Debt collection just got easier: the role of AI explained

Consumer debt is at an all-time high. According to research by PWC, total UK household debt now exceeds £2 trillion.  

That’s the equivalent of £71,000 per household - and along with the rise in debt comes the ongoing challenge of getting people to pay.  

If debt collection methods are going to succeed, they need to be efficient and deliver a great customer experience. So, how can businesses successfully navigate the rise in collections volume whilst also gaining that all-important competitive edge? That’s where AI for debt collection comes in.  

AI is revolutionising the debt collection process by automating key tasks, improving decision making, and streamlining workflows. Whether by analysing data or predicting risk, it improves accuracy, compliance, and efficiency throughout all stages of the debt collection cycle.  

Read on to discover the role of AI in debt recovery and collections - and how AI is making debt collection easier...  

How AI is making debt collection easier 

1. Faster recovery through automation

Old-fashioned, obsolete processes are one of the biggest barriers facing debt collection today - but AI can enable you to speed up the debt collection process. From streamlining time-consuming data entry tasks to using AI chatbots to interact with customers in real-time, AI frees up your time to focus on high-value activities.  

AI-driven technologies also enable you to automate customer contact without manually reaching out to customers. For example, AI solutions can accelerate the debt collection process by sending reminders and managing payment schedules, enabling you to focus on more complex issues.  

Essentially, by automating manual processes such as email communications and reminders, as well as utilising AI to look at the probability of actual payment and recommending the best time to contact customers, you can reduce time and resources required, resulting in improved efficiency, enhanced productivity, and better debt recovery success rates.    

2. Enhanced risk assessment

Another big challenge in debt collection is understanding which accounts are likely to default. However, leveraging predictive analytics powered by machine learning enables you to detect abnormal activities faster than ever before.  

Using AI to enhance customer profiling, segmentation and analysis of data, you can predict customer behaviour based on patterns of payment or risk, helping you to understand each customer’s situation. What’s more, you can also utilise prescriptive analytics to decide what to do about future outcomes and create behaviour-based risk models to inform and improve your collection strategy.  

By understanding the unique circumstances of your customers, AI helps you design more relevant, human-centered approaches. You can then fine-tune your interactions based on customer profiles. Customers who may be facing temporary difficulties, for example, can be offered flexible payment plans or deferred payments, building trust and potentially boosting repayment rates. 

Access to such powerful information means you can tailor your strategies, prioritise high-risk and financially vulnerable accounts for action, and take proactive steps to address potential issues - ultimately improving the chances of successful collections.  

3. Improved customer experience

If you are going to streamline your debt collection process, understanding your customers and delivering a great customer experience is key - and if you want to understand your customers, you need a single overview of their debt history. However, this is almost impossible to achieve manually thanks to immense datasets related to customer profiles and payment histories. 

But AI-powered predictive analytics and machine learning enable you to quickly collect and analyse vast amounts of data from multiple different sources. From behavioral patterns to financial history, these insights empower you to understand and segment your customers, so you can optimise your strategy for an enhanced customer experience.  

The advanced analytics provided by AI also means you can create personalised engagement strategies and optimised repayment solutions. This level of insight allows you to offer flexible, realistic payment options that are more likely to be adhered to. As a result, debts are repaid more consistently, and customers feel more supported during the process. 

4. Increased engagement

Finally, AI analytics and real-time insights can also help you to communicate and engage with your customers at scale, improving collection rates and customer satisfaction.   

Effective communication is essential in the debt collection process. In the past, collection efforts often relied on generic reminders and mass communication, which rarely yield positive results. However, AI for debt collection makes it possible to create personalised communication strategies for each customer, resulting in more effective engagement.  

The fact is that customers are more likely to interact with and respond to messages delivered through their preferred channels - and the customisation of messages through AI will lead to higher engagement still. By analysing data and using NLP techniques, AI tools can enhance communication and personalise messages, adopting the right tone and messaging based on the needs of each individual customer.   

By creating a smoother, personalised, omnichannel interaction, and ensuring that each message is tailored to the recipient’s circumstances, you can deliver a better customer experience and increase the likelihood of a positive response. 

Plus, by using AI tools to analyse individual payment histories, behaviours, and preferences, you can determine the best time and method for your communications. From chatbots and virtual assistants to phone calls, you can then use your data to pinpoint each customer's preference and tailor your communication methods.  

What’s more, machine learning enables you to adapt the tone and content of your communications accordingly. This not only improves the customer's experience and enhances engagement, but also speeds up the collection process, ultimately leading to faster payments.  

Now’s the time to embrace the power of AI  

There’s no denying that artificial intelligence is revolutionising debt collection. Debt collection no longer has to be a labour-intensive, manual process that is prone to inefficiencies. Rather, AI-powered software is transforming the industry by offering powerful tools to enhance accuracy and increase efficiency, allowing businesses to use data and machine learning to understand their customers on a deeper level.  

This transforms the relationship between customers and financial institutions, making it more collaborative while also speeding up recoveries and improving collection effectiveness.   

Ready to make your debt collection easier with AI?  

If you want to explore how AI can help make your debt collection easier, as a global leader in debt collections and recovery technology, the team at EXUS is here to help you to optimise collections, improve recovery rates, and ensure compliance every step of the way.  

Contact us today to set up a demo and learn more. Alternatively, why not download our ultimate guide to AI in debt collection for step-by-step advice on how to increase debt collection efficiency with AI.