Insights and Inspiration


What Technology Is Transforming Debt Collections

Debt Collection Technology That's Transformational

Debt collections is one of those topics that most people don't want to talk about. You hear the term debt collection and for most there is a negative connotation. There are more than 8m people in the UK struggling with some degree of problem debt. But it cannot be forgotten debt collection plays an important role in the business which is to ensure financial stability.

Companies should not lose focus on the personal situation's customers may find themselves in. Striking the balance between collecting the monies owed and treating customers with respect and empathy is a balance that can be hard to strike. Debt collection complaints to the financial ombudsman are in decline, and with only 27% of complaints being upheld last year, which is good news for the industry.  But on closer inspection of debt collection complaints you can get a better understanding of the exact nature of the issues:

  • Wrong amount collected
  • Debt amount not verified
  • Debt already paid
  • Debt not owned

On the face of it these complaints are more clarification issues rather than an issue how collections teams go about collecting the debt. They can be traced back to failures in process, automation, and access to real-time data.

So how can companies reduce the unnecessary chasing of customers or unnecessary communications that only serve to taint the collections process from a customer’s point of view?

Well the good news is that cloud-based debt collection technology is playing an important role and where once was frowned upon is fast becoming the happy bedfellow of the debt collections process. Not only is it more accessible but it is more affordable.  And there are many use cases where technology has not only enhanced the collections process but left customers feeling more positive about their engagement.

So, is technology a good or a bad thing? The answer is it depends on how it is used. Everyday debt collection technology is being used to improve customer experience while also enabling collections teams and organisations to work smarter, improve their performance, cashflow and ultimately the bottom-line.

A recent article in Forbes referred to the next wave of debt collection technology will include artificial intelligence (AI) and it is safe to say that this is now a reality for many companies, but there is a noticeable trend that most smaller collection agencies are failing to capitalize on the technology available today. And that is something that we at Webio have certainly experienced. 

So, what technology is being used in debt collections and what difference it is making?

Mobile Messaging Apps and SMS

Messaging is absolutely where it is at and its future is only getting brighter and brighter. Messaging apps have permeated the market. With WhatsApp currently being the most popular, with 1.6 billion monthly active users and OTT applications are expected to grow 33% over the next five years. Similarly SMS business messaging traffic will reach 3.5 trillion messages in 2020, rising from 3.2 trillion in 2019. A recent report stated that B2C communications are welcomed amongst consumers. And messaging is a perfect fit, especially for debt collections as it is a less intrusive form of communication and gives customers an opportunity to engage privately and on their terms.

Conversation Automation

Process automation in debt collection is not a new phenomenon.  Activities that are manually done by humans are being replaced by an automated process.  With the most commonly automated process being the use of automated diallers to connect customers with agents. But with the onset of messaging, diallers are being relegated, with messaging being the primary strategy for customer communications and in some cases, dialler have been completely replaced.

But in recent times, there is a growing trend in automating customer conversations using chatbots.  And we are only seeing the tip of the iceberg in the potential for automated bots to transform how collections companies procure payments. Conversation automation at its simplest involves creating and deploying bots to reach out to customers, start the conversation and fulfil the most basic elements of the conversation and then pass to an agent to complete. But the power of automation cannot be denied and more and more collections teams are using conversation automation in more and more innovative ways.

Artificial Intelligence and Machine Learning

Artificial Intelligence has arrived and is here it stay and has proven to be extremely useful to the debt collection process. The beauty of AI and machine learning is that chatbots/ virtual assistants can be trained so the complexity of the engagement can evolve. Predictive analysis can be used to predict that likelihood of a customer missing a payment, making payment, or even identifying vulnerable customers and determining the best way to manage the conversation. In addition, analysis can show at what times and which channels are best to contact customers about their amount owing which saves time and ensures that resources are better placed to increase the probability of securing payments.

So technology is playing a vital role in collecting customer payments and it will continue to do so.Used at the right time, in the right way it is guaranteed to deliver successnot only for the business but for the customer.

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