Debt collection is the process of recovering a debt that the borrower has failed to repay in the agreed timeframe. At this point, the company or debt collection agency tries to engage with the borrower or customer to collect the over-due debt.
Companies and Debt collection agencies will use the customer information they hold on file to try and reach out and engage. Traditionally letters, emails and phone calls are used, usually in tandem to try and get the borrower to contact them to discuss their debt.
The Digital Age of Debt Collection
The collections landscape has changed quite significantly. As customers continue to turn to digital channels it is vital for the debt collection process to be in sync with evolving trends. A recent Mckinsey Report found that lenders’ customers expressed a general preference for digital contact over traditional methods. The personalised experience that customers experience using digital channels has resulted in a change in customers’ expectations around how payments are to be collected and how they interact with creditors and collection agencies. Despite the fact that nearly every customer has a phone, customers in arrears typically do not answer calls, preferring instead to communicate (and pay) in their own time, on their own terms.
No longer is there the need for barraging customers with phone calls and letters, customers now expect a more human and respectful experience, which is exactly what digital debt collection can deliver.
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 like Webio 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.
So, in summary, the answer to the question what is debt collection? is simply engaging with customers in a respectful manner using the channels they are most comfortable using to discuss and make a repayment on an outstanding debt.