Debt Collection and Online Lending

What a fantastic article on the emerging, and maturing, industry of online lending.  This industry has come from infancy to a young maturity, extending the reach of credit to many who would otherwise not have access to personal, or business credit.

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We found the principal subject of the article, Lending Club’s, take on collections and customer care particularly refreshing and effective.  Lending Club has a large phone staff, the majority are dedicated to customer service, the minority are dedicated to collections.  This is a large customer service based focus, however their Customer Service Staff are cross trained in collections so that calls with debtors on their way to having difficulty can quickly transition from service to collections.

It has been our experience that the earlier collection action begins,  wth either an individual or a business, the higher the positive outcome of the debt collection action.

There were other highlights in the article.  We find Lending Club’s attitudes and direction refreshing.  Online Lending has added a fresh dimension to the extremely mature credit industry.

Summary

First, as the online industry continues to mature and consolidate, the major players within it, including Lending Club, may likely see larger portfolios, bigger market share and an increasing need to handle collections skillfully and effectively. Every day, the online lending industry needs collections expertise more and more. And some collections firms have already responded to this need.

Second, the Lending Club CEO suggests that online lending firms may benefit quite a bit by welcoming regulatory engagement and by actively working to meet regulators’ standards for consumer-friendly products and services.  This, again, is not a popular sentiment in the more traditional corners of the financial services space, where opinions on regulatory action focus largely on the onerousness and unintended consequences of new regulations and regulatory action.

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