Uplifting overdue debt collection in retail for a Fortune 500 collections firm

The current economic crisis, fuelled by the pandemic, the political environment and the climate change among other things has led to a spurt in debt. According to a report by Bloomberg, the world debt was at a record $281 trillion at the end of 2020, surpassing even World War II. The report also indicated a rise in the next two years. In 2021, household debt alone was $15 trillion in America alone. Add to those digitally aware customers, more stringent laws, and transformative technologies, and the job of collection agencies has become increasingly complex.

Using AI in debt collection

Debt collection is a financial cycle that needs numerous recurring administrative activities. Collection teams must adapt to remain competitive, which, most importantly, means that they need to be swift and responsive. This is where AI comes in. With AI in debt collection — AI for predictive analytics, risk assessment and fraud prevention — companies can protect themselves from losses, suffer fewer insolvencies and make the process of debt collection more seamless, thus increasing the growth potential of the business.

Alliance One, a global debt collection agency, with a similar vision wanted to adopt a data-driven debtor contact strategy to optimise collection of overdue payments. They have over 25,000 customers and a cumulative debt of $45 million.

The Application of AI and Machine Learning in Business

Their partnership with Findability Sciences helped them formulate an AI-based propensity score model, to optimise their telecalling, so they could prioritise and call the most likely payers first.

This was carried out in two steps. In the first, Findability.AI used its multi-modelling predictive technology to rank every debtor in order of high to low propensity to pay score. In the second, the leading AI expert used the payment propensity score to develop a contact strategy for the daily permissible number of calls and fine tuning DND contacts.

The Results from Implementing AI

The AI-driven debtor contact strategy helped the business record 20-30 percent year-on-year uplift in collections over a period of two years, a 20 percent increase in collections and over 40 percent increase in financial ROI for 2021.

“Findability Science had a very good process to spit out what’s going to drive our propensity to pay,” says Jason Eppert, Vice President, Operations, Alliance One.

Findability Sciences not only used its expertise in predictive analytics to gauge the propensity to pay for Alliance One’s collections for credit cards but also converted that into prescriptive analytics, which resulted in the measurable growth in ROI.

The future of AI in debt collection

With over one billion online credit card transactions happening every day, and the deep penetration of debt in everyday lives, debt collection businesses need advanced tools and
techniques to help you keep pace in a digital world. This only means that AI in debt collection is no longer a choice for select business and rather a need for all. AI can simplify clerical tasks, helping businesses focus their efforts on managing more demanding tasks like monitoring debtor activities, and work to identify data patterns and use them for informed debt collection.