4 Uses of Technology in Debt Collection

By Dean Kaplan, president of The Kaplan Group

The use of technology in debt collection was a growing trend before the events of 2020. However, the Pandemic increased the speed with which collectors adopted new technologies. The need to work remotely and to save on employee-related costs have all led to a quicker and larger-scale adoption of certain technologies.

A recent survey found that employees were the largest expense for most debt collection agencies. By automating routine tasks, increasing collection odds, and allowing consumers to self-serve accounts, technology can save agencies money and save agents’ time. Here are four growing technology trends for debt collectors. Take a look at the site here.

Automated Messages

With more and more people relying on cell phones and caller ID, getting someone to answer the phone isn’t easy. In addition, personal phone calls leave open the possibility of misunderstandings. Instead, many collectors are using automated response systems that send a voicemail, text message, or email to a debtor. The message is often enough to spur payment from debtors who have forgotten to pay. The new Regulation F to the Fair Debt Collection Practices Act (FDCPA), which takes effect this fall, includes rules about these messages.

Artificial Intelligence (AI)

You probably have firsthand experience talking on the phone with a robot. From the ever-present “car warranty expiration” calls, to being on hold with your doctor’s office, talking to robots has become so commonplace we rarely notice.  Many agencies already use interactive voice response (IVR) systems to answer incoming calls. But AI can also make outgoing calls, collecting information in a non-threatening and time-saving manner.

Analytics

A debtor who is unwilling, or unable, to pay requires a different debt collection approach than someone who does not believe they owe money or who is going through a temporary hardship. By using predictive analytics, agencies can better identify risk and the type of debt. Data on a debtor’s credit history and past behavior can predict whether they are less likely to cooperate and require a more aggressive collection approach. 

Speech analytics can also transform a collection agency’s approach. Instead of having managers listen to random calls for legal and business problems, a properly tuned speech tool can take data from every call and translate it into meaningful information. In turn, that information translates into better customer experiences, better collections success, and better legal compliance. This is especially important as laws around collections vary from state to state and change over time.

Payment Portal

It’s no secret that Millennials and Generation Z avoid talking on the phone in favor of texting. They would also prefer to avoid talking to a real person when handling payments. Services like PayPal and Venmo have made paying online commonplace. Traditional payment methods, such as cash or check, require an inconvenient amount of effort from the customer. Instead, payment portals, or payment gateways offer flexibility. Online payment options allow debt collectors to accept payment in a variety of formats. More companies are creating portal options specially made for collections agencies.

At its heart, debt collection is a human-based business. Negotiation, creativity and empathy are all human skills. However, as agencies look for ways to save money, and certain types of technology improve, agencies will continue to look to technology for solutions.

Dean Kaplan is president of The Kaplan Group, a commercial collection agency specializing in large claims and international transactions. He has 35 years of manufacturing, international business leadership and customer service experience. Today, he provides business planning, training and consultation to a variety of global companies. You can read more advice from Dean on his blog at https://www.kaplancollectionagency.com/blog/.