The global debt collection solution market is predicted to grow from $2 billion in 2019 to more than $3 billion by the year 2025. Debt collection software is designed to manage and streamline the debt recovery process. The industry’s leading software is powered by machine learning and artificial intelligence, which streamlines and manages the debt collection process. But how exactly does Artificial Intelligence (AI) make debt collection smarter?
WHAT IS AI EXACTLY?
In its simplest terms, AI is intelligence exhibited by machines.
When describing AI, Huw Price, Professor of Philosophy at the University of Cambridge said, “the potential benefits of creating intelligence is huge” and it will “transform every aspect of our lives.” Similarly, Sundai Pichar, Google’s CEO, called it “one of the most important things humanity’s working on. It’s more profound than… electricity or fire.”
HOW AI WORKS IN DEBT COLLECTION
AI works to overcome the limitations of existing, antiquated database systems, through increasing automation and providing compliance management to its users. Furthermore, AI applications focus on productivity and efficiency; they determine the most effective communication method for each debtor, and use machine learning tools to predict and analyse customer behaviour (more on machine learning below). The overall impact is debt recovery and collection is streamlined as a process.
THE IMPACT OF AI ON LABOUR COSTS
The traditional process of debt collection via a human workforce can be incredibly labour intensive, and therefore expensive. Company’s collection departments place calls, send emails manually, and manage accounts by updating databases by hand. Now AI can take the place of a human, by managing debt recovery on your behalf and even autonomously negotiating debt repayment. In addition to labour costs being substantially reduced, collection rates will vastly improve and businesses can run as efficient 24/7 services. It’s a no-brainer.
But of course there are many other benefits of AI. It can enable business growth without increasing staff numbers. It also enhances customer care, and can increase a company’s ability to pre-empt defaulted payments.
MACHINE LEARNING
Machine learning is a specific application of artificial intelligence that provides systems with the ability to learn and improve. Data-driven machine learning methods are an important part of analyzing the impact of AI on debt collection and recovery. Algorithms can predict and model behaviour based on data. These analyse and assess a debtor’s behaviour and as a result different debt collection strategies can be employed and prioritized in order to reach the best outcome. The benefits of this machine learning approach include reducing call centre workloads, lowering costs through more accurate communication with customers, and increased recovery rates.
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