By Roy Urrico
Milpitas, Calif.-based Eltropy, which provides digital communications platforms for credit unions and other community financial institutions (CFIs), recently announced a partnership with Malvern, Pa.-based AKUVO, creator of Aperture, a cloud-based collections platform. Credit unions can now use the Eltropy-AKUVO connector to implement a texting platform into their collections department.
“Integration between Eltropy and AKUVO’s Aperture will provide collectors with a powerful texting platform to guide their account holders through a proactive, effective collections experience,” said Steve Castagna, chief revenue and operating officer at AKUVO. “We love that our two companies have a similar, visionary approach to using data and analytics to help improve the financial lives of the members of the credit union and banking customers we serve, and we’re excited to see what we can achieve together.”
Debt Climbing, Delinquencies Rising
Past-due loans are an essential part of the financial services environment. Collection efforts help credit unions maintain members and free up more funds for lending. However, when past-due rates exceed projected parameters, this part of the credit cycle becomes problematic. Incorporating robust collection and recovery tools and procedures helps improve efficiencies, reduce costs and maintain compliance.
Having effective collections in place in 2023 could play a significant role at credit unions.
In December 2022, for example, consumer credit rating agency TransUnion reported swelling loan delinquencies as Americans took out a record 87.5 million in new credit cards and 22.1 million in personal loans.
TransUnion also expects U.S. consumers to fall behind on their personal loan and credit card payments in 2023 at the highest rates since 2010; and noted projected delinquencies on unsecured personal loans will likely increase to 4.3% from 4.1% at yearend 2023 over the same period in 2022. For auto loans, the percentage of borrowers who are 60 or more days past due will climb to 1.95% in the fourth quarter 2022, then drop to 1.9% by the end of 2023.
In another good news/bad news scenario, the national mortgage delinquency rate closed 2022 down 9% for the year, but inched up 7 basis points in December 2022 to 3.08%, according to Black Night. Borrowers 30 days late increased by 40,000, up 4.8%, while 60-day delinquencies stayed flat. In addition, foreclosures filed last year climbed 115% from 2021 to 324,237 filings in 2022, ATTOM reported.
Collections Help Available
With the Eltropy-AKUVO partnership CFIs, including credit unions, can now integrate Eltropy’s texting communication platform into Aperture, AKUVO’s cloud-based collection solution powered by data and analytics.
Jason Smith, vice president of strategic partnerships at Eltropy, said, “Speaking for our customers, we expect the rate of contact for collections teams to dramatically increase with this Eltropy-AKUVO partnership.”
Smith said “One of our primary goals in 2023 is to build stronger integrations with vendors who have strengths in areas of need from our CFI customers, so we look forward to partnering with AKUVO who is making waves in the collection industry with their Aperture platform.”
Getting Through to Members
In Smith’s view, "credit Union staff who work in collections often encounter members embarrassed about their personal financial hardships when unexpected situations cause them to be unable to make payments.
“They are resistant to talk on the phone, which can be too personal. Alternative messaging via email is overlooked because of overwhelming junk mail,” he said. “Yet, results are showing they respond via text at significantly higher rates.”
Plus, Smith maintained, text messaging fits the credit union model — members helping members —well. “People in need of a loan or other lending related issues can communicate so much more effectively and openly by text, making it easy for them to open their heart in a way they're not willing to do by phone," noted Smith.
"In the collections operations for lending departments, we've seen (40 times) higher response rates by text messaging versus traditional methods of phone and email. Integrating AKUVO's expertise in collections and Eltropy's robust digital communications platform is a winning combination," said Smith.