A global analysis estimates that the U.S. debt collection market is worth $18.8 billion in 2022. There has been a significant increase from just 3years ago, when it was valued at $11.6 billion. We’ve observed trends that greatly impacted and expanded the collection business year after year. Several major changes happened last year, including the significant change to the Regulation F law. The gradual transition of agencies to omnichannel communication, the digitization of banking, etc. At the rate the industry is changing, change will undoubtedly be a recurring theme through the end of this year.
We believe five trends will shape the debt collection industry in 2023.
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Greater Transparency for Customers
Customers are becoming more aware of their financial situation. They are now more attentive to even the slightest financial aspects.
Consumers are aware of everything, even in a straightforward situation like money being withdrawn from their bank account. They would want to know the basis for those reasons. Or they might be curious to understand those numerous form fields and facts. Especially when they’re going through their borrower information form when attempting to apply for a small business loan. They might wish to review the specifics of covered services and costs in their medical bills while negotiating with a healthcare provider.
They’ll also demand more openness from businesses that assist people with their finances. To achieve a more efficient collection procedure, debt collection agencies can set an example by being more transparent and informing consumers about their rules.
Taking into account how agents look for, produce, and receive context during conversations is one of the best steps agencies can take toward openness. Think about standardizing and automating call notes and providing in-person agent support. Both will give customer service representatives more information at their fingertips and the most precise context throughout a chat.
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A Shift to Omnichannel Intelligence
Debt collection companies’ desire to establish an omnichannel approach. This prominence was a hot topic in 2021. This requirement became more crucial in light of Regulation F, which restricts the frequency of which an agency. They may contact the borrower and requires communication via the channel of their choosing.
The value of each attempt a collector makes to get in touch with the borrower increases; as a result, they should give precise information top priority. Encountering a better caliber and more data to evaluate will raise the need for omnichannel intelligence.
Before we continue, let’s define omnichannel intelligence. It is the process of communicating with customers across many channels that are integrated with one another and capable of exchanging precise context.
For instance, the agent on the call should be aware if the borrower has made a crucial statement in an earlier email. Likewise, the borrower should inform the agents in subsequent contacts if they discloses to the chatbot whether they’re unemployed or have a repayment problem. Focusing on accuracy and quality also lowers the risk of noncompliance while enhancing communication.
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Rising Number of Accounts With Low Account Balances
There are a lot of accounts with declining account balances in the financial services sector. That’s because consumers are attempting various alternatives to standard credit card debt to get creative with paying off their bills. Hence, this potentialize the variation presented to collections teams.
People now have a variety of options, even for healthcare. They are experimenting with various services and the traditional out-of-pocket costs to pay for their medical bills.
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Emphasizing Collaborative Intelligence Over Artificial Intelligence
Together, humans and machines can use collaborative intelligence to solve problems. It is necessary when AI requires a lot of human assistance, especially in delicate situations like debt collection, when every discussion may, by its very nature, entail stressful or tense moments.
AI is used in debt collection software to record the conversation between the agent and the borrower. It listens to the dialogue between the agent and the borrower and extracts important details into a concise summary of 20 to 50 words.
The AI-generated notes, however, can have material added or removed by the agent. As a result, the AI model gradually increases note accuracy over time. It cannot succeed without human input and context, and vice versa. Additionally, these comments can offer consistent data to support better suggestions for agent performance when used in conjunction with a real-time assistance system. Working together with the same information are both humans and machines.
- Forgive and Forget: Debt Forgiveness
Recently, the government decided against sending some student loans to collectors. Instead they also decided to forgive a tiny portion of them. Although it may seem strange, there are ways to have debts forgiven, i.e., student loans. They may also participate in income-based repayment plans, or by performing volunteer work. Later, their credit bureau scores no longer reflect them.
Other sorts of debt are also subject to this, although only in extremely rare circumstances. Nevertheless, you cannot disregard this important topic for the year since it will likely persist. Keep a closer eye on how it affects your firm going forward.
Think Forward
The debt collection industry is developing quickly. It will take effort to stay on top of these trends because they constantly change. However, there is only one significant lesson to be learned: it is now time for leading, forward-thinking collection agencies to develop a clever, data-driven omnichannel strategy. You’re ready to speak with prodigal about this dynamic period in collections. You must get ready to streamline operations, boost efficacy, amp up productivity, and reduce risk.
