At Peregrin, we understand and appreciate the roadblocks that financial institutions encounter when acquiring card portfolios from other issuers – especially when these portfolios include existing DMP accounts.
In this piece, we will take a look at the traditional ways in which financial institutions do this – and how Peregrin’s modernized approach can result in higher efficiency, accuracy, and cost savings!
Let’s dive in.
Consider a financial institution that is acquiring card portfolios from other card issuers. These often include existing Debt Management Programs or DMP accounts. For several reasons, including outdated and inefficient tracking methods, this usually results in long lead teams to forward payments, leading to poor onboarding success rates, misdirected payments, and increased manual tracking of lagging payments.
Now, let’s compare the older way in which they acquired accounts, versus the new way in which we have enabled them to implement the same onboarding processes much more successfully.
The old way of acquiring portfolios
The acquired portfolio includes a DMP portfolio. While the acquirer will easily know which accounts belong in that portfolio, they frequently don’t have payments recorded. And almost always, they have no record of which credit counseling agency is managing the customer’s account.
Once the portfolio is acquired, the acquirer needs to:
- Have the account number changed
- Redirect the payments to a new address
- Update the system of record to indicate which agency has permission to discuss or inquire into the account
To do these things, the acquirer puts in a payment change notice with the payment processor, so once a payment comes in, the sender is notified of the new payment address and the account number.
This process can take place over multiple cycles, where the payment is not properly posted to the consumer’s account. This leads to both risk and loss-related events, and of course, immense customer frustration and dissatisfaction. In the absolute worst cases, the consumer may go as far as to terminate the relationship altogether and expose the acquirer to a higher risk of loss.
In the best-case scenario, this requires a huge effort to track down the originating agency, update the acquirer’s records, and establish notification with the customer.
Now, here’s the Peregrin Way
When a portfolio is acquired, Peregrin starts off by posting the old account number, the new account number, and the new payment instructions on our secure website. We work closely with the acquirer, and send a notice to each of the credit counseling agencies that access our website – yes, quite literally every single one of them!
We then offer the credit counseling agency a tool that allows them to pass a file of all the account numbers from the divesting lender that they are working with. The account numbers that match with the acquired DMP portfolio are then posted to the credit counseling agency with the new account number, along with the new payment instructions. – Accounts that are not matched are flagged for monitoring, allowing for proactive follow-up and resolution. Acquirers are also notified of both matched and unmatched accounts, providing visibility into the onboarding process.
This process results in a 60-70% match rate and significantly brings down the amount of missed payments and the effort that’s needed to onboard the new portfolio successfully and seamlessly. Acquired accounts are matched to their correct credit counseling agency, reducing the need for follow-ups and offering the opportunity for enhanced customer service.
The matched accounts are notified to the acquirer. Payments immediately are sent with the new account number to the new payment destination. Accounts that are not matched are also notified to the acquirer so they can be monitored for further activity.
On the whole, the current payment percentage of the acquired portfolio is dramatically improved – notably, with minimized costs and simplified processing. It also enhances compliance by offering a higher degree of control over the identification of who has access to the customer’s information. Further, it enhances compliance by offering more control over the identification of who has access to the customer’s information.
At Peregrin, we leverage technology and communication to reimagine the entire DMP onboarding process, ensuring significant savings and higher levels of customer satisfaction.