For third-party debt collection agencies, consumer outreach has always been a multilayered challenge. Because of resource limitations, strict compliance requirements, prohibitive costs, and the difficult ecosystem of consumer collections, it’s rarely easy to reach debtors, with account penetration, right-party contact, and payment recovery being some of the hurdles faced by collectors.
Diversifying the communication methods and leveraging top-tier technology are two solutions to these challenges. The rise of Conversational AI and automated messaging is opening new and efficient channels for communication with consumers, which can significantly boost third-party debt collection operations.
Until recently, few collection agencies would have considered investing in automated text messaging for one simple reason: the technology was not up to par with the needs of the industry, given the lack of two-way communication, user verification, and compliance capabilities.
But now, thanks to Generative AI, things are changing. Text message automation powered by Generative AI handles two-way, multi-turn, intelligent conversations with consumers utilizing the same Conversational AI technology of top-tier Voice AI, all in compliance with the applicable regulations.
In this article, we’ll outline the immense potential that text message automation using Conversational AI has for transforming the industry, both in terms of debtor communication and operational efficiency.
Conversational AI: A Game Changer for Debt Collection
Conversational AI is enabling debt collection to be more adaptive and efficient. This technology relies on natural language processing to understand and respond to consumer inquiries, making the process more conversational and less transactional.
Debt collection agencies have already been relying on Voice AI to automate both inbound and outbound collection calls, delivering impressive results. Now, leaders in the industry are offering additional self-service channels to consumers, so that everyone can utilize the channels they prefer. One of them is text messaging automation with AI.
- Text messages have a remarkably high open rate, estimated to be between 80-99%.
- 90% of text messages are opened within the first 3 minutes of receipt
- Click-through rates with SMS (i.e. clicks on links within the SMS) can vary greatly, but they’re estimated to be somewhere between 15-30%.
Conversational AI handles two-way, intelligent conversations with consumers, answering questions and providing context-based information. Whether you want to use it to automate phone calls or text messages, you’ll be able to harness the power of Generative AI to take your recovery strategy to the next level.
How AI-powered Text Messaging Fits into Your Recovery Strategy
When applied to text message automation, Conversational AI enables debt collection agencies to:
- Reach consumers on their smartphones and enable them to reply whenever and however they prefer
- Handle two-way, intelligent conversations via SMS on outstanding debt and resolution options
- Reduce the burden on live collectors for routine communication and outreach
- Share time-sensitive information such as payment reminders, settlement offers, and deadline alerts in real time
- Integrate seamlessly with existing software and workflows
The core benefit of text message automation lies in its ability to maintain a consistent, timely, and unobtrusive line of communication with consumers. Rather than ignoring calls or becoming frustrated with multiple phone conversations, consumers can engage on their schedule, in a format that is increasingly the most natural to them.
So, how does adding AI-powered text messaging affect your recovery strategy?
Text messaging offers convenience and personalization. When a consumer feels that an agency understands their circumstances, and offers a practical and convenient way to settle their debt, the chances of recovery increase. AI-driven text messages can:
- Respond immediately to queries or requests, expediting the recovery process
- Offer personalized payment plans in installments or settlements
- Monitor and adapt communication strategies based on consumer response trends
By leveraging AI to handle the logistics of communication, third-party agencies can focus human resources where they are most effective—on complex conversations and personalized negotiations that demand a human touch. AI is not meant to substitute live agents, but rather to augment their work.
AI’s Role in Mitigating Compliance Risks with Text Messaging
With the intricate web of federal and state regulations impacting the debt collection industry, compliance is always a top priority when developing new technology for debt recovery. When properly deployed, technology can actually act as a shield against compliance breaches.
Our text automation solution is programmed with several filters and settings to ensure compliance in terms of outreach frequency, Mini-Miranda (FDCPA), user authentication, and opt-out requests. Thanks to the bot’s capabilities to discern intent, opting out is easy and can be done via a wide variety of keywords.
Enhancing the Overall Consumer Experience (CX)
Consumer experience is also an important aspect to keep in mind when it comes to debt recovery, despite being one of the most overlooked ones. CX might sound out of place here, and yet the experience consumers have when interacting with your agency can greatly impact their approach and behavior.
Offering self-service alternatives to speaking with a live collector can greatly impact the consumer experience, and text messaging is one of the most utilized communication tools, making it a safe bet. Text messaging automation speeds up the resolution process and reaches demographics that typically don’t enjoy phone calls, such as younger consumers.
Additionally, Skit.ai’s text messaging solution is context-dependent and keeps track of previous conversations with the same consumer on other channels, as well, such as phone calls via Voice AI.
Are you interested in learning more about how Conversational AI can improve your collections strategy? Use the chat tool below to schedule an appointment with one of our experts!
