How a Text Message Communication Strategy Can Strengthen Member Relationships

hand holding out phone displaying text message conversation with agent
By Kris Bishop

4 minutes

Texting and automation can help members avoid delinquency and streamline your collections processes.

All industries are feeling the current shift in the economy, including credit unions. With rising inflation, increased consumer debt and hardships resulting from the pandemic, credit unions are seeing an increase in late charges, overdue accounts and delinquencies.

Unfortunately, credit union collections and recovery departments have often been overlooked when it comes to updated technology and processes. Many are still working from spreadsheets, working with manual systems or using inexpensive but unscalable solutions that just barely met the minimum needs of a collections department.

The increase in delinquencies and late payments necessitates a system that can not only track and work the loans, credit/debit cards and negative share draft accounts efficiently, but also drive member communications—meeting them where they are most comfortable and communicating through the channel that best meets their needs. Interestingly, text messages have proven to be an efficient collections communications tool.

Great member relationships are built on great communication. Credit unions have understood this truth from the very beginning and still live by it. Members’ preferred communication styles and requirements have evolved over the years, but the fundamental purpose has stayed the same.

Today, while physical mail is still used and even required at times, email has become one of the dominant member communication channels. However, since more than 85% of adults in the U.S. today have access to a smartphone, credit unions’ use of text messaging has also risen significantly. Texting is an inexpensive and effective way to communicate with members and can help them avoid a missed payment or delinquency fees. Text alerts are another example of how credit unions are truly looking out for the best interest of their members and their financial health: With a text reminder of a payment, along with an easy way for members to make those payments (e.g., a link in the message), the credit union is providing the tools and guidance necessary for members to live their financial best.

Why does texting work?

SMS messages, or text messages, are extremely popular today, and usage is common among nearly all age groups. Text messages have a 98% open/read rate. Compare that to emails, of which only about 18-20% are opened and read.

Texts also tend to convey messages clearly and quickly directly to the member’s personal phone. They’re a definite improvement over to unexpected call center interactions or an email that’s likely to get buried in their inbox. As such, text messages address the hardest part about debt collection: how to effectively get in touch with members. Low response rates are traditionally a consistent headache for collection departments. After all, the less credit unions are able to connect with their target members, the fewer collections they can make.

Credit unions can use a text message-based approach to satisfy the main collection notifications, which include:

  • billing notifications
  • overdue notifications
  • settlement choices and other informative updates
  • payment made notifications

The strong likelihood that text messages will be read makes them one of the best ways to reach out and connect with borrowers. Credit unions can send text-based reminders about payment due dates, terms, click-to-pay and more. Plus, the two-way, real-time text conversations can build genuine relationships with individual members.

Text messages for collections fit into the current branch reality.

The role of the branch is continuing to evolve, and members are visiting branches less frequently—especially when they know they’re already behind on payments. Plus, many businesses today including credit unions continue to be short staffed, resulting in too few people to handle tasks the traditional way and making new, more efficient methods even more important to help maintain overall collection department productivity.

Not surprisingly, credit unions’ use of text messaging to contact members is governed by strict regulations. The overall communication strategy must comply with FCC, FTC, FINRA, and SEC guidelines and more. If credit unions fail to comply with all the applicable rules and regulations, they can face severe penalties and fines. Having a system in place that automatically tracks and archives activities and communications not only ensures efficient processes but ensures the credit union is meeting all regulatory requirements and can easily prepare for regulatory audits.

Reduce manual processes—use automation.

To communicate with members in efficient and timely way, credit unions need to ensure they are utilizing automated solutions. Manual processes in today’s digitally driven world are no longer scalable or effective. Regardless of the number of collections or delinquent accounts, augmenting data analysis with an automated system to assist with communication saves the credit union from inefficient and costly processes. If a credit union isn’t using or can’t use automated workflows to reach their members and make collections easier, that is a key sign that it is time to invest in a new system with these capabilities built in.

It’s now a credit union best practice to have a compliant, professionally operated text-based collections strategy in place. In fact, it’s almost a requirement. Texting is an excellent way to maintain productive relationships with borrowers. Implementing technology to streamline what has been a manual process allows credit unions to devote more resources to handling more complex collections situations with a sense of humility and sensitivity. When such a strategy is deployed successfully, members are much more likely to continue to bank with your credit union and turn to you for future lending needs.

Kris Bishop is CEO of FIntegrate, a data-driven analytics company focused on portfolio tracking, collections and revenue recovery software for the financial industry. For more information, visit

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