Artificial intelligence is making labour intensive manual processes in debt collection a thing of the past.
When it comes to innovation, the debt collection industry has consistently fallen short in comparison to others within the global financial sector. Some challenges remain such as getting people to pay overdue invoices or set up payment plans, but there is still a heavy reliance on traditional communication such as telephone calls, and manual data processing to do this.
In an environment of growing financial pressure, the adoption of artificial intelligence is changing the narrative out of necessity – requiring the reduction of costly labour intensive elements and actively enabling technology to pick up the administration burden instead.
Improving the customer experience through AI
The debt collection industry is in a transitional state.
With the AI global debt collection software market generated revenue of over $3 billion in 2019, current projections reveal that it will reach nearly $7 billion by 2027* – the industry is evolving at a rapid pace, bringing with it a new set of challenges, and opportunities.
Anyone familiar with the industry knows that debt collection is a topic that most people actively avoid. Conversations agents have are generally difficult and confronting, especially with someone who is in a financially fragile situation. Many businesses are experiencing high agent turnover, frustrated clients, and unhappy, vulnerable debtors – but there is a light at the end of the tunnel.
Managing Director at Cloud Payment Group, Trevor Greenhill, said that after decades of operating in the debt collection industry, he was excited to see positive changes coming out of the widescale adoption of AI solutions.
“Whilst we pride ourselves on always dealing empathetically with debtors throughout the debt recovery process, traditional methods such as phone calls are not only hitting the bottom line hard but creating increasingly stressful situations for our people – which in turn creates a high attrition rate.
Ultimately, I believe the answer is not more people on the phones making calls – it’s AI. It gives us the ability to improve the overall customer experience, reduce staff turnover and overall costs to the business.”
Trevor is also emphatic in his view that accurate data is critical to ensuring AI will succeed.
“Agencies must receive accurate data from clients if they intend to use something like AI conversational chatbots. Teaching it how to answer with understanding and be a guide during the chat – rather than be viewed as the “debt police” and scare people away, is critical to creating a positive customer experience. This is a chance to change the narrative around debt collection for the better, whilst adopting game-changing technology.”
Tangible benefits of AI
It’s no secret that the debt collection industry lags behind other industries who have adopted AI into their everyday practices. Trevor says the positive business outcomes alone should be enough to drive greater AI adoption.
“As long as there is accurate data behind it, AI software can predict high-risk customers, personalise communications and even enhance self-service payment portals. Individual interactions, using what we term conversational AI – in the form of online chat – can also use that data to recognise customer vulnerability – which is of particular importance in the energy sector. Changing regulations can be built into the AI, meaning greater compliance with state regulations such as the Better Bills Guideline for the energy sector.
There are many other tangible outcomes for clients including increased payment rates, reduction in costs for both agency and client especially bad net debt, and higher levels of staff retention as the remit of their role evolves and the emotional load lessens.”
Where to next for AI in debt collection?
Trevor Greenhill believes that whilst AI isn’t the only solution to the challenges faced by the debt collection industry, it does give opportunities to transform the customer experience and provide greater ability to improve operational efficiency.
“The future of debt collection is AI – however it doesn’t necessarily need to be complex or daunting.
There are many solutions that incorporate both conversational AI and predictive analytics to transform the way we do business – it shouldn’t be labour intensive, but instead centred around simple but clever systems. It frees up resources to focus on other value-add activities.
At Cloud Payment Group, we’re focusing on removing a number of efficiency blockers within debt collection, by looking to QR codes, automated reminders and perceptive SMS – which are all cleverly designed to improve the overall customer experience. It’s an exciting time for the industry, and especially for clients who can create more positive interactions with debtors than before.”
Cloud Payment Group is one of Australia’s most trusted providers for debt collection and payment management, with more than 50 years’ industry experience.
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Source: * https://www.alliedmarketresearch.com/