This article is the first part of a series on AI and collection
Consumer debt has increased significantly over the years especially after the pandemic, resulting in changes in the industry and making us wonder how significant its impact is.
According to a recent survey, millennials & Gen Z consumers’ communication preference for financial services has shifted to text messaging, e-mail, and IVR payments prioritizing self-service digital channels. They tend to respond reluctantly to intrusive collection phone calls—a typical mono-channel approach complicated by stricter regulatory compliance owing to varied restrictions on call frequency, consumer verification, etc.
This is where embracing digital debt collection channels is the new ask in order to enhance the industry’s collection capabilities and be better prepared to address any further increase in delinquencies that might occur with traditional debt collection strategies. Having said that, is it as easy as it seems?
The answer is that it may not be easy but once strategically incorporated and governed, it is a paradigm shift that becomes indispensable for the business and revenue collection. Let’s face this, we never talked about digitization in debt collection that openly like we do now after COVID-19 hit. It is because of which various industries or businesses have speeded the adoption of digitization by several years as this is the need of the hour.
Customer-centric practices as we may call it, like digital channel communication, providing quick, easy-to navigate platform to make payment online, providing time and channel preference to contact, is the prime deciding factor for which businesses thrive or go under.
In fact, prior to pandemic, the statistics reveal that any decline in online payments by a business has directly translated to its lost revenue. The strategy is simple with digital debt collection – frictionless transactions.
Digital debt collections reduce the back and forth between third-party vendors and consumers significantly causing reduced drop offs and less friction on the call, gathering quick payments and better customer experience. A digitally enabled collection environment enables compliance and addresses changing customer demands along with contextualizing and optimizing customer interactions.
The interaction here is less intrusive, less assertive but more empathetic. By being digital end to end, customers have more opportunity to self-serve, reducing the need to have real-life conversations, thereby reducing the people-risk in maintaining compliance. Whatever little or precise conversation over call is left, that’s driven empathetically with a more human touch than a bot speaking to them. This is possible because of digitally-equipped systems like an omnichannel approach that identifies customers’ preferences and optimizes collection strategy, a 360-degree view of customer’s behavior in a single-view dashboard to push relevant repayment options, recommend plans, and streamline communications for improved customer retention and using AI/ML integrated systems to identify trends, anomalies, and opportunities.
The overall result is a happy customer with a pleasant experience at the end of the day. The commissioned third-party vendors overlook customer centricity while recovering debt and this results in a horrid customer experience with results being banned or blocked by the consumer resulting in a lost debt that can never be revived. Repetitive messaging or intrusive harsh calls doesn’t help anymore, the customer is smart enough today to track you down on compliance and scores as these policies are no more industry-bound jargons but known across by all.
Nowadays, the laws have become more strict against debt collection companies to curb these annoying and abusive behaviors, but some debt collectors still flout the law. There have been instances when companies have been permanently banned like in 2014, the owner and six employees of Williams, Scott & Associates were arrested for allegedly accusing people of fraud and saying they would be arrested and face criminal charges for not repaying their debts. This is nothing short of a worst customer experience and what we call digital bullying.
Consumers have complained that collection agencies even falsely claim to be working under contract for federal and state government agencies threatening them to issue arrest warrants if they fail to repay the money they owe. Digital collections have drawn a very thin line to being called digital bullying due to such incidences faced by many debtors. No debt collector is permitted by law to publicly shame or demean the consumer into paying the debt or even call them by names on a simple phone call. Digital bullying can be summed up if the debtor faces any of these:
• Calls threatening violence or harm
• Use of obscene or profane language
• Receiving calls repeatedly
• Having debt collectors call you before 8:00 a.m. or after 9:00 p.m. without your permission
• Receiving calls at work, if you forbid it in writing
• Taking calls in spite of you telling the collector, in writing, to stop contacting you altogether or to contact only your attorney.
So how do you maintain that balance of collecting money while making sure the customer is happy to pay? Calling customers for collecting debt can feel like walking on a tightrope. It is essential to have a 360-degree view of customer’s profile before jumping on that call. Automation does help you in this. With digitization and integration via artificial intelligence and machine learning, an end-to-end customer information in a single-view dashboard is very much possible owing to the analytics and propensities it generates.
Following a professional demeanor yet being empathetic is the key. On the basis of the customer’s time and channel preference it is important to shoot across the message to pay in a profound yet friendly way. You can’t bully a customer for not paying, but you can apparently understand their reason for not paying and help them overcome it. Read between the lines and rest the analytics will take care the next time you have to dial.
Acknowledge the vulnerability of your customer like age, gender, etc., and build a conversation rather than just dictating them to pay. With digitization and integrated systems, you get complete information about your customer leaving no room of misinformation or communication gap. An extra help goes a long way like reminding them of the follow-up dues, making accurate notes in the system for future, asking for a full payment and later break it down to their preference, staying positive about their situation and keeping them aware about their account along with following the FDCPA guidelines all the time to stay green.
Instead of calling the customer 10 times, instilling fear in them for not paying and sending a threatening letter for a stricter action, it is always advisable to follow a more human approach, thus ensuring customer loyalty. All this is possible if your agents are well-trained and equipped with systems running in-depth analytics of your customer’s profile via digitization and AI.
Empathy goes a long way in debt collections like in educating the customer about his/her debt and how essential it is for them to clear their debt and enhance their likelihood. Exhibit friendliness on the call and make the debtor comfortable to a conversation in order to increase the chances of getting the debt paid quickly. Being all ears to the debtor is also nothing less than being empathetic and strengthening that bond between the collection company and debtor. Remember the happier the debtor, the merrier your business.
Watch or the next article on the collection AI series!