Mark Hein, SWBC
SAN ANTONIO—Credit unions are outsourcing more of their collections, a trend that is increasing even as the economy—and delinquencies—improve, according to SWBC.
SWBC President and CEO Mark Hein told CUToday.info that it appears the recession has taught credit unions the value of outsourcing functions that can be done more effectively and efficiently outside the CU to allow staff to focus on revenue-driving tasks they are highly skilled at.
“Interestingly, even with the improving economy we are seeing a greater need for credit unions and other financial institutions to want to outsource more collections business to us,” said Hein. “You would think that with the economy turning around, outsourcing of collections business would decrease. But just the opposite is happening.”
Hein said that in the improving economy credit unions are increasing their focus on revenue-generating opportunities they are good at and are opening up with the expanding economy.
More Savings
“They see we can do collections more economically and provide them with even better results, and they send more work our way,” said Hein.
Overall, Hein feels the recession has taught many credit unions that they can’t do everything on their own.
“It may have changed their thought process about having to do everything internally,” said Hein. “I would not say the recession taught them a lesson, as much as they learned on their own to be smarter with their resources. The most expensive resource everyone has is people, and if you can find better ways to utilize your people . . .”
Hein added the compliance burden borne from the recession, as well, is taxing CUs’ HR bandwidth, and he urged credit unions to partner and collaborate to share compliance resources.
“As we know, unless you are among the top 20% of credit unions in assets, to stay compliant with all the regulations that have come out since the recession has become a big problem,” reminded Hein. “It’s hard enough to do business today in the current environment, and when new rules come out all the time and the new rules have a lot of gray areas, it becomes a guessing game for credit unions as to where they will dedicate time and resources.”
Hein said that continuing margin pressures are also prodding more CUs to adopt a sales culture.
Margin Pressure
“The net interest margin compression has credit unions looking to find other ways of making money,” said Hein. “For a long time ‘sales’ has been a four-letter-word for a lot of credit unions, but that is changing.”
Hein said that while credit unions approach sales in a consultative manner, they realize they have to step up efforts to build deeper relationships.
“There are certain products in the past some credit unions were really good at selling, and then some they were really bad at selling,” said Hein. “Credit insurance, for example, CUs were not fond of selling. You are talking about someone dying or becoming disabled, and I don’t think they were comfortable talking about that. But now in this environment they have to offer members more products, because if they don’t someone else will.”