Effective delinquency management is a looming concern for lenders of all types and sizes. Every lender’s operations may account for some level of loan delinquency. But if that level becomes too high, it can negatively affect your business, including increased collection costs, reduced profitability, and reputational risk.
According to reports by a credit information bureau, retail credit has experienced an increase in serious delinquencies, with mortgage loans such as loans against property and credit cards being the most affected segments. The COVID-19 pandemic will only exacerbate this disruption, thanks to the widespread layoffs, looming recessions and economic downturn.
From a lending institution perspective, retail loans extended by non-bank finance companies (NBFCs), which typically take riskier loan bets, reported a 0.49 per cent increase in delinquencies compared to 2019.
With delinquencies showing signs of stress and a growth in overall loan origination volumes, NBFCs and their banking counterparts need to adopt proactive strategic measures to tackle delinquency management and monitor repayment schedules.
Effective delinquency management plays a critical role to reduce the lending institution’s credit risk and improve profitability. The ultimate goal is to maximise recoveries while keeping overheads lower.
Advanced technology powered by AI can help streamline the entire loan collection process, eliminate errors, and help maintain a robust loan portfolio.
Finezza’s Debt Recovery and Collection Management System to Monitor and Manage Loans
Finezza’s delinquency management feature aims to simplify debt collection for lending institutions. This platform automates loan collection framework with a sophisticated and customer-centric solution that leverages AI and data analytics.
While late payment penalties are ubiquitous, too few lenders realise that simple modifications to the payment process can drastically reduce delinquency.
The solution manages the entire loan collections lifecycle from the soft calling of delinquent customers to tackling hard bucket collections until final closure. It provides a complete picture of the team’s collections efforts and prompts telecallers and field collectors for the following best action.
All in all, it keeps track of the delinquencies and provides visibility to shorten collection cycles and minimise the overall cost and effort in NPA management.
Here are some of the critical features of the delinquency management system:
1. Case Allocation
Finezza’s delinquency management automatically assigns collection cases to specific agents according to configurable rules. This way, you can ensure that the right people work on relevant issues. In addition, the rule-based system enables you to configure the classification and allocation logic of delinquent cases to the field staff.
The rule-based classification of queues helps by assigning customer accounts to the suitable collectors at the right time while also allowing manual allocation for cases that need special attention. In addition, escalations can be easily configured to ensure visibility and timely action.
2. Calling and Follow-Up
The system generates a call and follow-up list for the operations team to act fast and take complete control of collection activities. As a result, the operations teams can quickly communicate with customers.
If multi-level follow-ups are needed, all the aspects can be maintained and tracked within the follow-up dashboard of the system. In addition, the system supports a follow-up trial of communication between the collector and the customer.
3. MIS Reporting
The reporting module includes an MIS (Management Information System) to track progress, control productivity, scheduling, allocation, and early identification of delinquencies.
You can also measure key metrics to assess and evaluate collection management and the likelihood of NPAs. This includes performance metrics like collection profitability, agent effectiveness, delinquency level, and more.
4. Generate Secure Payment Links to Customers
The delinquency management system empowers lenders to interface with multiple payment gateways as per their requirements and sends customised payment links to customers. This facilitates faster and secures digital payments at the customer’s convenience.
5. Real-time Updation of Data for Communication
The system has an embedded capability to update all information in real-time to and from host systems. So whether you need to relay information to the customer or enable access of information to collection agents, you can ensure 24/7 accessibility to all parties involved in the process.
6. Transaction Addition and Approval Management
Agents and managers have the flexibility to add transactions and submit for approvals. There is no need for cumbersome documentation and filing work to maintain all collection records.
Instead, you can rely on a single point of truth and a unified source for all collection-related workflow processes. For example, if there is a necessity to arrive at a settlement for waiver repayments on loans, it can be added and submitted for approvals within a given period.
Benefits of Using a Delinquency Management Solution
Below are the benefits you can reap by using a modern solution to proactively and effectively manage delinquent customers:
- Customer-Centric Focus – A 360-degree view of customers and their accounts for continued credit monitoring
- Simplified Collection Workflows – Provides critical information for easy decision-making and a hassle-free recovery process.
- Adherence to Policies – The configurable rule engine enables compliance to business processes as per the policies and aids easy classification of cases
- Easy Integration – Software and platform agnostic with secure APIs and data pipelines that can be easily integrated
- Performance Tracking – Facilitate enhanced collections process with convenient tracking and reporting features
- Enhanced Collections – Decide the best course of action with automatic case allocation, classification, and follow-up actions
- Transparent and Paperless Processing – Deliver faster and paperless transaction processing with reduced risk and greater transparency than manual processes
- Reduce NPAs – A structured process and collection workflow can help you work on high priority cases first and reduce NPAs.
- Faster Deployment – Solution can be deployed on cloud, thereby reducing upfront expenditure and aiding more immediate implementation
- Integrated Mobile Platform – Empower field staff with easy to use mobile apps throughout the collections process
While collections have been traditionally dominated by manual processes, legacy systems, or outsourcing to third-party agencies, these approaches tend to consume more time, effort, and resources.
Moreover, they are ineffective in dealing with the growing number of delinquencies. Hence, what is needed is an automated and advanced platform that enables tracking and management of delinquent accounts in a single place and streamlines the lending institutions’ efforts across multiple accounts at the customer level.
Whether it be secured loans of mortgage loans, auto loans, etc., or unsecured loans like personal loans, Finezza’s innovative delinquent management feature delivers process efficiency and superior customer-centric experience all at once. Get in touch with us for more details.