Disaster Planning Could Bring Greater Telecommuting for Issuers

The threat of a flu pandemic could drive financial institutions to implement telecommuting operations for their staff, and that could impact collections departments at credit card issuers.

The U.S. Centers for Disease Control and Prevention reported last year that a global pandemic could kill millions and the World Bank has estimated losses would exceed $800 billion. In the U.S. 200,000 to 2 million could die and consumer spending would drop $150 billion to $200 billion.

In response, the Federal Financial Institutions Examination Council released a study of 2,775 participating financial institutions finding that 36 percent did not have a business continuity plan if a pandemic occurred. Forty percent of the banks said that their liquidity would be impaired due to customer late payments and delinquencies.
 
An analysis of the findings by TowerGroup found that planning for such an event could actually be an opportunity for some collection units at credit card issuers.

No doubt, the current economic downturn presents a more immediate threat to card issuers, notes TowerGroup’s Senior Analyst Dennis Moroney in the report, “Contingency Planning: Are Credit Card Issuers Ready for the Next Pandemic?”

Still, notes Moroney, many large financial institutions said they would implement telecommuting work operations if a pandemic occurred in order to reduce the intermingling of their staff.

Companies that use call centers would be impacted as confined spaces increase the risk of infection, according to the TowerGroup report.

Moroney suggests that card issuers consider implementing telecommuting today because it “is a business process that can be selectively deployed to the collections process during normal operating periods.”

Telecommuting is generally cheaper for the employer and many employees are eager to telecommute.  Additionally, data security and better communications “enable effective and close monitoring of remote staff to ensure consumer privacy and data protection,” according to Moroney.

Specifically, issuers could deploy telecommuting staff to card delinquencies greater than 90 days because these accounts typically “require collectors with extensive collection experience,” writes Moroney.

Last December, the U.S. Treasury Department, in addition to members of the securities industry and the financial markets sponsored the Pandemic Flu exercise to test the readiness of the financial system.

Smaller institutions were less prepared for such an emergency, according to TowerGroup’s analysis of the findings from the exercise. Thirty-eight percent of companies with less than 500 employees were not prepared compared with 14 percent at firms with more than 25,000 employees.

Larger firms typically said they would implement telecommuting for their employees if a pandemic were to occur, while smaller firms said they would implement staggered shifts and personal space limitations.