The current economic volatility is affecting auto finance companies directly, and so are inflation and other consumer behavioral trends, making it a genuinely complex space to be in.
Tracking the Fitch Ratings on Subprime Auto ABS (Asset Backed Security) provides a better understanding of the circumstances in 2024:
- Subprime auto delinquency rose to 6.39% in February, the highest in the decade.
- The industry usually expects a recovery in March and April due to tax refunds. Delinquency rates did drop to 5.23% in April.
- Even with this drop, the delinquency trends are the highest in the last decade. The recovery rates were the second worst, second only to the April 2020 rates.
With the auto finance industry expected to grow at a 7% CAGR, controlling delinquencies in a less affordable market troubled by high inflation rates is a challenge.
In addition to these macroeconomic stresses, auto finance companies face an acute skilled labor shortage. This cumulative effect has made auto finance companies scout for automation solutions that can solve their challenges on all fronts.
Relying solely on traditional collection strategies is not enough in this current landscape. Adopting innovative technological solutions has become a necessity. Before Conversational AI, no tech had the capability to automate collections and customer support calls without the need for agent intervention.
How Multichannel Conversational AI Can Empower an Auto Finance Company with Automation
Multichannel communication is a critical component of automating collections through AI. Multichannel communication refers to using multiple channels, such as email, SMS, phone calls, and webchat, for collection agencies to engage with customers. By utilizing multiple channels, AI-driven systems can effectively reach customers, providing convenient avenues for them to address and resolve their delinquencies.
This approach caters to consumer preferences by offering a range of communication options, ensuring that each customer can engage using their preferred channel. Furthermore, this strategy is context-based, meaning they can seamlessly switch between channels without losing the context of their previous interactions.
Conversational AI for Inbound Communications
Inbound communications are a gold mine for collections. Customers often reach out with various inquiries, frequently seeking help to make a payment or process their transaction.
Without Conversational AI: Most auto finance collection processes depend on agents to handle inbound customer inquiries. However, if customers attempt to reach your business during off-hours or on weekends and holidays, they often can’t get connected with an agent, leading to missed payment opportunities. Moreover, maintaining a well-trained team of agents amid rising attrition makes it increasingly challenging to provide reliable inbound support, making it harder for customers to simply make their payments.
With Conversational AI: All inbound communications are seamlessly managed. Every call is answered, every SMS and email receives a reply, and no payment opportunity is missed. It can also schedule follow-ups and calls for later if requested or needed.
Conversational AI’s Impact:
- Better collections as willing consumers have access to easy payment options
- Better disposition and intent capture
- Improvements in CSAT scores
- Better customer experience as financiers can listen to and record every customer query.
Conversational AI for Outbound Outreach
Conversational AI revolutionizes customer outreach by automating end-to-end collections, allowing auto finance companies to efficiently scale their operations.
Without Conversational AI: Traditionally, reaching out to customers involved significant manual effort, with agents making individual calls and sending messages.
With Conversational AI: Collections are streamlined, enabling thousands of calls to be placed and SMS or emails to be sent within minutes. This not only saves time but also ensures that outreach efforts are consistent, widespread, and personalized, significantly improving scalability and operational efficiency.
Automated Outreach for Better Auto Finance Collections
Multichannel Outreach for Maximum Engagement
Today’s customers—especially those from Gen Z—prefer to interact across various communication channels. They are no longer limited to a single mode of communication like phone calls; instead, they expect to be reached via SMS, email, or other digital platforms. Conversational AI excels in this area by facilitating multichannel outreach, ensuring communication is tailored to each customer’s preferred method. By engaging customers where they are most active, auto finance companies can achieve higher response rates and better engagement.
Seamlessly Consistent Communication
A key advantage of using Conversational AI for outreach is its ability to integrate and never lose the context of communications across all channels. Whether a customer responds via email, SMS, or phone, the AI ensures that all interactions are a part of a unified communication strategy. This prevents any communication gaps or inconsistencies, providing customers with a smooth and coherent experience.
End-to-End Collections without Agent Intervention
Conversational AI can establish right-party contact, capture promise-to-pay (PTP), and facilitate on-call payment collection without needing any agent intervention until asked for or during any complex situation. Customers can easily make payments using a card-on-file or through a secure text-based payment link, streamlining the payment process. This approach can also lead to faster collections without compromising the customer experience, ensuring that payments are collected promptly while maintaining a positive relationship with the customer.
Facilitating Negotiations and Payment Plans
Conversational AI is not just about collecting payments—it can also handle more complex interactions, such as negotiating payment terms and setting up customized payment plans. For customers facing financial difficulties, the AI can offer flexible solutions that align with their current situation, such as extended payment deadlines or installment plans.
Automated Payment Reminders
Conversational AI can automatically send payment reminders via SMS or other channels to further enhance the payment collection process. These reminders can be scheduled at optimal times to ensure they are received when the customer is most likely to take action. By proactively reminding customers of upcoming or overdue payments, the AI reduces the likelihood of missed payments and improves overall collection rates. This feature is especially useful in maintaining regular cash flow and ensuring customers remain on track with payment obligations.
Impact of Conversational AI
Conclusion
Multichannel Conversational AI offers auto finance companies a powerful tool to automate and optimize their collections process. By integrating multiple communication channels and leveraging AI-driven technology, companies can enhance customer engagement, streamline operations, and achieve faster debt recovery without sacrificing customer experience.
Whether it’s managing inbound communications, automating outreach, facilitating negotiations, or sending timely payment reminders, conversational AI provides a comprehensive solution that drives better outcomes. As the auto finance industry evolves, embracing this technology will be key to staying competitive, improving profitability, and building stronger, more responsive customer relationships.
Are you interested in learning more about how Conversational AI can improve your collections strategy? Book a demo to schedule an appointment with one of our experts!
