Conquer the Shortcomings of Traditional Debt Collection with Fintech Debt Collection

Digitization in debt collection or fintech debt collection veers round involving the practices such as machine learning, artificial intelligence for creating effective strategies for the customers of the creditors. The routes to reach the debtors can be automated calls, emails, texts and other online tools to establish an efficient digital debt collection method. All the attempts are made to reduce delinquency and improve a positive cash flow inside the organization.

Debt Collection Challenges

Now it is clearly believed that traditional debt collection methods of the collectors to the debtors like letters, automated calls, aggressive agents, long dispute resolution end up making the creditors and the collectors and everything ends up in poor recovery rates.

The challenges of debt collection lie in the contact strategy depending on the risk profile of the customer, days delinquent and customer profile. Some companies have started incorporating practice models for integrating different categories for behavioral segment and contact preferences. Still the creditors who use the modern practices such as text and email for the early delinquency, switch the methods within 30 days and move to the traditional methods again.

The creditors preferring traditional channels use the methods more in the later delinquency days but the customers prefer to get contacted by digital ways more especially by emails, text messages no matter what the delinquency is.

Odds of Traditional Collection Process

To get the true power of the digital collection, you have to understand the odds of the traditional collection methods first. There are multiple shortcomings and we are going to explore the same here. The most significant ones are mentioned-

Analog Communication

In this age where everything is going digital relying on the analog communication is something we want the least. On average, every customer spends more than 5 hours on their smart phones and quite active digitally, the traditional collection methods seem to appear less efficient and outdated.

Manual Data Processing

The traditional collection systems are dependent on the legacy systems more and it moves to the direction where more time is required on manual data processing. Manual data processing is incompetent when you need to categorize and evaluate hundreds of documents of debtors. Moreover, it also restricts the creditor to pay attention to individual debtors.

Deficiency in Integration and Data Exchange Complication

A recent survey has showed that leading creditors are till date relying on the traditional methods. Such methods are inefficient in terms of technology adaptation and integration, implementing modern technical set-up. In this age when the debtors can be contacted via multiple channels at the same time, the traditional software only can capture restricted signals and it makes the entire process quite complicated.

Inefficient Legal Options

In most cases, the creditors face scarcity of required and authentic information. This is when clubbed with attorney fees and court fees and costs of other legal options, becomes highly uneconomic and leads to decreased success rate of legal processes.

How Digital Collections Are Helpful?

Advanced-Data Collection and Analytics

The fintech debt collection strategies follow omnichannel contact that enables the creditors to capture multiple borrower signals instantaneously and categorize them depending on the advanced algorithms. It fosters to create custom contact strategies based on the debtor’s profile.

Moreover, the creditors can trust the previous data for creating an advanced debtor profile and make a projection of future repayments and the predictive delinquency. These two abilities make the creditors less vulnerable to risks and prepare them for a better future.

Optimized Communications

Using the digital collection process effectively would enable the creditor to augment their communication process across all the channels par excellence. This adaptation would also help to shift their focus to customer-oriented offerings from standardized scripts. The creditors can also bring the power of the borrower profiles previously made to improve their service and comprehend the profile of the customer better. As a result, it would come up with active better communication with the debtors being more empathetic than following an aggressive collection method.

Multiple creditors have gained advantage from this process and it is more effective because it reduces the spamming and increases efficient communication.

Insight-led Solutions

The fintech debt collection strategies enable the creditor to create system that will capture a picture with 360-degree information about the customers. This data picture would help the creditors to understand the debtor behavior better and make them follow an insight-led approach.

When you are in need of such services, follow us at Vital Solutions. We have years of experience in debt collection industry and we are waiting to hear for you and to recover your money.