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Crafting a Digital-First Debt Collection Company by Becoming Voice-first

The need for digital transformation (DX) can hardly be overemphasized. The need for DX and automation is becoming more conspicuous in the debt collection space. Globally, companies are expected to spend a whopping $1.8 trillion on DX technologies, and what’s more incredible is that DX spending will sustain the momentum and grow at a whooping CAGR of 16.6% between 2021-2025 (IDC DX spending guide).

While the investment and gung ho surrounding DX are real, typically, companies find it hard to succeed at DX, and further challenging is to sustain that success. Only of companies succeed at DX, and a much smaller fraction has been able to sustain that success. This blog focuses on one technology that has proven to have a high business impact, and success rates, while being easy and quick to deploy, i.e., Voice AI.

Debt collection space has not remained insulated from the recent tumultuous years. The industry is amidst epochal changes as challenges mount in 2022. The overall grim economic forecast, inflation, and frequent regulatory changes make it imperative for debt collection companies to transform. In 2010, U.S. businesses placed $150 billion in debt with collection agencies, who could collect just $40 billion of that total. On delinquent debt, the industry averages a 20% collection rate, a decrease from 30% a few decades ago.

Technology is the only potent tool capable of overcoming core challenges and transforming debt collection companies. 

Ironically, 7 in 10 U.S. small businesses put off technology decisions and are invested deeply in day-to-day tasks, according to a 2021 study from Xero, a global small business platform. The implications of this are clear–companies will not be able to incorporate technology that is vital to their long-term survival. No wonder the majority of DX efforts result in digital grief. Hence the discussion on a technology that brings about quick and easy transformation is vital. But first, let’s deep-dive into the challenges that are crippling collection agencies.

As CXOs look forward to improving the performance of debt collection agencies, here are the core problems they are trying to solve:

Efforts have been made to solve these problems, emanating out of 8 core challenges:

What Digital Transformation (DX) or Being Digital-first will do?

DX is essential if a company wants to thrive in the long run. But it is a precarious journey, and only when prudent technology incorporation is done, it brings about positive outcomes.

For the same purpose, we delve into the nuances of technology that a debt collections agency can incorporate. Post transformation, debt collection agencies can leverage technology to be more agile, more efficient, and automate most of their processes.

Technologies Enabling Debt Collection Companies

We have classified the technology into two parts – Those that help in communication and customer support. and those that support the business function.

A. Customer Support Technologies

i. Voice-Based Conversation Technologies

We can look at voice-based technologies from a standpoint of their newness. This is important because most debt collection companies have to decide what to upgrade, integrate and replace.

  1. Dialers and Telephony
  2. IVRs
  3. Voice AI or Voicebots
  4. Voicemails
  5. Voice Analytics

The larger discussion here would be about legacy systems. Dialer and telephone are very important and can be of great value if they are on the cloud. IVRs are still useful, but are equally frustrating, so a decision to either replace them or upgrade them is a big one. Voice analytics is a new and emerging tech, and debt collections companies will benefit if they leverage it. We will discuss Voice AI in detail, as the potential for value creation is incredible.

ii. Text-Based Conversation Technologies

They have been the oldest ones and have also been a part of legal mandates. These technologies are a significant part of interactions with customers, notifying them at the right time.

  1. Chatbots and Text Messages
  2. Using Email in Debt Collection

Text messages have been a vital part of debt collection as they are mandated by regulations. Chatbots are new and are improving rapidly, but since debt issues are complicated, it is not the favored go-to modality for problem resolution. 

B. Technologies Supporting Business Function

These technologies power the business function of debt collection agencies and help them operate at better operational efficiency and agility.

  1. Collections CRM for Debt Recovery
  2. Debt Collection Compliance Software
  3. Payment Gateways

They are very essential and can help debt collection agencies perform operationally better.

Analysis of Cost Structure

To assess the impact of technology, it will be necessary to analyze its impact on cost and revenue. Typically the cost structure of a debt collections agency is like this:

Even a cursory look at the graph makes it abundantly clear that wages are the most significant element of the cost structure, ranging near 42%. Hence a technology that helps debt collection agencies minimize this cost via automation will have a significant impact on the structure of collections agencies.

Call Automation via Voice AI

Voice AI is the most disruptive technology of our times since it automates the most expensive part of contact center operations – calls and conversations.

It is one-of-its-kind technology that can enable debt collection companies to make complete calls without requiring a human agent. Lately the Voice AI technology-based SaaS platforms have become quite affordable and quick to deploy. Hence are creating large competitive advantages for early adopters. 

AI-enabled Voice Agents have been optimized to understand spoken language and strike intelligent conversations. The voice engine picks up not only what the customer is saying but also the semantics of the conversation.

Perhaps it is the most disruptive of all the present technologies as it is empowered to answer customer calls, and can reach them out independent of human agents. They are also excellent at updating customers and adhering to compliance requirements. They are proven to cut costs and improve agent productivity and collections rate. 

Read more about How – The Magic Pill of Voice AI can  solve Debt Collections Challenges 

Solving the Biggest Challenge – Automating Voice Conversations

A major chunk of the cost of a debt collection agency involves human agents’ salaries and similar expenses towards that end. Today, for the first time, companies have the technology to automate voice conversation and make calls possible without the need for human agents for as much as 70% of call volume.

We are in this section to delve deep into this new era of technology that will help companies transform truly.

Listen to Skit.ai’s Voicebot in Action 

Voice AI Software for Debt Collections Industry | Skit.ai

The rapid rise in call volumes, defaults, demand for remote resolution of disputes, and diminishing CX have resulted in collection agencies scrambling to catch up.

The need for better outbound collections efforts—along with managing increasing volumes of inbound inquiries from customers—is putting pressure to scale contact center teams, an undesirable and herculean task.

Call center turnover (30 – 45%) has always been a challenge and has generally been twice as high as the industry average (13.5 – 18.5%), while collection agencies perform worse, with some reporting as high as 100% employee turnover. The concatenation of these factors—higher call volumes, regulations, and agent turnover—has made companies lookout for technology solutions such as Voice AI-enabled contact center automation.

Let’s compare the challenges collections agencies are facing to how a conversational AI-enabled Intelligent Voice Agent meets every challenge.

Beginning the DX Journey With Voice AI

Of all the technologies, the deepest impact has been seen with the deployment of Voice AI. This is because a major part of what a debt collections company does is conversations and automating them is going to create an unprecedented amount of value. 

Once a voicebot or Voice AI agent is deployed, here is what that happens:

  • Automated campaigns with clear data documentation
  • Clear capture and documentation of the disposition/intent
  • No breach of compliance as the virtual agent stays true to script 
  • Handing the same volume of calls with a much smaller human agent team
  • Improve compliance adherence by Voice AI strict adherence to scripts, timings, and regulatory changes
  • Immediate cost savings and revenue expansion 

7 Reasons to Adopt Voice AI For Debt Collection

Augmented Voice Intelligence or AVI is the blend of Conversational AI and human intelligence. It creates meaningful conversations with customers to support them throughout their entire collection journey while adhering to compliance and regulations. Let’s delve deeper into the 7 core reasons:

Read in detail about these reasons in this Article

Here are a few outcomes contact centers have been able to achieve and are equally applicable to debt collection agencies: 

  • Near 50% reduction in contact center operational cost:
    • Debt collection companies can work with a small team of human agents and handle the same amount of accounts. This is due to the automation as a majority of calls by Voice AI Agents.
    • The debt collection companies save on the hassle of recruitment and large wages. 
    • The voicebot would also help companies cut down on agent commissions that typically range between 20-25% of the agent’s fixed compensation and is paid over and above the fixed component. This happens because the voicebot can enable payments without the need for human agents or does end-to-end automation. The higher the proportion of the payments the voicebot enables, the higher will be the saving on agent commissions. 
  • Over 35% automation of customer support efforts: 

For a debt collections company, the split–80% (Outbound) and 20% (Inbound) holds true. Let’s look into the proportion of call automation: 

  • Inbound: Though it depends upon the number of uses the voicebot is trained for, at an evolved stage, it can handle as much as 70% of total inbound calls. Escalating only the complex cases to human agents. Also, even if the call is escalated, the voicebot will capture the intent and establish the right party contact before transferring the call to a human agent. This adds value and saves agent time, and this reduces the cost.
  • Outbound: Typically a voicebot will make multiple rounds of calls for the entire database before it can capture the soft PTP (propensity to pay). Only on the select accounts, the human agent will make the call. In many instances the voicebot does the job, in the same manner, a human agent would and thus creates value by replacing his effort. For instance, it can successfully establish:
    • Wrong party contact 
    • Call back 
    • Debt dispute
    • Reminder calls 
    • Capturing disposition to pay
    • And more.
  • About 40% reduction in Average Handling Time 

Overall companies across industries have observed a drop in average handling times. This is because even in most simplistic use cases the voicebot will verify the consumer, identify his/her intent, and summarize the interaction. This helps the human agent close the query faster. 

  • Smoother Recovery with Better CX

Making the right call, to the right person at the right time makes a world of difference in collections space. Voicebot with its meticulous follow-ups, with the right message, can help customers make payments more conveniently. Hence companies see better recovery with better CX.

The Most Comprehensive Guide on Selecting a Voice AI Vendor


When going for DX, a piecemeal approach is the best. It is most prudent to start with technology with the biggest impact on the performance of the company and has the highest ROIs. But concurrently it must be easily accommodated into the current process with slight modifications. Voice AI possesses all the qualities, making it an ideal point to begin the DX journey. 

AI-enabled Voicebots such as Skit.ai’s Digital Voice Agent thus has helped companies transform their contact centers with positive business outcomes. 

For any questions on selecting the right Voice AI vendor and the technology, please schedule a meeting on www.skit.wpenginepowered.com 

Contact Center Outsourcing vs. Contact Center Automation

Companies all over the world spend billions of dollars on contact centers. In 2020, the global contact center market size was estimated to be over $339 billion, and that number is projected to grow significantly over the next decade.

Whenever a company invests in their contact center — whether it’s in-house or outsourced — they end up spending most of the budget on staffing, and significantly less goes to fund the technology. Even then, contact centers are dealing with major staff shortages that have caused customer service wait times to skyrocket.

In this article, we’ll discuss the pros and cons of contact center outsourcing, and we’ll compare them with the benefits of contact center automation with innovative conversational voice AI solutions.

What Is Contact Center Outsourcing?

Over the last decade, many companies have begun outsourcing their contact center operations. Contact center outsourcing is the use of contracted labor from a third-party source or organization to manage a company’s contact center and customer service operations. These third-party sources are commonly known as business process outsourcing (BPO) and they are often located offshore.

As a result of outsourcing, staffers who do not work directly for your company will handle all of your communications with your customers; they will be the ones to pick up the phone when you receive an inbound call from a disgruntled customer or a technical question related to your products or services. Additionally, customer interactions that may be handled by the BPO may include social media (e.g. Twitter), live chat, and email.

It’s common for contact center outsourcing to take place offshore, as it’s typically cheaper to manage these operations abroad.

The Benefits of Outsourcing Your Contact or Call Center

Here are some of the most relevant pros of outsourcing your contact center:

It’s cheaper. This is not to say that it’s cheap—just that it’s cheaper than running your in-house contact center. Hiring, training and managing staffers is expensive, in addition to the expenses related to the facilities and equipment required to run the center. Unloading all of these challenges to an external organization that is familiar with this type of operation is likely to save you a significant amount of money.

It’s one less headache. Money aside, managing a contact center can be a major headache, especially when dealing with the current attrition rates, which are very high, and short-staffing issues. If you are not ready to invest the time that goes into this type of operation, outsourcing may be worth looking into.

Customer service around the clock. Offering 24/7 customer service has become the key to a successful customer experience. However, maintaining an in-house team of customer care specialists that can deliver 24/7 service is a challenge most businesses cannot handle.

It allows for some scaling flexibility. As your business grows, customer queries will grow, too, and you’ll need to seamlessly scale up your service operations. Additionally, temporary crises and unexpected events can cause query and call volume surges, which are difficult to manage for a smaller, in-house contact center.

The Disadvantages of Contact Center Outsourcing

Yes, contact center outsourcing may have its perks, but it’s not the perfect solution to all of your contact center needs. Here are some of the disadvantages:

Limited control over your contact center. Outsourcing means trusting a third-party organization to manage your interactions with customers. While as a business you often have to rely on other companies and solutions, when you outsource your contact center you accept that you will likely have limited control over its operations.

Limited knowledge of your company. BPOs typically service many companies, which means that your contact center agents may be assigned to work with other companies, as well. Additionally, because they don’t work directly for you, the agents are likely to have a limited knowledge and expertise of your company and the products and solutions you offer; by definition, the outsourced agents will be less exposed to your company and will not be able to regularly communicate with other departments within your organization.

It’s still expensive. Yes, outsourcing is relatively cheaper than creating and managing an in-house contact center, but it’s still a very large investment. Additionally, if your customer experience deteriorates because of the poor customer support, then you will end up losing customers, which will directly affect your profit.

What Is Contact Center Automation?

Contact center automation is the process of adopting technological solutions that process and respond to customer service queries automatically, boosting the center’s efficiency, bringing down costs, and offloading human agents of repetitive, tedious tasks. In this article, we are focusing specifically on voice automation, which consists in the adoption of a voicebot.

As maintaining a contact center has become an increasingly expensive and complex operation, more businesses have been looking into automation as an ideal solution to the customer service crisis. Especially for the more simple customer queries, automation can be an easy-to-implement solution that leaves customers satisfied by easily solving their most common issues.

Skit’s Digital Voice Agent is a prime example of contact center automation, as it’s an purpose-built and industry-specific AI-powered agent that can converse with customers, answer their questions, and process their requests as needed.

Does automation mean that human agents are no longer needed? Absolutely not. At Skit.ai, we are firm believers in the power of Augmented Intelligence, which sees human agents partner with artificial intelligence to provide a seamless customer experience.

Dive deeper: Voice AI — The Biggest Contact Center Automation Trend

Benefits of Contact Center Automation as Opposed to Outsourcing

Significantly cheaper. You can adopt an AI-powered Digital Voice Agent at a fraction of the cost of a team of human agents. Some estimate that businesses that adopt voice automation save approximately 50% of what they were previously spending on their call center.

Direct control over your use cases. As opposed to an outsourced human agent, the Digital Voice Agent is built with your company’s specific needs in mind. Before it’s built, you get to express all of your needs; even afterwards, you can tweak it and improve its performance or add new use cases as needed by easily using Skit’s Studio platform.

Empowering human agents. For more complex queries or issues, the Digital Voice Agent escalates the call to a human agent—while providing the human agent with the appropriate context. You can read more about how Voice AI empowers human agents in this article.

Customer verification is much faster. Human agents typically spend 4-5 minutes just to verify the identity of the customer or caller at the beginning of the call. A Digital Voice Agent can do it in just a couple of minutes, costing you less resources.

24/7 support. We’ve already pointed out the importance of 24/7 customer support for seamless CX. The Digital Voice Agent never sleeps, and it doesn’t take a single day off.

Are you curious to see how Skit’s Augmented Voice Intelligence solution works? Would you like to see a demo of our product and speak with an expert? Schedule a call with one of our experts using the chat tool below!