How Digital Collections Is Transforming the Industry!

A recent research published by Statista highlighted how the digital lending industry in India is expected to cross a massive valuation of 350 billion USD by the end of 2023; however, the report forgot to mention the increasing popularity of another industry, which is closely following suit. While digital collections is not a novel concept to India, during the extent of the pandemic and since a few years before that, digital collections as a service has rapidly risen in popularity both among borrowers and lenders.

Source : Statista | Value of digital lending market in India from 2012 to 2018, with forecasts until 2023?

The continued growth of this industry can be attributed to a number of factors; however, one of the most pertinent ones is the rapid transition of customers from offline to online commerce. What started as a market disruption in India with the introduction of low-cost network carriers quickly snowballed into a rapidly increasing internet penetration and, with it, increased the adoption of online lending and repayment. Since most modern customers spend a significant portion of their time on online activities, industry research indicates that reaching them over online channels is not only more effective in terms of cost reduction but also success rates.

Traditionally, financial and non-banking financial institutions rely on standard debt collection channels such as letters and on-field agents, however with time, these methods have not only proved to be less effective but also innately expensive as it involves a lot of manpower.

On the other hand, digital collection systems pioneered by modern providers such as Spocto leverage the power of technologies such as artificial intelligence and machine learning to not only automate the rigorous tasks of debt collection but also intelligently adapt to customer behaviour, such that an appropriate course of action can be automatically charted to attain the customer highest retention as well as success rate.

The advantages of a digital collections system is widespread, meaning that it can be equally experienced by both lenders and borrowers. On the one hand, lenders now have the convenience of not having to manually follow-up with their customers at regular intervals to collect due payments while leveraging the power of end-to-end intelligently automated systems. On the other hand, customers no longer have to deal with the embarrassment of communicating with on-field agents and yet conveniently clear their dues on time, as they are reminded via gentle nudges and reminders.

Digital debt collection as a service not only has the potential of increasing customer retention via the advantages we shared earlier but also revolutionize the industry in the days to come by drastically reducing costs and increasing success rate.