There is no arguing that the collections industry has changed over the past number of years. Today, customers want to interact with their creditors in new ways, and digital debt collection is leading this charge.

Debt collection software that uses digital channels for messaging is becoming the primary means used to engage with customers of all ages. This shift was sparked as businesses noticed traditional collection methods not cutting it when engaging with customers who now live in a digital world.

Think of the traditional debt collection process as a vintage steam engine chugging along a well-worn track. It’s reliable, but slow and inefficient. Passengers – in this case, customers – often find the ride uncomfortable and stressful. They dread the shrill whistle of overdue notices and the sudden jolts of collection calls.

Now, imagine replacing that steam engine with a high-speed electric train. This new train glides smoothly, it’s quieter, faster, and more comfortable. Moreover, passengers can also self-manage their journeys, choosing when and how to interact with the system. 

Businesses that update their collections methods to go digital become more effective and efficient in their collections. They will see the following benefits.

Increasing Customer Payments

With digital collections, if you get it right for customers, it will be good for business. For the customer, digital collection tools are more convenient and less intrusive than traditional letters, phone calls, and house calls. This means customers are not put under so much pressure. Combine that with clearly presented information on their debt and the options available to them and, most crucially, the sense of control that all these things engender, and customers are more likely to act.

Extending Customers’ Lifetime Value   

By improving the customer experience and reducing the barriers to engagement, the frequency of payments tends to increase. This is good news for customers as it can help improve their credit scores. A better credit score, in turn, helps individuals by preserving or improving their borrowing capability. What's more, surveys show that borrowers who were provided access to digital collection options were 18% more likely to apply for another loan.

Driving Positive Conversations Outcomes

Rather than punishing borrowers for non-payments to try enforce action, digital debt collection encourages good payment behaviour by engaging in a positive way. For example, using conversational messaging, where timing, tone, and tempo ensure that the customer feels more in control.  Using proactive reminders, understanding the customer's intent, and making data-driven decisions all lead to better customer conversations and ultimately better outcomes.

Driving Efficiencies Across the Customer Journey with Automation

Automating customer conversations with AI agents leads to human agents are only stepping-in for high-value conversations, which lifts the level of agent productivity. Conversations can be self-directed by the customer, where a combination of AI and automation handles conversations 24/7. As an average across the board, Webio clients are achieving about 80% automation with AI agents.

Personalised Customer Engagement

Not all delinquent customers expect to be in an arrears situation. Many have simply fallen on hard times and some may just be dragging their feet in paying. So, adopting a rigid, one-size-fits-all approach to customers in arrears is a thing of the past. Today’s customers expect personalised engagement over their preferred messaging channels and using a conversational AI platform handles this mandate with aplomb. 

AI is adept at picking out entities (like dates and amounts), identifying customer intent, and using propensity guidance to predict and guide conversations.  For example, identifying at-risk customers earlier for a proactive, personalised engagement ensures that these customers are not mismanaged.

Self-Service for Debt Collection

Nobody likes to owe money and they feel uncomfortable knowing that they do. And being chased to make a payment does not always improve the situation. However, digital debt collection enables consumers to self-manage payments and resolve their debts on their own before agents get involved. With a simple payment link in an SMS or WhatsApp conversation, or a link to a conversational form to capture data, customers can self-serve, which in turn increases retention rates.

Caring About Customers 

When communicating about something as serious as debt, you might think paper is the first port of call.  But that is not the case. Sending the dreaded letter that rarely gets opened is not effective and the tone more often than not is too harsh. Customers want to feel that the businesses they work with care, and creating a positive and helpful experience for those struggling with their finances benefits everyone. Digital engagement proves to be effective in having those difficult conversations and improving customer relationships.

Conclusion

Digital debt collection strategies are more reliable, more effective, and less risky than traditional models that have remained the norm for decades. No matter where you turn, the future is digital, and debt collection isn't any different.