Hand holding disappearing dollar bills Source: AdobeStock

After nearly a decade of healthy economic growth, financial institutions have experienced a surge in consumer lending, paired with a decrease in delinquencies. However, the economy is undergoing a seismic shift due to rising inflation, increased consumer debt and hardships resulting from the pandemic. According to reports from March, consumer credit hit a record high of $52.4 billion – a notable jump from $37.7 billion the previous month and the pre-COVID average of close to $15 billion per month.

Additionally, not only is the economy declining, but Paycheck Protection Program (PPP) and COVID impact loans, as well as disaster relief funds, have dissipated, with an influx of delinquencies expected on the horizon now that repayments are required. Before this shift, credit unions were not accustomed to seeing late charges, overdue accounts and delinquencies, with collections and recovery departments operating on spreadsheets, manual systems, or inexpensive and unscalable solutions.

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