How can automation improve debt recovery?

Published On : July 29, 2022

How can automation improve debt recovery?

With software and AI morphing into one intelligent entity due to the huge strides made by AI experts across the world, debt recovery / collection practices have seen a hitherto unseen new wave of evolution! Not only can AI-based software help in debt collections, but it also allows individual creditors to efficiently manage debt recoveries.

Just a few short years ago, debt collection was merely a call-and-response process. The process was invariably brimming with errors, often spiraling downwards into ferocious legal tussles with negative consequences. However, today, AI offers a hassle-free route to avert such situations. In this article, we will discuss how AI can improve financial collections.

AI-led automation has been changing how businesses and sectors operate for a while now. With tremendous advances in Machine Learning capabilities, led by tech scientists, its potential for various industries is endless. When it comes to debt collection or financial collection, automation now plays a much larger role than it did previously as a secondary mechanism.

From voice recognition systems to chatbots to web-portal assistants and automatic payment processing procedures – all of these are concrete examples of AI techniques that have begun to expedite debt collection.

But exactly how can AI Can Improve Financial Collections?

Let’s see. Dive right in…

1. Improving Communication between collection agencies and debtors

Debt collection generally is a sore and extremely touchy topic. Getting in touch with borrowers isn’t without its own share of hurdles. But today, chatbots that are AI-powered platforms can do much more than merely help lenders establish a contact. They can actually bolster the quality of communication.

Virtual assistants & chatbots can be utilized across multiple platforms (including text messages, WhatsApp, email, Telegram, and many more). Investing in AI allows a debt collection agency to scale its outreach without sacrificing the much-needed human touch while maintaining/reducing the headcount.

2. Streamlining Processes

One of the greatest hurdles to provide prompt, efficient and outstanding customer service is cumbersome establishment processes. No financial institution is different. However, instead of forcing customers to visit the creditor, the debt recovery procedure can be made quick and easy by moving the process online.

By incorporating AI-enabled services, having a customer-friendly approach, and aligning processes according to it is very well possible. The credit agencies can detect the pain points that might thwart or delay debt recoveries and mitigate them. Again, while sending payment reminders, AI-based tools can also factor in whether it’s the first reminder and then opt for a message template that better suits the context.

3. Better Understanding Customers

If an agency / field agent needs to understand the borrowing profiles of their debtors, a single unified overview of their debt history is essential across banks and other financial services. Well, it is not as easy as it sounds and is almost unthinkable to accomplish manually.

However, with AI, analyzing data from various sources can be done in an instant, and you can uncover crucial insights. With deeper understanding of customer defaulters, they can be segregated based on their debt backlogs, and more practical and nuisance-free debt-recovery strategies can be designed.

4. Optimizing Debt Collection Strategy

AI-powered tools automatically boost human decision-making when it comes to debt collection. AI software can quickly detect patterns in historical data of solvent and insolvent borrowers and provide valuable inputs to decision-makers, making it easier to flag at-risk accounts. It will ensure that debt collectors implement a proactive and not reactive strategies.

5. Modernizing Analytics

By their very design, any software built with artificial intelligence at its core, aggregates data from a wide range of sources. It implies that businesses can remarkably enhance their business intelligence (BI) quality by merging AI and ML solutions with their debt collection procedure.

Top-notch AI algorithms can process datasets in unique ways. In some scenarios, they extract definite patterns data. In others, datasets may be a black box that algorithms ‘open’ through diverse model-based approaches. Machine Learning techniques can then be utilized to find the best strategies based on the nature of the debt and the organization’s financial objectives.

Finally…

From the above, it can be easily deduced that automating debt collection streamlines clerical tasks and understands debtors enabling businesses to manage other demanding tasks. AI-powered automated solutions have the potential to completely redesign the way debt recovery takes place while significantly improving debtor / customer experience & business value.