Digital transformation is constantly reforming and refining the financial services industry as we know it. Digital technologies such as artificial intelligence (AI), machine learning (ML) and blockchain are significantly disrupting the industry and improving conventional practices. Consequently, customer experience has improved, profitability has improved, and data-driven solutions have emerged. One such innovative solution born out of digital transformation is digital debt collection.
Replacing traditional practices such as hostile agents, recurring robocalls, and protracted dispute resolution, digital debt collection brings debt collection into the 21st century. Claims for debt collection represent approximately 50% of all consumer claims affecting bank ratings. The ramifications of the Covid-19 crisis and growing chargebacks have further catalyzed the need for a streamlined approach to ensure optimized debt collection without impacting the customer experience. Inevitably, digital debt collection is advancing in a stalled industry and catapulting the FinTech industry to great success.
What is digital debt collection?
Digital Debt Collection is a data- and insight-driven solution that enables debt collectors and lenders to leverage advanced technologies like AI and ML to improve borrower contact strategies. These communication strategies include email, SMS, WhatsApp, or any other customer-preferred digital channel. By effectively using information provided by AI, collectors and lenders can send personalized messages to customers. Additionally, customers can make digital payments using their preferred payment channel at a time of their choosing. With these customer-centric and data-driven strategies, a more holistic and humanistic approach to debt collection can improve customer experience and improve collection rates.
Facilitate customer-oriented collections
Traditional debt collectors typically employ associates with little or no access to customer profiles or information to constantly contact customers for debt collection. Sometimes customers who don’t even owe money are hounded by debt collectors due to lack of information. But today, customers are looking for more authentic and personalized communication. By leveraging AI and ML, associates can gather insights into customer needs and preferences to personalize their communications, opt for customer preferred channels, and choose the right time and frequency to reach customers. . Such a customer-centric approach can boost the image and success of FinTech companies.
Ensure regulatory and standard compliance
Due to growing concerns about privacy and borrower protection, strict laws and procedures have been introduced into lending practices. With increasing regulatory concerns, debt collectors can deploy data and an AI-based approach to identify the optimal strategy to communicate with customers accordingly. Compliant communication can help debt collectors comply with debt collection regulations and requirements. As a result, by following standardized procedures, FinTech organizations can ensure guidelines are followed, never default, and attract more customers.
Strengthen insight-based communication
AI-powered debt collection platforms give debt collectors a 360-degree view of customer profiles by acquiring data from all available sources such as credit information, social profile, and financial history. As a result, debt collectors can design custom strategies using past data. And associates who communicate with borrowers can use single-view dashboards or advanced custom analytics to suggest appropriate repayment options, recommend plans, and optimize communication. This can result in higher collection rates, simplified communication, customer retention and reduced collection costs.
Integrate an omnichannel approach
Providing customers with an omnichannel experience and consistent service across all touchpoints has become the need of the hour. A data-driven debt collection strategy can help lenders and collectors take an omnichannel approach, whether the interaction with customers is physical or digital. Digital debt collection allows debt collectors to maintain standard communication with customers through emails, texts, calls and more. Such an approach is likely to accelerate debt collection while reducing operational costs.
Drive operational efficiency
Associates can access previous customer interactions, credit and financial history for critical information to address real-time challenges while communicating with customers. Such research speeds up the debt collection process by making it more goal-oriented and customer-focused. Using data-driven strategies and analytics can also help debt collectors manage client portfolios, enabling them to reduce risk and improve cash flow. Operating in a digital environment will help debt collectors and lenders increase operational efficiency and FinTech success.
It is a recognized fact that customer satisfaction is the engine of business success. Today’s digital-first customers prefer the digital communication and convenience that modern tools provide. By leveraging advanced technologies like AI and ML, FinTech companies can improve customer experience and provide lucrative business opportunities for lenders and debt collectors. This is a step in the right direction of digitizing the debt collection industry. FinTech companies, being at the forefront of digital transformation, can take a data-driven approach to debt collection and bridge the gaps in the traditional debt collection industry.
The opinions expressed above are those of the author.
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