QUANTRAX versus TEC SERVICES

by Ranjan Dharmaraja, Technologist, Quantrax Corporation

BACKGROUND

Let us start by saying we deplore negative selling because there is no better way to insult an intelligent prospect. We also love this industry and know that successful agencies and first parties must thrive, for vendors like Quantrax to succeed. The driving force for a winning agency is the successful adoption of the best collection software. Supporting actors like dialers and chatbots are important, but if you are a race car driver, your car is far more important than your pit crew. This article is not negative selling. It is about calling out inaccurate and misleading information that is important for our industry.

In the last two years, AI has taken center stage in almost every industry. Rightly too, because of its potential to change everything in very positive ways. It's created a feeding frenzy. As an example, almost overnight, NVIDIA that sells GPU's and is the world's leading maker of artificial intelligence chips for professional applications, became one of the most valuable companies on the planet.

AI is disruptive technology, and so was the iPhone. There are concerns about AI, but the positive sentiments have far outnumbered the concerns. When one visible consulting company's strategy is to warn the collection industry about the disadvantage of AI, recommending caution and waiting, instead of optimism and speed, it was a concern for us. The collection industry may be shrinking quickly and there are more concerns than answers. We must become more profitable quickly, and we at Quantrax, took it upon ourselves to fact check some of TEC Services' controversial conclusions on AI, in the interests of an important industry.

TEC SERVICES

TEC Services Group is a successful technology and professional services company, serving the credit collections industry for over 25 years and describing themselves as "The most trusted technical services company serving the collections industry."

After a recent expansion of their services, TEC Services is now providing product advice and implementation services for collection software companies Latitude by Genesys and Debt Manager by C&R Software.

Adam Parks of Branding Arc, recently talked to Jon Daane, VP of Sales & Marketing at TEC Services Group, in the "Receivables Roundtable" Series, hosted for Receivables Info.

Here is the link to that discussion.

https://www.youtube.com/watch?v=yYd61oFfqK0

A summary of that chat was :

• TEC Services have created "TEC Solutions" that 'sells' different technology solutions, including collection software platforms, and can assist with the implementation of those products.
• In addition to "Bridging Systems with Solutions", Jon advanced his subjective comments and recommendations regarding AI in collection software.

AN OBJECTIVE ANALYSIS OF THE AI-RELATED STATEMENTS

TEC Services describes their approach as being akin to an Angie’s List, "ensuring you receive the most effective recommendations to optimize and improve your collections process." From Quantrax's vantage point, which has the advantage of three decades of investing in AI-based collection software, that would be as infeasible as creating an Angie's List for space travel. Why?

For demanding top-tier creditors looking for cutting edge service levels, collection software is cleverly engineered, sophisticated technology, that requires an intimate understanding of system platforms, the collection industry, collection software and domain knowledge that includes dialers, e-mail, texting, direct drop voice mail, automation and AI. That knowledge is extremely difficult to cultivate and maintain. To even suggest that this role can be successfully outsourced to a third party that probably does not have the software platform's source code, is misguided and bordering on reckless.

Companies are free to pick their partners and how they manage those relationships, but when a visible consulting company contradicts the usefulness, practicality and potential of AI in modern collections, we had to ask, "Why would AI be welcomed in every industry other than collections?"

Let's take a look at some of Jon Daane's statements.

"TEC Services stays a truly agnostic consulting firm."

If agnostic refers to being impartial, that's baffling because in spite of working closely with only two collection software companies (Latitude and C&R Software), neither of which has ever claimed to have built AI-based software, TEC's advice was heavily slanted against AI in collection technology. We wonder if the advice from TEC Services would have been different if those two companies offered AI-driven software?

"The use of the word AI needs be clarified. There are different types of AI."

This statement was misleading and set the stage for several ambiguous and inaccurate statements that followed. There are different ways that AI has been applied in different use cases, but there is only one AI, and its definition is consistent. IBM says "Artificial intelligence, or AI, is technology that enables computers and machines to simulate human intelligence and problem-solving capabilities." From Wikipedia, we have "Artificial intelligence (AI) is the intelligence of machines or software, as opposed to the intelligence of living beings, primarily of humans." There is even a test for AI dating back to 1950. It's called the Turing Test and is a test of a machine's ability to exhibit intelligent behavior equivalent to, or indistinguishable from that of a human. There aren't different types of AI - it is simply about machines performing like humans. That could be Elon Musk's chips in a human brain, Expedia that has replaced travel agents, or collection software that can manage several million accounts in the same way that your collection expert would. AI does have different use cases, but it has an uncomplicated, single, definition.

"It goes to my core philosophy in sales that sales is no longer about product knowledge or knowing a specific technology".

We had to listen to that several times. Did we lower the bar so that it was acceptable for a salesperson to talk to us about technology that manages millions of accounts, scoring, compliance, dialers, intelligent chatbots, analytics, implied consent, and data security, without product knowledge or knowledge about specific technology?

"We're starting to ask questions like 'Where do you want to be in 10 years'".

This is not AI-related, but we must talk about it. Sales is about knowing your product, specific technology, and the industry. Profits are down and most owners have no solutions that are certain to change that. There are predictions that we could be down to 500 agencies in a short time, and TEC Services asked you where you want to be in 10 years? How about "I think we can quickly help you to address your labor shortages, very high IT costs, the great fear of lawsuits, and the credibility of your software vendor who wants to extend the life of a 25-year-old platform that is never going to leverage AI or give you the truly integrated, compliant, omni-channel features you needed a long time ago?'

"The use of the word AI needs be clarified. When we use it broadly it can distract the message. AI is a technology, it's a tool. Leveraging AI to interact with consumers may be a bit too much at this time. May not be. We need to be very cautious about how we step into it."

There were several statements in the above, that we have not been able to connect.

That was a lot to unpack quickly, but we will try. If this was all you heard about AI for collections, and believed it because you had heard that TEC was "the most trusted technical services company serving the collections industry", would you have a positive outlook for AI in credit collections? TEC's lack of understanding of AI is clear. AI is disruptive technology. We saw what Uber did to the taxi industry and we know what AI voices and Chat GPT did to the entertainment industry. This is closer to the truth and is from Telefónica. "Embracing disruptive technologies saves companies money by allowing them to enter the market with cheaper products and services, such as robotics and process automation, because they help increase productivity by moving away from strategies and structures that are outdated and inflexible, to the needs of an ever-changing global marketplace."

"There are collection platforms that were designed to be some form of AI. That is not Generative AI which is what people think of when they think AI."

Fact check, first. Generative AI is a great example of AI, but AI is much more than Generative AI. A robot waiter that delivers orders to the right table, walks around filling up water glasses and can remove your empty plate, would be AI that does not use Generative AI. When Jon referred to "collection platforms that were originally designed to be some form of AI", was he referring to Quantrax's collection software that Quantrax says was designed ground up, 30 years ago, to be artificially intelligent? Is that what this is all about? After all, Jon has seen Quantrax's collection software. He has asked questions about our technology but has continued to challenge Quantrax's position (and that of some very recognizable companies) that they have an AI-based collection platform.

"Software companies were designed to sell their software and they want everybody to move as fast as possible. Customers are going to be lagging... due to cost differential and risk... The right thing to do is 'Let's not rush into it. Let's not put you at risk.'"

Here's the glass half full. A new collection platform for 40 people, may cost you $100,000 plus one-time conversion costs that will not break the bank if you work with a company that knows what they are doing. Is that the cost differential that Jon referred to? What about the $350k a year that you will save because you will need 10 less people if there could be a true vertical shift because of significant productivity gains? Add the IT savings and better customer service for your consumers and reduced risks. Is there a reason to rush?

"Agencies and companies are afraid of taking that next step. They don't understand. Look for a truly objective look at what can be done."

That was the response when asked about advice to a company looking around for an upgrade.

Of course they are afraid. They have 25-year-old software that was not redesigned to meet predictable requirements and is being reinforced by expensive IT spending and workarounds. Profits are down and the solution is to keep doing what you've been doing for the last 10 years? Of course, they don't understand and are afraid.

"We are fairly on top of what's available today, and where the market is headed from a collection software standpoint, from an omni-channel......"

Is that the truth? Jon mentioned Latitude, Debt Manager and Sedric (companies TEC Services works with), and said a great deal about collection software, cautioning the collections world about the pitfalls of AI, but not once did he mention Quantrax, the company that claims to have had a successful AI-based platform for 30 years in many companies, including very large Fintech and healthcare providers, and hundreds of agents on multiple companies servicing the now cancelled large and small Education Department contracts.

"There's all sorts of technology that's coming up, that's on the forefront, it's not quite out yet. It's coming very quickly, and we want to be a part of that. My only caution, is we have to be careful how you leverage the word artificial intelligence."

Come on, Jon. Tell us what's coming very quickly. Why delay? This is not about leveraging words, as you say. It's about leveraging very powerful computers and software, to help us in ways that were never possible a few years ago. It's about doing the right thing for a non-technical industry that needs honest and objective advice. Jon Daane clearly suggests you hold or sell, while every other industry is saying buy. Why?

WHY THE FEAR MONGERING?

AI needs to be understood, embraced, and invested in, at the fastest possible pace. Those who cannot keep up will lose like the taxi industry that was changed forever by that smart phone app called Uber. Presenting only the worst-case scenarios and suggesting that we slow down is not what the collection industry needs, considering AI's potential to transform weak and labor-intensive processes into efficient and profitable enterprises.

Quantrax is a software company that builds and supports collection software. Unlike most collection software companies that were started by 'collection people', Quantrax has an engineering background and saw collections as an "engineering problem" and ultimately, a numbers game. In 1991 we deployed a collection platform designed to work and manage accounts like a collection expert would. For any AI-deniers, it was AI. We used 'Backward chaining', a technique that is used in AI to solve problems. The reasoning starts with the goal and works backwards to find the path to the goal. The benefit of backward chaining is that it is a simple and efficient way to solve problems. An example in collections is having one year before you must return accounts to your client. Based on the information you have, what if you had a machine that could make intelligent decisions at data points and times, to meet your work standards and goals for this client? For example, you need 3 attempts by Day 60, with at least one RPC etc. Giving the accounts to the best agent (or sending them down the digital strategy path) and making sure that each attempt is launched at different times in the day, and each phone number is dialed evenly - These are tasks that can only be effectively managed in volume and under strict compliance rules, by computers, and machine thinking (software). As long as you believe that AI is for you, AI will do all of that for you without people.

With no salespeople, Quantrax had 100 different clients in over 35 states, a few years into 2000. There were collection agencies and a few first parties, small and very large companies, that worked medical, financial, student loans and retail. Products by Ontario Systems (Finvi), Columbia Ultimate, CR Software, Latitude and Quantrax, were the choice of most of the companies who sought off-the-shelf collection software.

Quantrax did not push clients towards any specific dialer, letter vendor, payment processing or texting company, although we created powerful and expensive integrations with best-of-breed technology products. We worked with any company that was looking for a mutually beneficial relationship and TEC Services was one of those companies. We even went down the path of a partnership, where they would refer companies looking for a change in software platforms to Quantrax, and we would use their professional services team for data conversions and automation projects. As a part of that relationship, we shared information with Jon Daane and TEC Services about AI and our platform. TEC Services later decided to provide marketing services, implementation, and product support for collection software companies. These services were offered to Quantrax, but we felt that it was impossible to be objective and impartial when a company offered multiple products using staff who were probably incentivized by commission. How objective could they be under those circumstances? As a consulting company that helps companies with RFP's, we also believed that there was an unhealthy conflict of interest within the TEC Services offerings.

Fast forward to 2024 and every agency owner will agree that this is not "our father's collection industry". The older platforms we mentioned have not been rewritten or redesigned as they should have been. There are several reasons, and one of them is private equity that has acquired some of these companies and arguably, focused more on profitability than investing in the best technology for their clients. We have freedom of technology. There are hundreds of companies with hundreds of employees running on aging collection software platforms and looking for better support, code changes and workarounds. Over the years, companies like TEC Services have provided an invaluable service by filling those critical gaps. With that role comes the opportunity to educate and change an important industry. Suggesting that you run what has clearly become an information system business, on 25-year-old software supported by companies other than the original vendors, can be questioned at several levels. It's broken. Let's fix it. TEC Services, that's the elephant in the room and you need to talk about it.

If you listen to the interview with Jon Daane, there was no enthusiasm for agencies to urgently look at their collection software options, including collection software products that leverage AI and have been built or redesigned to meet and comply with today's challenging requirements. If we can agree that technology can be a game changer; that every ounce of AI that can be leveraged must be leveraged; that the functionality of enterprise class software, which collection software is, must at some time be torn down and rebuilt - If you believe that, who really benefits from taking TEC Services' advice that you do not have to rush into looking at AI or making major change, a priority?

Many of the TCPA and state compliance requirements apply to or may soon apply to both first and third parties. The ARM industry is in a period of consequential change and decision-making. There will be success stories and casualties. Between failing agencies, falling profits, lawsuits, and the great fear and caution that Jon Daane sold and talked about, we may be in a rut. You have heard the saying "When you are in a hole stop digging". Positive change and technology adoption must trump (no pun intended) conventional thinking and FOBO (the Fear of Better Options). In the interests of a great industry that is very important to so many people, we urge TEC Services to do their part.

IN CONCLUSION

If there are any doubts that the collection industry should urgently look at AI for collection software, or that Quantrax created AI-based software for collections, we are very happy to have that discussion with Jon Daane and his advisors. We believe that Adam Parks will do an excellent job coordinating and moderating this session and are also happy to split any costs with TEC Services. We believe that this interesting and educational webinar will be of great benefit to our industry.

Quantrax Corporation is a technology company that created an intelligent collection platform over 25 years ago. They believe that the ARM industry has been poorly served by collection technology that has not evolved or kept up with the great potential of computing power, or challenging industry changes. Self-funded, Quantrax has continued to successfully develop and deploy technology that offers modern solutions to old problems.

www.quantrax.com – (301) 657-2084