Activities

Lending companies can benefit from monitoring the customer’s real-time activity when seeking to recover a debt. Such a system can notify debt collectors about the repayment activities of borrowers as and when they are done. Real-time notifications ensure borrowers who have already repaid are not bothered unnecessarily by unwanted recovery calls and save much time. 

Functionalities like CTI allow debt collection agents to pull up all the data about a particular customer while conversing with them. Such features can revamp the way debt collectors handle debt recovery cases.

1. Scheduled Follow-Up Tracking

Lenders often struggle with ways to get customers to repay loans before resorting to extreme measures like legal intervention. Using scheduled payment reminders, such as SMS texts and emails, is easy to follow up with a borrower. When a debt collector contacts a delinquent customer, they need to keep additional contacts on a strict schedule. Systematic follow-up of borrower accounts reinforces a sense of seriousness and urgency in the customer. Thus, follow-up tracking is a less invasive approach to recover debts from borrowers quickly and consistently. 

1. Use Debt Recovery Analytics and Account Receivable Scores

Lenders need to change the way they feel about unpaid accounts. Instead of referring to them as ‘due collections’ and ‘bad debt,’ they must focus on the accounts receivable cycle. Following a holistic approach using Debt recovery analytics and account receivable scores can fetch better revenues. To prioritise delinquent accounts, lenders should apply analytics that brings out both the probability of recovery and the expected monetary amount to be recovered.

Why is Finezza the Ultimate Tool for Easier Debt Recovery?

Finezza’s mobile ecosystem offers a unique collection app that facilitates debt recovery. This state-of-the-art delinquency management solution helps lenders with field collection to make debt recovery easier. Not only does the use of this specialised collection app omit the lending company’s paper load, but it also streamlines the collection process by easing the woes of collection agents. It also minimises the chances of human error. 

The app comes laced with multiple features that simplify the debt collection process, like:

•      PTP tracking
•      Follow-up tracking
•      Real-time customer information
•      Location tracking
•      Collection updates through mobile and web
•      Address locator

Finezza offers wholesome loan lifecycle management solution, filling in the gaps in the process of debt collection through its collection app. All in all, it improves operational efficiency on account of automation and minimal human intervention. It also ensures minimal operational costs, all the more reason for lending companies to embrace the ecosystem!

To know more, get in touch with us today!