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Research: Turn Your Collection Risks into Opportunities with Digital Precision and Empathy Research: Turn Your Collection Risks into Opportunities with Digital Precision and Empathy

How AI and digital-first engagement are redefining debt collections in the U.S.
lending landscape

From default to dialog: It’s time to act

As delinquencies rise and borrower behavior shifts, lenders face growing pressure to modernize collections.

This HFS Market Impact Report, in partnership with Firstsource, explores how leading financial institutions are responding with digital precision, AI, behavioral intelligence, and human-centered design to transform digital debt collections from a reactive function into a relationship opportunity and efficient recoveries.

What the Report Includes:

  • Insights from interviews with leading US fintechs and banks 
  • Data-backed trends on delinquencies, charge-offs, and repayment behavior 
  • A breakdown of AI-driven collections, automation in collections, and the behavioral signals driving them 
  • Strategic recommendations for modernizing outreach, compliance, and recovery

Key findings:

Collections prioritization has changed

Auto loans and BNPL are now prioritized over credit cards and personal loans. Younger borrowers (~ 50%) use multiple fintech providers, fragmenting repayment discipline and loyalty. So, lenders must compete on relevance, trust, and digital accessibility.

Legacy systems are a risk multiplier

36% of US-based lenders struggle with outdated platforms, and 30% face data issues limiting agility, compliance and AI adoption. Thus, 39% are prioritizing platform modernization.

Digital engagement wins

SMS and self-service portals outperform voice calls and email. Borrowers respond better to low-friction, neutral reminders, and app-based contact.

AI enables early intervention

31% of lenders are using AI-driven collections, automation, and digital tools to act early-detecting cues like autopay deactivation or channel switching before defaults escalate.

Compliance is tightening

Regulations like the FDCPA and Regulation F demand ethical, transparent, and non-intrusive debt collection strategies and data-driven outreach embedded into workflows.

Empathy is a strategic advantage

Lenders offering flexible repayment options and hardship support achieve higher recoveries and deeper customer loyalty—making digital debt collection a relationship differentiator.

Ready to Rethink Debt Collections?

Download the full report to discover how forward-thinking lenders are turning compliance pressure and rising defaults into an opportunity for innovation, trust, and long-term value.

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