How Digital Debt Collections Can Drive FinTech Success?

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5 Ways in which Artificial Intelligence (AI) and Machine Learning (ML) improve Customer Experience (CX)

Digital transformation has disrupted the financial services sector today, creating two worlds, namely traditional and FinTech. Increasing data-driven trends in FinTech have cut across traditional financial services in banking, equity, and debt collections.

Although they are miles apart from each other in the way they approach their businesses, the end goal remains Customer Experience. However, lack of clear visibility into customers’ debt, indifferent approach to collections, stringent collection strategies, and manual collection processes are resulting in poor collections yields and higher costs to collect.

Further, the major impact of COVID-19 on debt collections and imminent defaults have necessitated a digitally-driven standardized approach to ensure collection management efficiency, process consistency, and reduced customer anxiety to drive FinTech success.

Traditional Debt Collections challenges & how AI-driven Digital Debt Collection approach can help

The traditional approach required associates to constantly call or email customers for debt collections. As most organizations do not dedicate resources to analyze their customer’s profiles, associates continue to contact all kinds of customers (defaulters and otherwise) without any prior information and intimation.

This approach also demands that associates constantly call the debtors, or meet them in person until the collection is made. If the debt is overdue, apart from the default charges and lawsuit threats, the relationship between the debtors and collectors is more often than not, irretrievably destroyed.

Today’s digital-first customers are inclined towards tech-savvy means of communication and prefer to be contacted only through digital channels. This is the right step towards the digitization of the debt collection industry. Being at the forefront of this transformation, FinTech companies can choose a data-driven approach leveraging AI & ML in debt collections. Here are some of the ways AI can establish a goal-oriented approach and improve CX:

Customer-centric collections

Today’s customers seek authentic and personalized communication. To enable this, AI & ML provide associates with insights on customer needs and preferences to customize their communications, choose preferred channels, and determine time & frequency to reach debtors swiftly.

Maintaining compliance

Year on year regulatory concerns have been on the rise, with stringent privacy laws and loss mitigation strategies becoming increasingly integrated with lender offerings. Data backed with AI can identify the optimal strategy and engage with customers accordingly.

Crafting customized insight-led solutions

AI platforms provide a 360-degree view of customer’s behavior, leveraging data from all available sources such as credit data, social profile, and financial history. This helps in defining clear category segmentation and aids in devising strategies with custom-made requests and recommendations. While in conversation, associates can have a single-view customer dashboard that helps them push relevant repayment options, recommend plans, and streamline communications.

Data-backed omnichannel approach

A data-backed omnichannel approach helps FinTech companies create an effective omnichannel approach across multiple customer touchpoints such as emails, calls, SMS, and others. Key engagement insights lead to faster collections and reduced operational costs.

Improving Operational Efficiency

Analytics on historical customer interactions provide key insights to manage real-time issues of the customers’ experience. By using data-driven research, the debt collection process is more goal-oriented, customer-friendly, and accelerated, which helps improve operational efficiency.

Conclusion

Customer experience drives business success. And if leveraging AI and ML can help improve CX, and provide wider business opportunities for lenders, FinTech companies should lead the way. However, to leverage AI and ML to its optimum, you need a robust platform that can help integrate data from traditional as well as digital sources to derive contextual insights.

Explore Firstsource’s Digital Collections platform, underpinned by our ‘Digital First, Digital Now’ approach. It leverages diverse technologies including automation, AI/ML, and cloud-based services through a people & technology transformation framework for decoding your customer interactions and personas. This helps reduce your cost of collections to as low as 3% and enables delivering better recovery rates for you.

To learn more, write to us for a quick demo of the platform.
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