Let’s face it: debt collection agencies often sit on high-volume portfolios of accounts, as they lack the capabilities and resources to contact all consumers in a timely manner. Ultimately, some agencies give up on reaching all those accounts to focus solely on the larger ones.
ARM companies usually handle thousands of new accounts each month, but many of those accounts might be left untouched due to the lack of bandwidth. For each account, agents need to establish right-party contact (RPC), remind the customer of their outstanding balance, and offer ways to help them pay off their debt, such as a payment plan. More often than not, customers are not available right away, and the agent has to call them back at a different time.
What if I told you that you could automate this entire process?
Yes, you heard that right. A conversational voice AI solution can handle your collection calls on your behalf. In this article, we’ll explain how this type of solution works.
What Is Call Automation?
Nowadays, 88% of consumers expect organizations to offer a self-service support portal. Contact centers in all industries — from banking to e-commerce and, of course, accounts receivable management (ARM) — are turning to automation as a strategy to overcome the challenges of managing both inbound and outbound calls with customers.
In this rapid-changing environment, marked by the surge of generative AI, conversational AI has emerged as a key debt collection software to solve automation challenges. These tools are capable of handling conversations with consumers from start to finish, without the need for any human intervention.
Voice AI technologies may sound “new” to you today, but they are set to become the industry standard in the collections and payments space within a few years. Early adopters are already reaping the benefits as they are ahead of the learning curve.
When they hear “call automation,” many people tend to think of IVR (interactive voice response) systems. Think, “To make a payment, press 1…” In recent years, voice automation, AI, and speech recognition technologies have significantly evolved, also with the emergence of conversational voice AI and large language models, delivering a much more sophisticated technology than IVR. You can think of IVR as the “grandfather” of voice AI.
A conversational voice AI platform delivers a human-feeling and effective two-way conversation with a consumer, answering questions and providing context-specific information.
Once you upload data for a collection campaign, the solution can initiate thousands of calls to consumers, establishing RPC and reminding them of their outstanding balances; the solution then helps them pay via select payment gateways or negotiates a payment plan.
What Does an Automated Collection Call Sound Like?
Because Skit.ai’s technology is powered by AI, no interaction will be identical to the other; every customer is different, and each call is personalized. The technology is built to handle a natural-sounding back-and-forth conversation with the consumer following their responses, cues, and questions ad hoc.
If you want to learn more about our approach to customer experience (CX) and how we build a persona for our voice AI solution, read our article about how Skit.ai elevates CX in collection calls.
The voice AI platform handles these scenarios:
Is an AI-powered Collector Compliant?
Compliance is one of the most common pain points and concerns for executives working in collections. There are many regulations at both federal and state levels, and sometimes consumers may file lawsuits against ARM companies, causing major expenses on the agencies’ part. Additionally, regulations often change, and collectors sometimes struggle to keep up with the new developments.
Skit.ai’s conversational voice AI solution fully complies with the current laws and regulations related to collections and phone calls, such as Reg F, the TCPA, and more. We ensure that the solution initiates calls only at the permitted times of the day and within the correct frequency. We prioritize information security; we have, among others, ISO 27001:2013 and PCI DSS certifications and use AES-256 encryption.
It’s actually easier to ensure that an AI solution rigorously complies with regulatory requirements; this is because the solution:
never goes off-script
always provides identity disclaimers
only calls customers at permitted times
always honors do-not-call registries
never resorts to threats or aggressive language.
Do you want to learn more about call automation for collections and payments? Are you looking to adopt a Conversational AI solution for your business? Schedule a call with one of our experts by using the chat tool below!
Skit.ai’s Augmented Voice AI Platform is now powered by Generative AI. With the incorporation of Generative AI, we are taking a giant step forward and boosting the capabilities of our Conversational Voice AI solution. The interactions with consumers are about to become more natural-sounding and complex, leading to an improvement in customer experience (CX) and better results for collection agencies using Voice AI.
At Skit.ai, we embrace the future and go beyond industry standards and expectations.
How Generative AI Impacts the Capabilities of Skit.ai’s Augmented Voice Intelligence Platform
With the ongoing application of large language models (LLMs), we are seeing a big jump in the conversational capabilities of our solution:
Higher Conversational Accuracy: LLMs are capable of understanding consumer interactions through an improved understanding of context, sentence parsing, and response accuracy, leading to significantly higher conversational accuracy.
Better Handling of Complex Conversations: Generative AI enables our voicebots to better handle more complex interactions that were earlier escalated to human agents. This improvement can reduce the percentage of call transfers from the Voice AI solution to the company’s human agents.
Out-of-scope Calls: The LLM’s ability to grasp a wide range of questions and topics enables our voicebots to better handle out-of-scope utterances and calls.
Natural Utterances: The Voice AI solution is able to express a wide variety of natural-sounding utterances that improve the quality of the interaction.
Faster Voicebot Creation: Incorporating Generative AI give a big boost to the speed at which new voicebots can be created as the inherent complexity and effort involved in the design, and creation is a fraction of earlier effort.
Massive Performance Gains with Generative AI Springboard
In addition to the massive gains we are seeing thanks to LLMs, we intend to take this exercise even further and enable our voicebots to outperform human agents and collectors.
Going Beyond Human Agent Performance
An agent’s performance rests on two things: the ability to communicate and technical skills. At Skit.ai, we’ve seen that, with current LLMs, we can achieve superlative communication skills, and by training extensively with end-user data, we can achieve a high degree of technical skills. Hence our solution can excel on both fronts.
To share a rough estimate: the best-performing agent finds success on 5% of the calls (out of all connected calls), while low performers convert about 2% of the calls.
With Generative AI, we take a big jump. From the current voicebot conversion capability of around 1-2%, we expect the performance to jump 3-4 folds. Beyond this, our Reinforcement Learning platform learns from outcomes to personalize the conversation to figure out the ideal strategies, learning from thousands of daily conversations.
Better and More Natural Spoken Conversations
Generative AI, with its unparalleled conversational capabilities, needs to be complemented with equally capable speech synthesis and understanding systems that produce the right speech given the output from LLMs. And that is one of the major areas from the many below:
A more natural-sounding TTS (text-to-speech) voice
Conversational context handling prosody of generated audio
Full duplex and backchannels in speech conversations
Ultimately, we will be able to deliver the most engaging conversations that delight consumers by solving their problems faster and better than human agents.
The Business Outcomes of Incorporating Generative AI
Below are five major impact areas we will move the needle on:
Higher Collection Rate, ~5%: This is a difficult number to quantify, but as the incorporation of Generative AI matures, we expect its collection capability to move beyond 5%, surpassing even the best of human agents.
Lower Agent Dependency, reduction by 50-80%: As the voicebot will be able to handle more complex queries, we expect a 50-80% reduction in agent touch points.
Higher Resolution Rate, ~100%: Better accuracy and conversations with higher engagement will help us achieve a conversational resolution rate close to 100%.
Creating New Voicebots: The effort to create new voicebots will see a significant dip, as the complexity will be remarkably lower.
Entering New Markets with Ease, 15X faster: Entering new markets and training for new use cases and applications will require less effort and resources. We are estimating the process to be 15X faster.
What’s Next
Though the improvements in our Augmented Voice Intelligent Platform are visible and clear, we will further our efforts to achieve greater performance gains and stay ahead of the curve.
To learn more about how Voice AI can help support your collection efforts through call automation, schedule a call with one of our experts using the chat tool below.
Artificial intelligence is experiencing exponential innovation. Generative AI, ChatGPT, DALL-E, Stable Diffusion, and other AI models have captured popular attention, but they have also raised serious questions about the issue of ethics in machine learning (ML).
AI can make several micro-decisions that impact such real-world macro-decisions as authorization for a bank loan or be accepted as a potential rental applicant. Because the consequences of AI can be far-reaching, its implementers must ensure that it works responsibly. While algorithmic models do not think like humans, humans can easily and even unintentionally introduce preferences (biases) into AI during development and updates.
Ethics and Bias in Voice AI
Voice AI shares the same core ethical concerns as AI in general, but because voice closely mimics human speech and experience, there is a higher potential for manipulation and misrepresentation. Also, people tend to trust things with a voice, including friendly interfaces like Alexa and Siri.
Call automation for call centers and businesses is not a new concept. Unlike computerized auto dealers (pre-recorded voice messages) like Robocall, Skit.ai’s Voice AI solution is capable of intelligentconversations with a real consumer in real-time. In other words, Voice AIs are your company representatives. And just like your human representatives, you want to ensure your AI is trained in and acts in line with company values and displays a professional code of conduct.
Human agents and AI systems at any given point should not treat consumers differently for reasons unrelated to their service. But depending on the dataset, the system might not provide a consistent experience. For example, more males calling a call center might result in a gender classifier biased against female speakers. And what happens when biases, including those against regional speech and slang, sneak into voice AI interactions?
In contrast to human agents, who might sometimes unintentionally display biases, Voice AI follows a predetermined, inclusive script while strictly adhering to guidelines that prioritize consumer satisfaction and compliance. This level of professionalism eliminates the potential for misbehavior and creates a positive consumer experience.
Our team is always potentially looking out for any potential bias that accidentally seeps in, as ‘biases’ as constantly evolving. One thing can be acceptable today, but may bee seen as a bias tomorrow. At Skit.ai our skilled team of dedicated designers meticulously construct the dialogue patterns to guarantee balanced responses. Following these predefined scripts allows our Voice AI solution to offer consistent, unbiased interactions, thus establishing an inclusive user experience. This emphasis on conversation design aids us in overcoming potential biases that may surface in human interactions, thus securing a more balanced and impartial user experience.
Consumer Convenience and the Growing Preference for Voice AI
Consumers increasingly prefer interacting with Voice AI rather than human agents due to the convenience it offers. Voice AI allows users to communicate naturally through voice commands, eliminating the need to type or navigate complex menus. This convenience aligns with the preferences of many individuals who find it easier and more natural to speak rather than type. Furthermore, Voice AI is available 24/7, providing round-the-clock support without the need to wait for human agents.
This instant access to information and assistance enhances consumer satisfaction and can lead to faster issue resolution. Additionally, voice interactions can be personalized and tailored to individual preferences, creating a more personalized and engaging consumer experience. The convenience and preference for voice-based interactions make Voice AI a valuable tool for meeting consumer expectations.
Building Ethical Voice AI
Empathetic conversational design eliminates bias. At Skit.ai, we’re dedicated to developing leading-edge Voice AI technology. Our mission is to facilitate communication that is equitable and devoid of bias. Through conversational design, biases are eliminated, ensuring fair and inclusive interactions. A significant part of our strategy involves refining the conversational capabilities of our systems, striving for a natural, seamless exchange of speech that ensures equal treatment for all and eradicates discriminatory tendencies. As we navigate the future of work, Voice AI stands as a valuable tool, empowering enhanced communication, fostering seamless consumer conversations, and further elevating customer satisfaction.
To learn more about how Voice AI can help support your human resources and scale their collection efforts with call automation, schedule a call with one of our experts or use the chat tool below.
Debt collection companies have been automating various parts of their operations, much like companies in other industries. However, one of their core problems—the inability to automate complex conversations with consumers—has impacted their ability to solve their core challenges.
Connecting with consumers to recover payments is at the core of what a debt collection company does. According to a new survey by TransUnion and Datos, communicating with consumers is a top priority for collection agencies. A growing number of agencies are exploring new methods of communication for debt collection, focusing primarily on AI-powered chatbots and voicebots, as well as text messaging.
Conversational Voice AI, with its capability to automate collection calls, solves all significant challenges and ushers in a new era of debt collections. In this blog post, we’ll learn how this technology is dramatically changing the landscape of collections.
How is Voice AI Changing Debt Collections Forever?
100% Account Penetration: A Voice AI solution can initiate and handle millions of calls within minutes, covering an agency’s entire debt portfolio in an impressively short amount of time. This level of automation has never been possible until recently; it’s important to note that over a third of an agency’s files often remain untouched.
Less Dependence on Human Agents: It is hard to recruit a skilled collector, and having a consistent team that can scale up when needed has been extremely challenging for agencies, especially the smaller ones. AI provides the benefit of instant and infinite scalability, making the issue of staffing less concerning. Thanks to end-to-end automation of consumer calls, agencies can scale up and down as needed.
Augmenting Agent Productivity: Voice AI enables live agents to focus on more complex and revenue-generating tasks. Without call automation with Conversational AI, this would be impossible, as live agents would have to spend a lot of time establishing right-party contacts (RPC) and handling time-consuming, repetitive tasks that should be automated.
File Segmentation for Better Recovery: For the first time, collectors can now see the entire picture of their portfolio. As the Voice AI solution goes through the entire portfolio, collectors can see the set of right-party contacts (RPCs), the propensity to pay, and other crucial data that can inform a more strategic and data-driven recovery strategy, ultimately improving collections.
Remarkably Lower Collection Costs: Calls handled by Voice AI cost approximately one-third of a traditional collection call handled by a human agent.
Voice AI Comes with Other Remarkable Benefits. Here Are a Few:
Lower Compliance and Legal Risk: Voice AI has the potential to improve compliance and reduce the risk of legal issues for agencies. The debt collection space is heavily regulated, and collectors must follow strict compliance rules. With our Augmented Voice Intelligence platform, compliance rules and guidelines such as call frequency, the Mini-Miranda, and other important regulations — both at the federal and state levels — are built into the technology to ensure the Voice AI solution follows them. Voice AI never goes off-script and never has a bad day, protecting both the consumers and the agencies.
Better Decision-making with Data Analytics: Artificial intelligence can analyze consumer data and make informed decisions on the best course of action. For example, Voice AI can use data on a consumer’s payment history, income, and expenses to determine the best payment plan for them. This data-driven approach can lead to more efficient and practical debt resolution outcomes and a better customer experience (CX).
Unprecedented Automation: One of the main benefits of Conversational Voice AI in debt collections is that it automates much of the manual work involved in the recovery process. Debt collectors can use Voice AI to automate tasks such as calling consumers, sending out payment reminders, and recording consumer interactions. This saves time and allows collectors to focus on more complex tasks, such as negotiating payment plans and resolving disputes.
How to Choose the Right Conversational Voice AI Solution Provider for Your Company
The most important thing to remember about a Voice AI solution is that it either works and satisfies the consumer, leading to positive outcomes and recovery, or it will lead to consumer frustration and significantly adverse outcomes. Hence the choice of vendor is highly vital. Here are a few things to consider:
Proven Track Record: To ensure a successful implementation, working with a Voice AI provider with a proven track record in the accounts receivables industry and who can provide a comprehensive and integrated solution is essential. Collection executives prefer to adopt solutions that have been in business in the accounts receivables industry for at least six months.
Ease of Integration: Another priority when implementing Voice AI in debt collections is ensuring the technology is integrated with existing systems and processes. The provider’s capability to integrate with existing systems and other vendors—such as payment gateways—is one of the significant factors that must be considered while selecting a Voice AI vendor.
Ease of Deployment and Use: One of the critical challenges in implementing Voice AI in debt collections is ensuring that the technology is user-friendly for debt collectors and consumers. Make sure that your vendor’s solution is easy to deploy and to use.
Speed of Deployment: The solution must be ready. No promise of building a solution in a few months should be considered, because no viable, working product is ready. Select a vendor who is ready to go live immediately after a series of well-defined tasks required on your end.
Positive Business Outcomes: Look at the results the AI vendors have been about to achieve in the recent past with companies similar to yours. See if these business outcomes and success metrics align with the outcomes you’re hoping to achieve.
Make the Right Choice
Conversational AI technology is remarkable and has proved its worth in our industry and beyond. The only thing left for debt collectors is the selection of the right Voice AI vendor. Select the right vendor, and it will help you gain a competitive edge and show your tangible positive outcomes in a matter of weeks.
Voice AI technology is about to change debt collections forever; don’t miss out!
To learn more about how Voice AI can help solve your staffing challenges and improve your recovery strategy, use the chat tool below to schedule a call with one of our experts.
For debt collection agencies, debt recovery is a labor-intensive effort that typically relies more on human effort than capital investments. Even with the adoption of newer digital communication tools that promise to scale manual efforts, the ARM industry invariably struggles with one major issue — human resource turnover.
It’s hard to know the exact attrition rate in the ARM industry. Agencies reported a monthly quit rate of 2.9% in 2021. Before the pandemic, in 2016, large collection agencies reported experiencing an average turnover rate of 75% to 100%, according to the Consumer Financial Protection Bureau.
The high attrition that characterizes the collections space makes third-party debt collection agencies vulnerable to several challenges, like loss of domain expertise, risk of non-compliance, lawsuits, and increased cost of hiring and training new talent. In the United States, with nearly one in four citizens having at least one debt in collections, recovery has become an increasingly costly endeavor.
Most Common Reasons for Collection Agent Attrition in the Debt Collection Industry
Here are some of the most common challenges that make it so difficult for agencies to retain collectors:
Too Many Accounts, Too Much Work: Given the growing debt delinquency in the U.S., one can only imagine the amount of verification and debt-related communication work that can drive collectors to overwork.
Collectors’ Commission is Dependent on Recovery: Third-party debt collection agencies are involved when credit card issuers or creditors’ collection representatives cannot recover overdue balances. Collection agencies face thinning profit margins, and human agents’ commissions for debt recovery further burn holes in their pockets. There is no set rule or guarantee on the time the human agents need to recover outstanding loans successfully.
The Great Resignation: While all contact centers face high attrition rates, many people have been rethinking their careers and seeking opportunities in new fields over the last two years. This also applies to the ARM industry, where collection agents face acute stress from chasing after customers over the phone while adhering to a wide array of regulations, making attrition an even bigger challenge.
Empty Promises to Pay: It is common to find consumers dodging debt-related interactions. When confronted directly, they are likely to make promises to pay that may only sometimes be honored, which is another detractor for collectors to stick to their roles.
Debt Shame: Debt collection calls are direct and can sometimes make the debtors uncomfortable delving into the details of their unpaid loans. According to a study by Webio, people can be much more honest when communicating via text messages than in voice interactions for difficult scenarios. In the case of debt collections, textual conversations can reduce stress for both debtor and collector.
Efforts Often Don’t Justify Conversion Rates: When it comes to debt, the devil is in the details. To invest too much attention and time in each customer who needs a detailed overview of their loans and debts is unrealistic. It is extremely costly and leads to operational overkill, another reason for collectors’ resignation.
Debt Collection is Not for Everyone: Employee turnover in any field results from the nature of the job/employer and the employee’s capabilities. Working conditions, perks, quality of work, and benefits will fix the collector’s morale. But employees’ capabilities for the job determine how much they are willing to stick to it.
Rapid Changes in Regulatory Framework: Many regulatory agencies like FTC and rules like Fair Debt Collection Practices Act dictate how collection agencies can approach consumers without violating consumer protection laws. It requires constant staff training and procedural approaches like obtaining debt verification requests, debt validation, forbearance, and foreclosures that rely on unique expertise. When agencies adopt a manual route or use restrictive debtor communication methods, errors and inaccuracies are expected.
The Rising Role of Voice AI in the Debt Collections Industry
These challenges highlight the urgency for digital transformation in collection agencies; in particular, agencies are looking at automation as the primary solution to their attrition crisis.
In our previous articles, we discussed the unique capabilities of Voice AI technology in reducing contact center agent labor costs via call automation. Concurrently, Gartner’s estimates from their survey also suggest that labor expenses represent 95% of contact center costs, and adopting Conversational AI helps cut expenses by $80 billion. The customer-facing side of ARM, particularly the debt collection agencies, can capitalize on this trend to reduce staff shortages, curb labor expenses and make human resources more efficient and effective.
Voice AI’s value-adds are in areas that impact collectors’ productivity and bandwidth which further determine talent retention in this space. Here’s the rundown of its merits that help address agent attrition challenge in the debt collections industry:
End-to-end Call Automation: Voice AI helps automate 70% of calls (inbound and outbound), allowing prompt query resolution. Also, agencies can leverage automation to identify consumers, policy numbers, and other debt-related information. This reduces the effort and time it would take to call and follow up with each debtor manually.
Reduce High Cost of Collection by 1/5th: Digital Voice Agents that plug into contact centers and take over calls by holding human-like conversations can execute calls at less than 1/5th of the actual cost of manual calls. Collection agencies can lower operation costs with intelligent voice agents in lieu of collectors by concurrently calling over thousands of defaulters.
High Scalability: Agencies can scale their debt collection efforts and consumer outreach by leveraging call automation and Digital Voice Agents that can handle and answer tier-1 caller queries by automating up to 70% of calls, reducing dependency on human agents.
Higher Portfolio Coverage Intensity: Collectors can cover many more debt files when they leverage Voice AI’s ability to handle multiple calls simultaneously. With minimal effort, cost and time, agencies expand their scale of reach of debt collection practices with minimal human intervention.
Solve Diverse Use Cases: The recovery process in the collection agencies involves rigorous reviews, checking outstanding balances, sending demand and acknowledgment letters, and arranging for telephone contact. It is humanly impossible to keep track of all details, numbers, and sensitive information about different types of debt and cases at their fingertips. Digital Voice Agents can be optimized to address various debt-related queries and use cases without time, cost, and human effort constraints, reducing work stress and dissatisfaction for debt collectors.
Enhance Human Agent Productivity: Debt collectors can experience higher and faster conversion levels by leveraging Voice AI’s analytics and caller data insights. The pre-call verification, call automation (inbound and outbound), and routing features enable real-time agent augmentation, boosting productivity and performance. Also, the Digital Voice Agents are capable of intelligent call transfers to human agents only for complex cases, allowing the human workforce to focus on efforts that help retrieve debts faster.
Voice AI Calls are Free of Human Biases: Holding debt recovery conversations is a sticky collection practice that most consumers tend to avoid out of pressure, discomfort, shame, and fear of judgment. Voice AI’s call automation capability eliminates direct voice interaction between defaulters and collection agents, making collection calls free of human biases. Also, Digital Voice Agents can hold persuasive, contextually accurate, and proactive conversations and keep interactions direct and objective. This way, collection agents can experience higher work quality without job stress, dissatisfaction, and the chances of misdemeanors while talking to consumers.
Collection agencies rely entirely on outstanding loan payments to survive. Voice AI helps collection agencies strike a balance between meeting their recovery targets and making debt collection efforts more intuitive in a way that doesn’t come at the cost of operational burnouts and resignations. Voice AI eliminates bottlenecks in debt recovery and improves the overall customer experience.
To learn more about how Voice AI can help you solve attrition challenges, schedule a call with one of our experts or use the chat tool below.
Many debt collection companies are evaluating emerging technologies and looking into digital transformation. You can’t blame them: due to a faltering economy, rising costs, and high agent attrition, new processes and solutions are needed.
As a result, within the next three years, one in every ten interactions with call center agents will be voice bots driven, according to the new Gartner report. These findings are directly attributable to the spectacular rise to the advances in conversational artificial intelligence (AI), along with the mounting challenges we detailed above.
The report also estimates that by 2026, Conversational AI could save about $80 billion in labor costs! That is a significant number, indicative of the merits that early adopters will have in terms of cost, CX, and expansion of top and bottom lines. But, starting early is key to competitive advantage.
It is an open secret that high human agent churn is due to the fact that most calls are low-value and tediously repetitive. By handling these calls, Conversational AI will make the agents’ jobs more exciting and fulfilling, allowing them to focus on high-value and complex calls.
Globally, there are approximately 17 million contact center agents, and their cost makes up 95% of contact center costs. By intelligent call automation led by voice-intelligent technology, Voice AI, a big part of unproductive calls can be taken over by Digital Voice Agents, yielding high cost and CX advantages.
The Direct Cost and Efficiency Benefits of Voice AI for Debt Collection Agencies:
The most significant takeaway for the debt collection agency is that the benefits of Voice AI implementation are tangible and quickly realizable. But before we go into stats, here is a simple explanation of what essentially happens in a debt collection agency when they deploy a voicebot.
Voicebot Functioning
A voicebot is a conversational Voice AI application that can understand what the customer is saying as it is trained for a specific customer problem. It can strike a meaningful conversation with the customer. This happens because the entire conversation design has been done keeping in mind all the possible difficulties a customer can encounter.
So for every customer query, the voicebot has a ready answer as it pulls out relevant information from the client system and informs the customer, cutting the duration of the conversation remarkably.
Digital Voice Agents (DVA) Vs. IVRs: It is worth mentioning here that DVAs are remarkably different from IVRs; in fact, there is no comparison between the two. DVAs are at the cutting edge of the technological spectrum, while IVRs are legacy technology.
IVR can not converse. It is an unintelligent technology that runs a tedious exchange of inputs and outputs. For something as sensitive as debt collections, it is remarkably unsuitable.
Digital Voice Agent is AI-powered, built on Spoken Language Understanding (SLU) and context-rich conversational designs.
For a debt collections company, the two main categories of calls are Inbound and Outbound. Here is the process of value creation:
Inbound Calls: Many agencies cannot process a significant portion of customer calls. From them, a tiny fraction of customers have called to pay and perhaps need guidance.
Answering Non-revenue Generating Calls
The data from various sources is precise: A majority of calls are so simple that answering them by a human agent does not add any value to the company.
We’ve discussed the value of adopting a Digital Voice Agent for call automation. If you want to learn more, take a look at our Resources page, in which we regularly explore current topics related to the ARM industry.
Understanding the Top and Bottom Line Impact of a Voice AI Solution on a Debt Collection Company
The Final Word
Voice AI has proved its capability in bringing about a transformation of contact centers either with a small team or a big one. As its adoption increases, it will become a technology that can deliver sustainable cost advantages as well as a competitive advantage.
Refer to our Voice AI page for more information about its transformative potential.
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 ⅓ 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.
Dialers and Telephony
IVRs
Voice AI or Voicebots
Voicemails
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.
Chatbots and Text Messages
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.
Collections CRM for Debt Recovery
Debt Collection Compliance Software
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.
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.
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.
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
You’ve been exploring Voice AI as a possible solution to automate your debt collection agency’s operations; you’re considering adopting an Augmented Voice Intelligence solution to scale outbound and inbound calls for collections. Congratulations—you’re in the right place.
A Voice AI solution can significantly reduce your collection costs and improve the success rate and duration of your collection campaigns. However, not all Voice AI vendors are the same. How do you choose the right vendor for your agency?
Given our extensive experience with the collections space and our tech expertise, we’ve put together a list of topics to consider when meeting with providers and choosing the best one to move forward with, from the understanding of business operations to technical capabilities.
If you can’t count on your Voice AI vendor to fully understand the collections space, you will end up being significantly more involved with every step of the process, which will ultimately take longer, cost you more money, and lead to a disappointing return on investment.
Compliance with Debt Collection Regulations
The very first thing to look for in a Voice AI solution that handles outbound collection calls is the company’s level of understanding of the existing laws and regulations related to collections in the U.S.
A well-trained Digital Voice Agent can comply with the regulations with a consistency and precision that can be hardly achieved by human agents. However, it’s crucial to check whether the provider is up to date with the current laws.
The main collections-related regulations in place in the United States are:
Fair Debt Collection Practices Act and Reg F: The FDCPA, most recently updated with Regulation F in 2021, is the most comprehensive U.S. law that restricts, for example, call frequency and calling hours, and mandates the reading of the “Mini-Miranda.”
Telephone Consumer Protection Act: The TCPA ensures that numbers in the Do Not Call registry are never contacted; this can be easily achieved with Voice AI.
Federal Fair Credit Reporting Act: The FCRA protects information collected by consumer reporting agencies.
Payment Card Industry Compliance: PCI regulations ensure that the Voice AI provider takes the appropriate measures to protect stored cardholder data and encrypt the transmission of the data.
Health Insurance Portability and Accountability Act: HIPAA is one of the most well-known privacy laws in the United States.
Read more about meeting debt collection compliance with Voice AI in our blog post.
Provider’s Understanding of the Collections Space
This point goes beyond regulations: How well does the Voice AI provider know and understand the collections space as a whole? Their understanding of the structure and overall operations of a collection agency is likely going to be a helpful factor in the collaboration between the agency and the provider.
The provider should be able to understand the agency’s structure, the challenges related to employee retention and call scalability, as well as best practices for outbound collection calls. This way, you can trust that they will design an optimal conversation flow to facilitate your collection efforts.
Different factors will affect the conversation design. For example:
Nature of debt: There are different types of debt, including credit card, healthcare, student, etc.
Age of debt: A 30-day past due debt is very different from a 180-day past due debt.
Ability to Handle End-to-End Conversations
A Digital Voice Agent needs to be able to handle outbound collection calls from start to finish, without any human intervention—from verifying the user’s identity to completing the transaction.
The Digital Voice Agent will therefore initiate the call, remind the user of the due payment, register the reason of delay, persuade the user to pay right away, collect the payment or offer alternative payment plans, and ultimately feed the data it has gathered during the call to the CRM tool.
One important question to ask providers is: What kind of access will the collections agency have over the Voice AI?
The ideal provider will offer access to a dedicated and user-friendly platform, from which the agency will be able to view and tweak conversation flows.
Additionally, having a good platform will also help with the integration of third-party applications, such as payment gateways, CRM, and other business applications.
Want to learn more about how the technology behind a Digital Voice Agent works? Check out our dedicated blog post.
Actionable Analytics
Once the Voice AI solution goes live, will you be able to easily visualize and analyze its performance and results?
As more and more users speak with the Digital Voice Agent, you gather precious data that you don’t want to waste. Your Voice AI vendor should give you access to a dashboard to monitor the effectiveness and quality of the conversations.
MLOps (Machine Learning Operations)
At the very core of Voice AI lies the capability of the algorithms to continuously learn and improve as more conversations take place.
MLOps stands for Machine Learning Operations and it’s somewhat similar to DevOps. It’s an organizational model and culture designed to help the involved teams manage the operational processes behind machine learning.
AI companies that have a good MLOps system in place are likely to develop a better technology set to improve with time.
After Go-Live: Continued Voice AI Training
Your Digital Voice Agents are ready to go live and start calling your customers to remind them of their due payments. What now?
After the Voice AI platform goes live, the work is far from finished. The Digital Agents must be maintained for further optimization of the technology and the conversational experience, also to ensure they understand out-of-scope intents. The solution must also be monitored, especially at the beginning, for quality assurance purposes.
According to a recent Gartner report, failing to monitor automation tools in post-production is one of the most common mistakes companies make when implementing automation.
Additionally, it’s important to note that Voice AI solutions are typically rolled out in multiple phases: with time, additional capabilities and use cases may be added.
Therefore, your agency will want to work with a Voice AI provider with a clear plan for post go-live training and handling.
In conclusion, watch out for these key questions to ask your Voice AI vendor.
For more information and a free demo, you can schedule a call with one of our collections experts. We’ll be happy to help!
