August 2, 2022
August 2, 2022
Let’s begin by addressing the elephant in the room—the collection rates have dramatically fallen in the last decade. The State of Debt Collection 2020 Report reveals that in 2010, U.S. businesses placed $150 billion in debt with collection agencies, of which they could collect just USD 40 billion. On delinquent debt, the collection rates have declined to 20% (industry average), a decrease from 30% as recorded a few decades ago.
Anyone from the debt collection space would be cognizant that the industry has been under pressure from all fronts—inflationary pressures, agent attrition further fuelled by the great resignation and increasingly stringent regulations after Reg. F, and economic downturn.
Never before was the need for automation direr than it is in 2022!
Before we go into the transformative role Voice AI can play in the debt collection industry, let’s understand voice automation.
Voice Automation – Refers to the automation of voice calls, decoupled from the assistance of a human agent. This means the capability to answer customer queries with the machine, striking intelligent, multi-turn conversations.
Consider this scenario where an AI-enabled Digital Voice Agent interacts with a customer and facilitates an on-call payment.
The demo is a perfect example of how an intelligent Voice Agent can help consumers willing to pay and facilitate a quick payment with remarkable ease.
Hitherto, only IVRs have played a limited role in increasing the containment rate with the self-service option. IVR’s effectiveness can be debated, especially when reports have revealed that it plays a role in decreasing customer experience. The problem with IVR technology is that they have reached the culmination of what it can do for debt collection agencies. It is time to move beyond IVRs, especially when tech advancements have brought us to the sweet spot of cost-effective incorporation of AI-enabled solutions such as Voice AI.
Want more clarity; read this interesting piece – Voice AI Vs Robocallers
Debt collection companies face these core problems:
Read more about how Voice AI can help debt collectors augment bottom lines
With the coming of Reg. F, a new conversation has begun on the compliance of new-age technologies. Being AI-enabled and capable of striking an intelligent multi-turn conversation, Voice AI finds itself better placed to meet compliance. (read more about it in this Voice AI compliance white paper by Mike Frost and Skit.ai).
Voice AI is based on AI/ML, Automatic Speech Recognition (ASR), Spoken Language Understanding (SLU), Text-to-Speech (TTS) technologies, and more. A confluence of such great technologies enables Voice AI to understand the spoken word and respond to it most intelligently. Here is the gist of how a Voice AI Agent can create value for debt collection agencies:
With the great capability for executing thousands of concurrent calls, Voice AI can call and establish the right or wrong parties in a matter of minutes, for a significant portion of files. No technology has been able to accomplish this except Voice AI.
Value Creation: At a fraction of the cost, a debt collection company can identify if the contact is right or wrong without involving their human agents. Time and cost advantages can help them improve performance in a big way.
Classifying customers into 4-5 different segments solves a lot of problems for the collection agency. A Voice AI agent can call thousands of customers and, based on dispositions, can segment millions of accounts into various buckets such as consumers who disputed the debt, consumers with cease-and-desist requests, consumers with attorney representation, consumers who agreed to a payment plan, etc.
Based on this segmentation, accounts can be allocated to respective specialists and departments for further processing.
Value Creation: Only after capturing the disposition for the entire portfolio, the company will be able to draft an optimal strategy and optimize the time spent by their agents.
Since the coming of Reg. F, the compliance has become difficult to keep and the corresponding implication of its breach is getting higher. With large portfolios, it is difficult for agents to execute their follow-ups with perfection.
Mandatory rules such as the 7/7/7 rule, along with Mini Miranda, use of decorous language, and more, make it difficult for the human agent to always stick to the script especially when a majority of calls are repetitive and low-value.
Value Creation: Voice AI agent, once trained for compliance will always stick to the script, and use the right language. It will also stick to the schedules of follow-ups increasing the probability of conversion as well as saving the company thousands of dollars in fines and lawsuits. This also increases the speed of the company processing its portfolios.
Voice AI, at a fraction of the cost – 1/6th, can process these calls (mentioned in the above section) and help human agents avoid these and focus on value-creating calls.
Voice AI, with its consummate coverage of debt portfolio, can help debt collection companies have a more precise understanding of their consumers and devise better strategies. Below is a graph that depicts VaR and the ideal file segmentation and corresponding strategy.
Strategizing with Voice AI
Age of Debt and Voice AI: A debt collector will typically have a mixed portfolio with debt lying in various age brackets. Typically the older the debt, the lower the probability of recovery, and hence Voice AI is more suited to engage with these accounts.
It must be noted here that the segmentation is only possible after the Voice AI Agent covers the entire portfolio to uncover consumers’ propensity to pay.
High Willingness to Pay (WTP) – High Value: When the willingness to pay is high, the voice AI agent can call promptly and facilitate on-call payments or remind them to pay. Debt collectors have been able to achieve a high degree of success in this category.
High and Low Willingness to Pay (WTP) – Low Value: This segment of the portfolio is prohibitively costly for human agents to process because of its low value, making it ideal for the voice AI agent to process it and help prop up recovery rates.
Low Willingness to Pay (WTP) – High Value: High value and low willingness to pay makes this segment of consumers ideal for human expertise. Human agents can deploy their cognitive skills to convince and help them pay.
No, the capability of Voice AI is not just based on conviction and hope, there are solid stats to second every value proposition.
It must be noted that the higher volume that Voice AI Agent handles, the greater the scope of value creation. This is necessary if a debt collector wants to strategize based on consumer disposition.
Here are a few outcomes that the debt collectors as well as other contact centers have achieved with Voice AI:
There are multiple challenges from diverse fronts plaguing the debt collection companies. They can break the status quo and make the necessary changes on many fronts such as cost, performance, recovery rates, compliance, and speed.
Voice AI technology has been successful in value creation for debt collection companies. However, it takes an expert vendor and meticulous execution to achieve desired results.
To further understand the nuance of Voice AI and the scope of transformative value it can create for your business please – Book a Quick Appointment.
What is an IVR System for Debt Collections? IVR stands for “Interactive Voice Response,” and it’s a legacy technology that enables companies to automate both inbound and outbound calls by using a pre-recorded voice that interacts with consumers and guides them through a pre-set menu, which can be navigated by inputting DTMF (dual-tone multi-frequency) from […]
The State of the U.S. Debt Collections Industry in 2023 Let’s start from the data. The U.S. debt collections industry is worth $20 billion in 2023, according to IBIS World research. Given that the industry was estimated to be worth only $11.5 billion in 2018, the growth has been remarkable—approximately 73.9% in just five years. […]