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Digital Debt Collection: Why Use It in Your Business

Mark Oppermann | Head of Sales & Marketing

The collections landscape has changed quite significantly over the past number of years, there is no argument about that. Today, customers interact with their lenders in different ways. Digital channels have become the primary mechanism used by customers to manage their finances; this trend applies not only to the millennial generation but also to consumers of all ages. Traditional call centre collections operations in this digital age are not sufficient to effectively engage with customers.

As customers continue to turn to digital channels it is vital for the debt collection process to be in sync with evolving trends. Businesses that modernise their collections capabilities to scale and become more effective and efficient in their collections processes; will streamline their collection processes and ensure they stay compliant while enhancing customer satisfaction, customer experience and significantly increasing recoveries, and containing costs.

Increase 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 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 customer experience, reducing the barriers to engagement, increasing the frequency of payments can help customers to improve their credit scores. A better credit score, in turn, helps individuals by preserving or improving their borrowing capability. Surveys show that borrowers who were provided access to digital collection options were 18% more likely to apply for another loan.

Drives Positive Conversations Outcomes

Rather than punishing borrowers for non-payment or delayed payment, digital debt collection promotes good payment behaviour and a more positive relationship with customers. Engaging in a positive way, for example using conversational messaging, where timing, tone, and tempo ensure that the customer feels more in control is a win-win.  Using proactive reminders, understanding of customer intent,  and making data-driven decisions all lead to more efficient customer conversations and ultimately better outcomes.

Drives Efficiencies Across the Customer Journey with Automation

Automating customer conversations across the customer’s journey with chatbots ensures that agents are only engaging with higher-value conversations. Conversations can be self-directed by the customer, where a combination of natural language understanding combined with intelligent workflows handles conversations 24/7. 

From a productivity perspective, chatbots and automation increase agent efficiency by freeing up call centre agents for the more complex tasks and reducing the time required to conduct manual and transactional processes.  AI also comes into play in the form of predictive analytics that provides real-time customer response suggestions and next best actions to assist agents in their jobs. We have seen an 80% reduction in agent resource needed to manage rising inbound customer queries during the pandemic for some of our clients.

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.  Adopting a rigid, one-size-fits-all approach to customers in arrears is a thing of the past. Today’s customers demand personalised engagement over their preferred channels. Using a conversational AI platform ensures that customers have a fully personalised experience.  From channel choice, analysing conversations, identifying customer intent, and using machine learning to predict and guide conversations.  For example, identifying at-risk or vulnerable customers earlier and facilitating a proactive personalised engagement ensures these customers are not mismanaged and are more likely to have a positive outcome.

Self-Serving is Growing in Popularity

Nobody likes to owe money and feels uncomfortable knowing that they do. Being chased to make a payment does not always improve the situation. Digital debt collection enables consumers to self-manage payments and resolves their debts on their own before agents get involved. Customers are increasingly moving to messaging channels like SMS and WhatsApp.  Adding payment links in a messaging conversation to pay online or a link to a conversational form to capture data gives customers the ability to self-serve and 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 wording and tone more often than not are stern. Customers want to feel like the businesses they work with care and are creating a positive, efficient, and empathetic experience for those struggling with their finances benefits everyone. Digital engagement has proven to be effective in having those difficult conversations and improving customer relationships.  Engaging via messaging is a better channel to have those difficult conversations, especially if it supported by conversational AI.

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 shouldn’t be any different.

 

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Digital Transformation has Become
Instant Transformation in Debt Collection

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52%
Uplift in Payment Arrangements
42%
Increase in Agent Productivity
57%
Decrease in Operational Costs
48%
Increase in Customer Engagement

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