Key Take Aways
- Labour market easing: The July 2024 jobs report shows job creation falling below expectations, with rising unemployment.
- Credit union delinquency: Delinquency rates for credit unions have risen significantly, particularly 90+ days past due.
- Delinquency trends stabilising: Growth in delinquency for certain products, such as bank cards and personal loans, appears to be slowing.
- Impact of economic conditions: Loans originated in 2023 are performing worse than those from previous years, suggesting a link to broader economic challenges.
- Risk segmentation tools: Experian offers advanced tools to segment collections risk based on variables such as balance, delinquencies, and product type.
- Customisable strategies: Debt collection strategies can be customised for credit unions based on risk assessments, improving resource allocation.
- Collection optimisation: Strategies to increase efficiency in collections through prioritisation of high-risk accounts and tailored contact methods.
- Data-driven insights: Credit unions are encouraged to use a combination of alternative financing data, trended attributes, and premier attributes for better risk management.
- Strategic contact methods: Effective contact strategies for debt collection include multi-channel approaches like phone calls, texts, and emails, depending on risk levels.
- Economic forecasts: The general economic slowdown, characterised by higher unemployment and slower job creation, may impact delinquency rates further.
- Client-driven inputs: Credit unions can leverage their own portfolio data, including delinquency history and account balances, to tailor their collection strategies.
- Expert assistance: Credit unions are encouraged to collaborate with Experian for the implementation and testing of their debt collection strategies.
Innovation
- Risk Segmentation Models: Innovative use of multiple variables like balance, delinquency frequency, and utilisation to create tailored risk segmentation for debt collection.
- Trended Data Analytics: Utilising changes in payment behaviour and balance utilisation over time to predict future delinquencies and inform collection strategies.
- Comprehensive Contact Strategy Design: A multi-day, multi-channel contact strategy tailored to risk levels, with options for incorporating emails, texts, and voice message blasts.
Key Statistics
- Unemployment Trends: Rising unemployment and slowing job creation, with the July 2024 report showing below-expectation figures.
- Credit Union Delinquency: 90+ days past due rates increased to 4.02%, up from 3.52% the previous year.
- Loan Performance: Loans originated in 2023 are performing worse than those in previous years, with a delinquency increase observed over 3 to 48 months.
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