Artificial intelligence has rewritten the basics of every financial service, from retail banking to business lending, Artificial intelligence in fintech is now more than just an exciting concept; how is this technology revamping today’s debt collection process though? Moreover, are financial institutions capitalizing on their debt lending process with AI to improve the overall lending experience?
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If there’s one thing 2020’s rapid pace of digital transformation has taught businesses and finance leaders, it is that forward thinking leaders are now more open to embracing new innovations in financial services to challenge traditional models and the status quo; when it comes to debt collection, in a digital-working world, the practices of yesteryear where incessant phone reminders and letters where part of the routine debt collection process, cannot continue to work. Not only have customer behaviors evolved over the years, so have their expectations from their financial services providers.
To suit today’s changed customer mindset, it is crucial for providers to revisit their debt collection model, a few starting points:
Using AI to understand the reason of late payments
In most cases, everyday bills or functional bills or due payments get overlooked by businesses or individuals because of several reasons including lack of reminders or genuine forgetfulness in the line of work. When it comes to debt collection, it is crucial for debt collectors to not only implement technology that helps them understand what a delayed payment is due to, they should also identify relevant technologies that can help them identify or preempt customer budgets or their potential to default in a particular month based on actual expenses. Automating reminders based on the dates when there are sufficient funds to pay outstanding bills for instance can ensure a seamless process between both, the service provider and customers. Moreover, with financial services now focusing on creating improved customer experiences, financial lenders who implement multiple channels of communication (via mobile, email, social media if needed) before a case of delinquency is reached will have a higher chance of settling repayments on time.
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Understanding high potential debt cases
While AI can help improve communication lines between services providers, debt collectors, lenders and customers, AI can also be used to improve and garner a better understanding of consumer debt and high potential cases at an earlier stage itself.
AI systems, through vast amounts of past data and financial historical information can help evaluate customer payment plans as well, their potential to default or pay on time and can then provider better decision making to lenders for when they have to sanction loans.
AI-powered chatbots
Intelligent AI-powered chatbots can use intuition to guide customer queries online when customers have doubts related to their repayments, by centralizing data and core systems, intelligent AI bots can be trained to suggest repayment plans (during a live chat) based on a customer’s financial status with the aim of ensuring that the suggestion is being rendered to meet payment deadlines on time. When there are multiple active channels of communication available to borrowers backed by the right technologies, financial institutions can benefit by gathering real-time data on customer need and challenges while integrating this data into their systems to help deliver the right solutions at the right time.
Reimagining the customer journey in debt collection with Artificial Intelligence
Using Artificial Intelligence to not only enable better customer services but to also help lenders improve how they handle customer interactions and repayment options instantly is the future driver. From identifying potential loan defaulters to alerting lenders when there is a drastic fall in a borrower’s bank balance, Artificial Intelligence can eventually help financial institutions deliver a more sophisticated client-lender relationship if trained and implemented in the right way.
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