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Banks seek support in handling debt collection processes

The current economic situation and continued high inflation make the non-payment of loan obligations by bank customers a significant challenge. As at September 2023, there were 2.7 million debtors in Poland, according to BIG InfoMonitor data. The total amount of arrears amounted to more than PLN 83 billion, and the average value of the debt was nearly PLN 31,000. Banks need to take countermeasures to reduce losses and maintain their ability to lend in the long term. Therefore, implementing tools to streamline the work of consultants handling debt collection processes is currently at the top of the list of priorities for financial institutions.

Bad loans pose a serious challenge to banks, affecting their profits or even generating losses. Defaults require increasing credit risk provisions and adjusting them to changing market conditions. The accumulation of unpaid liabilities affects banks' ability to offer further loans, and requires the allocation of capital to cover their financial loss. Therefore, high efficiency in the processes of managing a loan portfolio at risk of default becomes one of the key goals of a well-functioning financial institution. This is also confirmed by a survey conducted by Asseco Poland, which showed that as many as 90% of the surveyed representatives of the management boards of cooperative banks recognize the need to increase the efficiency of collection process management in the face of the growing risk of non-payment of customer liabilities.

"Banks must meet certain standards for credit risk management, which includes, among other things, effective collection processes. This has to do not only with the difficult situation of some customers, but also with the increasingly stringent regulations and strict supervision to which the financial sector is subjected. Facing these challenges requires the support of technology, particularly in the area of analyzing the situation of a given customer. Modern tools not only streamline the debt collection process, but also allow us to adapt the methods of action to a specific case" - said Joanna Wijata-Siedlecka, Director of the WPI Product and Service Development Program at Asseco Poland.

Effective management of a debt collection process

As part of the Common IT Platform (WPI), Asseco Poland has released a solution supporting a comprehensive approach to managing the debt collection process in banks - the Asseco Debt Collection System (Asseco DC). It is a tool designed to facilitate the work of debt collectors by providing complete information on indebted contracts within a single platform. In addition, integration with a bank's transaction system allows for getting a complete picture of a client in a collection process and creates a consistent work environment for a user. Asseco's solution enables very quick identification of delays and missed repayments, which directly translates into reduction of the number of debts, faster recovery of funds and preservation of positive relations with a client. Not without significance is also access to management information, enabling assessment of the effectiveness of activities and optimization of a bank's debt collection policy.

The new, flexible tool provides control over debt collection processes, enabling banks to create their own strategies and policies. The system supports three key areas that contribute to reducing the ratio of non-performing loans and increasing the efficiency of debt collection:

  • Monitoring a loan portfolio to identify risks as quickly as possible.
  • "Soft" debt collection by consultants, which translates into a reduction in the ratio of non-performing loans.
  • "Hard" debt collection leading to the recovery of debts through courts.

Flexible ways to communicate with a debtor

Thanks to its flexibility and rich parameterization tools, the Asseco DC system available on the WPI Platform enables banks to fully control their debt collection processes. This solution not only effectively identifies risks in a loan portfolio, but also facilitates the management of "soft" and "hard" debt collection. It also allows to appropriately select communication channels: individual letters, mass letters, text messages, e-mails, so as to effectively establish contact with a debtor and perform a debt recovery. For this purpose, banks can use ready-made communication templates provided in Asseco DC.

"The Asseco DC system has a flexible and rich parameterization mechanism for debt collection processes, which includes, among others, dictionaries of business parameters, including various statuses: debt collection, contracts, task completion, types of letters, as well as types of actions, delays, types of restructuring tools, etc., and templates for communication with a client. It is worth noting that access to information tools and flexible options for communicating with a client significantly increases the efficiency of debt collection processes, which in turn translates into better management of a loan portfolio" - explains Joanna Wijata-Siedlecka, Director of the WPI Product and Service Development Program at Asseco Poland.