The Role of AI in Collections and Payment Processing

Digital Collections and Payment Processing Keeps Debt Collection Agencies Competitive

American consumer debt rose significantly in 2023, reaching $17.29 trillion nationwide by the third quarter. According to recent studies, corporate debt is also on the rise. At the end of the first half of 2023, debt issuance rose 36% from the first half of 2022.

Collecting payment on so much debt can be complicated thanks to evolving consumer expectations surrounding digital technology, personalized communications and preferred payment methods. If your debt collection agency is still lagging behind on digital transformation, it's time to get serious and find the right tech for you.

5 Benefits of Modernizing Debt Collections

Collection companies and creditors alike can benefit from incorporating more digital technologies into their everyday operations regardless of their specific industry.

1. Enhancing Consumer Engagement

It's a well-known truth across virtually every industry that the better you can connect with consumers, the higher your success rates will be. When it comes to sensitive topics like collecting on debts, keeping consumers engaged with your organization is crucial for improving your collection rates.

Adopting a unified digital billing and customer experience management solution with advanced analytics and cloud capabilities is one of the most effective ways to improve debtor engagement. 

Here's an example. While more than 60% of customers want companies to update their account balances in real time, most legacy solutions simply can't process payments quickly enough to do so. A cloud-hosted solution like KUBRA can communicate with all the other applications in your tech stack, which updates account information across your organization any time a customer makes changes or submits a debt payment. 

Essentially, when one data point changes, all data points change in real time. And because this capability gives customers greater visibility into their relationship with your company, they'll be more likely to keep up with payment deadlines in the future.

2. Predictive Analytics for Debt Recovery

Traditional risk models rely on outdated formulas that only use a small portion of your available data and don't account for economic fluctuations. As a result, they can't accurately predict which debts will become delinquent. Leveraging predictive analytics for collections can help you significantly improve your likelihood of debt recovery by identifying risks early on.

Data analytics and business intelligence tools can analyze all your consumer data to identify patterns and risk factors you may not have been able to consider using conventional formulas. Some of those factors can include:

• Age
• Income
• Industry
• Profession
• Previous interactions
• Credit scores
• Debt types

The algorithm can then provide actionable insights and recommendations regarding how to adjust your approach for the best possible results. For example, if more customers are defaulting on a specific type of loan, your algorithm can analyze your customers' profiles to identify the root causes of the issue. 

3. Automating Personalized Messaging

It's tough to keep consumers up to date on their payments when you have so many different accounts to manage, but effectively communicating with and engaging debtors can be challenging due to many factors:

• Language barriers
• Unavailable or uncooperative debtors
• Incorrect contact information

Collections agencies need to improve their ability to connect with debtors to settle more debts on time. Integrated, omni-channel digital billing platforms like KUBRA use automation to simplify consumer communications and enhance the overall experience for both parties.

Automatically notifying consumers of upcoming payments using their preferred channels of communication is a simple solution that helps you keep consumers engaged and improve payment rates.

A digital platform with consumer-facing self-service tools helps you deliver a better experience by allowing them to set their own communication preferences. For example, Notifi^Ⓡ enables consumers to choose when, where, and how they'd like to receive your messages as part of their customer profiles. When the solution sends out automated payment reminders to consumers' preferred channels, they're much more likely to remember to pay on time.

Capabilities such as natural language processing (NLP) also enable digital payment solutions to understand the nuances of human speech and respond in kind. Because they work across a wide variety of channels, consumers can get the support they need where they're most comfortable. 

4. Boosting Operational Efficiency

Automated technologies streamline workflows for human employees, allowing them to spend less time on tasks that add little value to your organization. As a result, you can get more done faster.

Integrating automation into repetitive tasks saves your employees valuable time and allows them to focus on more urgent consumer concerns. Some examples of tasks that work well with automation include:

• Data entry
• Bill and document generation
• Reporting
• Reconciliation
• Dispute identification and coding
• Upcoming payment notifications
• Invoice processing

Automating these tasks also improves data quality and accuracy, which reduces the need to go back and correct errors later.

5. Enhancing Visibility With Real-Time Insights

One of the biggest advantages of adopting integrated payment solutions is the ability to generate real-time data insights. Rather than waiting for a human analyst to create a report that may be outdated by the time it's finished, powerful analytics capabilities can analyze massive quantities of data in seconds so you can generate the insights you need when you need them.

Of course, you need the proper infrastructure to support these insights. Analytics technologies require access to a lot of consumer data in order to perform any kind of accurate analysis. And since cloud-based platforms like KUBRA are highly scalable and dynamic, with the ability to make real-time updates across all channels, they provide the perfect foundation.

For example, integration between KUBRA iRemit™ and the KUBRA iDoxs™ Suite E-Billing Platform consolidates multiple disparate posting files into one, streamlining data access and improving analytics efficiency.

Modernize Debt Collection Processes With KUBRA 

If you're looking to streamline your collections processes while driving increased consumer engagement, partnering with KUBRA is the smart choice. We offer a range of software solutions for collection agencies that help collect debt payments quickly while enhancing consumer communication and engagement. 

And because all our solutions integrate seamlessly with each other as well as other leading software applications, compliance in collections and payment processing is simple. Our platform is PCI Level One compliant, which means we adhere to the strictest industry regulations for credit card payment security. You can count on us to help you minimize your risk in collecting and processing loan payments. 

Discover how KUBRA's modern payment processing and communications solutions can enhance your collections processes. Request a live demo today.