Collection systems, also known as debt collection management software, are specialized platforms designed to automate the delinquency management and recovery process for loan servicing operations in banks and credit unions. These solutions handle workflows such as predictive scoring for at-risk accounts, omnichannel communication (e.g., SMS, email, RCS), automated reminders and payment processing, compliance monitoring (e.g., FDCPA, CFPB guidelines), and reporting for portfolio performance. They are essential for financial institutions to improve recovery rates, reduce operational costs, maintain member relationships, and mitigate risks like guaranty forfeiture or regulatory penalties amid rising delinquencies. By shifting from reactive to proactive, member-centric strategies, these systems help lenders balance efficiency with empathy, transforming collections into opportunities for financial wellness.

What’s Going On in Collection Systems

In the second quarter of 2025, U.S. household debt reached a record $18.39 trillion, according to the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit. This increase of $185 billion from Q1 reflects continued post-pandemic borrowing trends. As a result, credit union delinquency rates rose to 0.91% and net charge-offs reached 0.79%, the highest levels since 2012, based on data from the National Credit Union Administration.

In response to these financial pressures, banks and credit unions are accelerating digital transformation. The global debt collection software market is projected to grow to $3.62 billion in 2025, driven by AI-powered analytics and automation that enhance recovery rates beyond the industry average of 20–30%.

One of the key innovations is the adoption of Rich Communication Services (RCS), which offer interactive, app-like messaging experiences. RCS campaigns have demonstrated conversion rates as high as 80%, significantly outperforming traditional SMS. Self-service borrower portals are also streamlining operations by automating routine inquiries and tasks.

Hybrid collection models are becoming standard, with in-house teams managing early-stage delinquencies (0–60 days past due) and outsourced agencies handling more complex cases. The National Credit Union Administration’s 2025 supervisory priorities emphasize collections sufficiency and credit risk management, urging credit unions to modernize systems to avoid regulatory violations. This follows enforcement actions such as the $95 million penalty levied against Navy Federal Credit Union by the Consumer Financial Protection Bureau for illegal overdraft practices between 2017 and 2022

Community banks and credit unions, managing diverse portfolios including consumer loans and mortgages, are increasingly adopting cost-effective, compliant tools with ERP and CRM integrations to remain competitive. Technologies such as conversational AI are automating up to 80% of routine calls, while predictive analytics enable personalized repayment plans that reduce manual effort and improve member retention. Optimized multi-channel strategies, including email campaigns with open rates reaching 45%, are enhancing borrower engagement. Legacy system gaps are being bridged through API connectivity, with a growing emphasis on ethical AI to ensure fairness and regulatory compliance.

Collection Systems Vendor Snapshot

This list is not exhaustive and does not include all vendors in the space, if you are a vendor not featured here, please contact us so we can consider updates.

• AKUVO Collections Platform: Cloud-based delinquency management with AI-driven analytics, automated workflows, predictive scoring, and omnichannel communication; integrates with core systems for real-time insights. Targets banks, credit unions, and fintechs handling consumer loans. Website: akuvo.com
• MeridianLink Collect: Cloud-based tool leveraging machine learning for predictive analytics, automated recovery strategies, compliance monitoring, and payment processing; supports skip tracing. Targets banks and credit unions focused on consumer lending. Enhances efficiency for high-volume portfolios. Website: meridianlink.com
• CGI Credit Studio for Collections: Cloud-native, event-driven SaaS with AI-powered decisioning, automated strategies, real-time reporting, and CRM/ERP integrations; emphasizes FDCPA compliance. Targets large banks, credit unions, and agencies managing high-volume debt. Processes $2+ trillion daily for 75% of top 20 banks. Website: cgi.com
• Fiserv Collections: Integrated platform with real-time views, automated templates (letters, calls), workflow automation, and analytics; seamless with Fiserv cores. Targets credit unions for end-to-end servicing. Flexible and cost-effective for delinquent loans. Website: fiserv.com
• FICO Debt Manager: Analytics-centric solution with strategy optimization, predictive modeling for recovery rates, automated scoring, and multi-channel engagement; strong on performance tracking. Targets credit unions and banks seeking data-driven approaches. Improves outcomes through advanced modeling; clients include HSBC and BMO. Website: fico.com
• C&R Software Debt Manager: AI-native, configurable system for debt recovery with workflow automation, omnichannel outreach, predictive dialing, and compliance tools; supports bankruptcy processes. Targets banks and credit unions with diverse debt types. Boosts efficiency in high-stakes recoveries; widely used in financial services. Website: crsoftware.com
• PDCflow Collections: Digital communication platform for secure e-payments, document delivery, and e-signatures via email/text; automates reminders and integrates with loan servicing for faster recovery. Designed for credit unions and smaller banks, with a focus on customer and member engagement in collections. Streamlines payment cycles and reduces manual processing. Website: pdcflow.com
• Temenos Collections: Person-centric module with 360-degree account views, automated workflows, customizable workspaces, advanced reporting, and API integrations for skip tracing/payments; part of broader lending suite. Targets credit unions and community banks for efficient delinquency management. Boosts operational efficiency and member loyalty. Website: temenos.com
• CARM-Pro™: Comprehensive debt management with automated workflows, multi-channel communication (SMS, email, letters), compliance enforcement, and integrations with core systems; supports special assets like foreclosures. Targets banks and credit unions of all sizes for predictive debt behavior analysis. Reduces costs and improves recovery. Website: ibshome.com
• HighRadius Accounts Receivables: AI-driven automation for collections, credit management, electronic billing, and cash application; optimizes financial operations with risk mitigation. Targets financial institutions managing high-volume receivables. Streamlines past-due accounts and enhances collector efficiency, suitable for banks and credit unions. Website: highradius.com

What to Look For in Collection Systems

If you are a buyer, ensure you have defined business and functional requirements to align the solution with your specific needs in collections and servicing.

• Regulatory Compliance: Includes regulatory monitoring, automated validation alerts, and audit trails to help avoid penalties and assist in regulatory reviews.
• AI and Predictive Features: Behavioral analytics, risk scoring, and automated personalization to prioritize high-recovery accounts and improve rates by 25%.
• Omnichannel and Self-Service: RCS, SMS/email integration, and borrower portals for multi-channel engagement, reducing agent involvement by up to 60%.
• Core System Integration: API/ERP compatibility for seamless data flow and unified portfolio views across loan types.
• Scalability for Community Institutions: Cost-effective options for banks / credit unions under $10B assets, with hybrid in-house/outsourced workflows.
• Analytics and Reporting: Real-time dashboards for delinquency forecasting and performance tracking to enhance customer / member retention above 70%.

For expert guidance on selecting and implementing these solutions, consider consulting with firms like CCG Catalyst, who specialize in navigating the financial services ecosystem to match your unique requirements.

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