Tech is Driving Success for Savvy Debt Collectors: Here's How

Consumer debt rose to a new high of $15.6 trillion in the last quarter of 2021 from $14.3 trillion in the first quarter of 2021. With inflation reaching the highest level in four decades and millions of Americans living paycheck to paycheck, consumers are expected to crank up their credit usage even further to make ends meet. 

Rising household debt can be a double-edged sword for the debt collection industry. More debt means more collections, but it also means more pressure on operations and staff, particularly as rising financial hardship increases the complexity of the recovery process. Quality assurance functions play a critical role in balancing this tension, but also have to deal with an increased workload and a wave of new regulatory requirements. 

Technology can play a leading role in helping companies to adopt new processes to be more compliant and improve their performance and bottom line. Automation and AI can analyze agent-customer interactions, detect non-compliant practices, and increase collection rates. 

Based on our work with leading debt collection firms, here are three ways technology can improve an organization’s compliance function and overall operations:

Optimizing Digital Channels
Rapid digitization has enabled debt recovery agencies to switch from traditional collection methods, such as phone calls and letters, to digital channels. A McKinsey survey indicated that 73% of delinquent consumers paid up when contacted digitally, even before the pandemic. Since then, collectors’ reliance on technology has only increased. Regulators have extended their oversight of digital channels and enacted Reg F, which, among other benefits, gives consumers greater control over how and when they are reached. 

The firms we work with saw Reg F as an opportunity to adapt. They use our automated platform to monitor and track customer interactions across all channels. By offering intelligent tools to manage regulatory supervision, we enable clients to monitor voice and digital channels seamlessly. An integrated view of all interactions with a single consumer is critical to enforce the 7-in7 rule and additional Reg F “components” that regulate contact frequency. Manual checks can no longer address the complexity introduced by multi-channel communications. Automated auditing enables collectors to extend their view of risk to 100% of consumer interaction, lowering their legal exposure and costs inflicted by litigation and fines. It also provides collectors insights into the efficiency of each channel with individual debtors, enabling them to optimize their outreach and outcomes.

Consumer Experience

Today’s most successful collections firms have done a remarkable job of adopting a client-first approach throughout their operations and delivering debtors a consumer-friendly service. These businesses didn’t primarily view Reg F as a burden, but as a way to continue improving their processes while meeting compliance obligations. For example, while regulations require firms to monitor their agents’ behavior and communications more closely, that analysis can also provide tremendous insights for optimizing collection outcomes and training agents that translate into an improved bottom line. 

By using an AI-powered system, collection agencies can also discover a wealth of data on personal preferences, such as the best time of the day for contact or most effective communication channel, and leverage that intelligence to personalize the collection process and increase their outcomes. It can also analyze customer sentiment to identify an effective consumer contact strategy that’s both empathetic and effective from a business standpoint. 

Agent Training and Stress Level Reduction

Debt collectors and their agents are under an enormous amount of stress. It’s one of the top drivers behind the industry's high turnover rate and has been an issue long before the Great Resignation. With the rapidly changing regulatory environment, the room for error widens and the costs of mistakes increase, adding to stress levels. 

That’s where new models of training come in. Our platform uses the latest technology to improve training processes in the collections industry. It uses speech analysis and AI to better understand agents’ performance and challenges. Based on these insights, it tailors individual training paths consisting of bite-sized videos to make learning easy and rewarding, which translates into tangible performance improvements. Video-assisted learning also speeds up new agent onboarding, particularly in today’s remote working environment. 

With better training, AI-driven intelligence, and a relentless focus on the consumer, collections firms can improve their operations and better support their employees. Innovative compliance platforms provide a competitive advantage to debt collectors by turning burdens into opportunities.