Delinquencies indicating potential coming performance issues on credit card portfolios and rising fraud attempts are among the headwinds credit unions are facing in Q2 2023. Here are three key observations from our latest credit union market perspectives report:
1. Card delinquencies are curing slower than any year over the past six years, suggesting additional performance issues to come.1 With this shift, it’s critical for lenders to prepare their collections programs for potential obstacles. This includes revisiting consumer engagement strategies and incorporating technology that will help increase the likelihood of engagement. One approach that has proven effective is integrating lender branding into outbound calls. This technology helps credit unions increase consumer trust and urgency, increasing promise-to pay rates on calls to mobile phones.
2. Lenders continue to combat constant, sophisticated fraud attempts — many targeting call center operations and digital channels. TransUnion’s 2023 Global Fraud Report showed the riskiest channel for financial services call centers is non-fixed VoIP: phone numbers that aren’t associated with a physical address. As fraud continues to rise, credit unions that have integrated inbound call authentication technology are better positioned to handle fraud attempts. This technology helps isolate and require additional authentication for high-risk calls. Having this mitigation measure in place not only improves the call center experience but ultimately reduces operational requirements and expenses.
3. Delinquency mostly decreased in Q1; banks other than regional or national banks, credit unions and FinTechs saw the largest decline.2 The reduction in delinquencies can partly be attributed to normal seasonal patterns, but may also be a sign of lenders revisiting credit criteria and making adjustments as economic conditions evolve. In addition, card and personal loans continued to see the highest levels of delinquency, while HELOC and mortgage performance remained strong. The increased levels of delinquency in unsecured debt are likely to continue as the impacts of inflation and rising cost of living continue to linger.
To learn more, read the full Credit Union Market Perspectives Report.
[1, 2] Source: TransUnion U.S. Consumer Credit Database 2023