Future of Digital Debt Collection

The future is here for debt collection technology.?

In the last decade, the collections industry, which was perceived as being slow to adapt to new technologies, has completely transformed itself. For a lower cost of collection, digital debt collection uses a data-driven approach. Debtors are empowered to make payments on their own and to resolve their debts. Using data, we gain a deep understanding of payment options and channels. This ensures clients are contacted at the right time, with the right message, and through the right channel. ?

1. Having a paper trail is becoming obsolete as everything is becoming digital.?

Most collection industry tasks were done manually in the early 2000s. Fax and regular mail (postal mail) submissions for debt collection represented nearly 99% of all debt collections. Data entry operators or clerks manually entered these accounts into their internal desktop systems, which were then processed by Mainframe systems or other customized applications. It's a decade later, and everything has changed. To accept collection accounts, nearly all large and medium-sized Collection Agencies have their own websites today. The process is faster and cheaper. This is a win-win situation for both Clients and the Collection Agencies. ?

2. The number of tie-ups between collection agencies and software vendors is growing: These days most clients use standard software products for accounting. The healthcare sector is also using software products for their patients' booking and accounting. Similarly, there are several software providers that have now integrated their software with collection agencies, so that delinquent accounts can be transferred for collections if the client wishes. Vendors have another feature for their platform, so clients don't have to extract and send the data separately to a collection agency, and agencies gain more accounts as well. To give their clients options, these software vendors often tie up with multiple agencies. By digitizing the industry, today clients are not restricted to only selecting an agency that is close to their physical location. Instead, they can shortlist any Collection Agency nationwide that gives them a better deal or a higher level of service.?

3. AI and Data Analytics:?

In the past, credit history and FICO score were considered the most significant indicators of an individual's financial standing. Newer technologies, such as AI and Data Analytics, can better predict whether it will be easy or difficult to collect money from an individual. Behavioral assessments can even give insight into someone's spending habits, assets, and liabilities. Then collection agencies can serve accounts with the appropriate intensity and settlement terms. This is made possible by artificial intelligence, predictive analytics, and data analytics.?

4. Conclusion??

Debt collection technology is improving the consumer experience as well as helping businesses work smarter and increase profits. In the coming years, we may see consolidation in the collections industry. The debt collection industry is set to be disrupted by technology just like every other industry.?

According to Forbes, the next wave of debt collection technology will include artificial intelligence (AI). But the article points out that most of the smaller collection agencies are currently failing to capitalize on debt collection technology:?

“A tiny percentage of profits (from these firms) get reinvested into new technologies. As a result, the players in the industry resemble large dinosaurs, stubborn, resistant to change, and simply awaiting the arrival of the asteroid to usher in the next wave of evolution.”?

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