2024 Retrospective: Transformations in the Brazilian Debt Collection Market and Lessons for the Future

The year 2024 brought significant changes to the debt collection market, shaping a new landscape for executives, managers, and professionals committed to efficiency, excellence, and customer focus. From economic shifts to technological advancements, government programs, and financial education, each development brought challenges and opportunities worth reflecting on. Here are the year's main highlights:

The Economic Landscape: Opportunities and Risks

In 2024, the debt collection market was profoundly impacted by global and national economic contexts. The slowdown in global growth, combined with uncertainties in emerging markets, pressured companies to revise their credit and recovery strategies. In Brazil, controlled inflation and the gradual reduction of interest rates opened room for a modest economic recovery. However, household debt remained high, requiring greater creativity from the debt collection sector.

What did we learn?

• Personalization is key: In a context of high debt, understanding the customer profile and their actual repayment capacity became even more critical.
• Financial education: Companies that invested in educating consumers on how to manage their finances reaped benefits in both recovery and customer loyalty.

The Role of Government and Regulations

The Brazilian government launched new debt renegotiation programs, such as Desenrola Brasil, which directly impacted the debt collection market's dynamics. While the program facilitated access to more favorable debt settlement conditions for millions of people, it faced criticism for disregarding Adam Smith's "invisible hand" of the market. By intervening directly and setting standardized conditions, the government overlooked the market's natural ability to balance supply and demand for renegotiations through competition and individualized negotiation.

Nevertheless, Desenrola Brasil highlighted the need to rethink credit and collection policies, demonstrating that public and private actions must work together to achieve sustainable results.

Additionally, 2024 marked the enforcement of mandatory financial education initiatives by financial institutions. These measures were regulated to ensure consumers had access to information and tools to better manage their personal finances. Banks and fintechs developed educational programs, webinars, and interactive content that helped prevent defaults and strengthen customer trust.

Finally, new data privacy regulations, aligned with LGPD, demanded investments in compliance and security. Protecting customer data became not only a legal obligation but also an opportunity to build trust in a sensitive moment.

What did we learn?

• Regulatory adaptation is a competitive edge: Companies that quickly aligned with legal changes and integrated government programs into their strategy achieved operational efficiency and stood out in the market.
• Trust is the new asset: Transparency in debt collection practices is now essential for maintaining good customer relationships.

Financial Education: A Sustainability Pillar

In 2024, financial education consolidated itself as one of the fundamental pillars for the sustainability of Brazil's credit and debt collection market. Various initiatives and regulations reinforced the importance of empowering consumers to make informed financial decisions. Among the main milestones were:

1. Bill 2747/24 This proposal, still under review in the Chamber of Deputies, aims to include financial education as a mandatory subject in public and private schools' curricula. If approved, it would be a significant step toward preparing future generations to manage their finances responsibly.
2. Joint Resolution No. 8 of 2023 As of July 2024, all institutions authorized by the Central Bank are required to provide financial education measures to their customers. These include simulators, informative materials, and personalized guidance, directly impacting the relationship between institutions and consumers.
3. Law 14,690 of 2023 This law assigned the National Monetary Council (CMN) and the Central Bank the responsibility of regulating financial education measures in the country. The result was greater uniformity in practices and strategic alignment with the guidelines of the National Financial Education Strategy (ENEF).
4. National Financial Education Strategy (ENEF) ENEF continued to play a crucial role by promoting awareness campaigns and consolidating partnerships between the government, private sector, and civil society. Its focus was on preparing consumers to use credit responsibly and encouraging financial planning as an essential practice.

Impacts on the debt collection market Financial education directly contributed to reducing defaults by empowering consumers to negotiate their debts more effectively. Institutions that invested in these initiatives also strengthened customer trust, increasing loyalty.

What did we learn?

• Prevention is key: Financial education is not just a benefit for consumers but also a strategic tool for companies to avoid defaults before they happen.
• Financial inclusion: Empowering consumers to manage their finances enables broader integration into the formal credit market.
• Building trust: Financially educated consumers trust institutions more, strengthening long-term relationships.

Technological Transformation: The Year of Automation, AI, and Self-Service

In 2024, technological advancements became a game-changer in the debt collection market. Industry leaders invested in machine learning tools and predictive analytics to segment customers with greater precision.

Artificial Intelligence (AI) emerged as an indispensable ally, used not only to personalize collection approaches but also to predict default behaviors more accurately. Additionally, AI was integrated into advanced chatbots, enabling automated negotiations and high-quality support for routine demands, ensuring agility and efficiency in customer interactions.

Self-service was another highlight of the year, with significant improvements in IVR (Interactive Voice Response) systems and chatbots. These channels not only enhanced efficiency in addressing trivial issues but also facilitated personalized negotiations for customers with a higher likelihood of repayment.

Another key innovation was the use of predictive intelligence to anticipate default behaviors. By combining historical and behavioral data, many companies acted proactively, reducing default rates before they became critical.

What did we learn?

• Smart automation is an ally: Well-implemented technology reduced operational costs and improved the customer experience.
• Data is the new gold: Predictive analytics is not just a trend but a necessity for better decision-making.
• AI adds value: AI tools enhanced both efficiency and personalization in customer interactions.

Customer Focus: A New Paradigm

The 2024 consumer demanded empathy and personalized solutions more than ever. Companies that put the customer at the center of their collection strategies stood out by using integrated channels and humanized communication to establish genuine connections.

Debt collection has shifted from merely recovering financial resources to becoming an extension of the customer relationship. This required a more collaborative and less punitive approach from companies.

What did we learn?

• Empathy drives results: Listening to customers and proposing solutions that respect their financial reality increases recovery and loyalty.
• Omnichannel is essential: Companies that offered multiple interaction channels better met customer demands.

Conclusion: Lessons for 2025

The debt collection market in 2024 showed us that efficiency and excellence go hand in hand with adaptation and innovation. Executives and managers must continue looking to the future strategically, investing in technology, training, and, above all, the customer.

However, the end of 2024 brought concerning alerts: rising interest rates and the appreciation of the dollar signal a challenging scenario for 2025. These factors are likely to exacerbate household debt and increase challenges for companies. More than ever, creativity and operational excellence will be needed to navigate the uncertainties of the coming year, ensuring cost efficiency without losing focus on the customer.

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