Credit Unions are enjoying a record increase in their membership of late. With rising customer base, the focus for these credit unions remains faster processing of loans along with providing better experience to their customer; but this heightens their overall exposure to delinquencies as well.
Unfortunately, this concern has only been amplified by the economic crisis caused by Covid-19. With increasing delinquencies and modern customer expectations, the traditional debt collection methods are no longer viable.
Traditional debt collection reducing Credit Unions growth
Traditional recovery methods are still favored upon by collections teams, leaving a stale experience for both the members as well as the Credit Unions due to not keeping up with the trends in customer behaviors and expectations.
Major challenges in traditional debt collection includes:
1.Lack of customer data
2.Increased burden of regulations
3.Failure to track and reconcile accounts
4.Inability to execute new recovery strategies
With growing business needs, challenging economic conditions and ever-evolving borrower’s profile, CU need something which can dig deep into the data and provide with insights that can help devise flawless strategies. Apart from developing new methods of interaction, Credit Unions need to evolve their collection strategies to grow and stay relevant.
Here’s your solution: AI-driven debt collection.”
AI driven revolution in debt collection
AI and ML can transform the debt collection practice for Credit Unions in majorly two ways. One – by embedding intelligence into their collection strategies and two – by enhancing contact strategies through intelligence.
The growing use of AI and machine learning is ushering in a new era in debt collection, one that includes an early warning for delinquency, refined methods of categorizing borrowers and optimized strategies for customer engagement to reduce defaults.”
AI-driven debt collection solutions:
1.Early warning system: Advanced AI/ML analytics will translate some insights into actions such as identifying early potential defaulters using predictive modeling, notifying collectors to check on at-risk debtors proactively and provide credit counseling support, and restructuring payment plans.
2.Categorizing borrowers: Debt collection strategies can be modified using insights based on customer’s demographic and socio-economic data, salary, occupation, and historical interactions. This will ensure the right channel and follow-up actions where you will probably get a positive response.
3. Optimized customer engagement: Artificial intelligence solutions with automation bots can carry out smart dialogues between businesses and customers via email, SMS, or any social media platform. This will enable collectors to reach exactly where the customer logs in several times a day and can pay the outstanding debt online, resulting in faster delivery of receivables.
Is AI still a far-fetched idea?
Many myths are there regarding the implementation of AI with regards to data transfer, security, and transition from old systems to new, which stop Credit Unions from going completely digital.
If you are one of those Credit Unions that face challenges including the complexity of integrating AI application with existing infrastructure, lack of knowledge about AI/ML technology, Contact Us to connect with our expert team to help your credit union transform debt collections by leveraging AI.
