The general landscape of debt management is shifting due to the link between debt and Conversational AI.
For over 30 years I’ve been involved in designing and deploying solutions to the financial services industry, very often focussed on the customer experience. Inevitably this frequently led to being asked to assess some of the day-to-day processes that may be less glamourous than the front-end activities consumers expect from FS organisations.
This led to my work with Debt Management teams in High Street Banking organisations, Sub Prime Lenders and Debt Collection Agencies (DCAs).
When I first began this work, those involved in the process of debt management saw the introduction of technology only as a means to increase collections.
A good example of this is the introduction of SMS to the collections process where we saw an immediate increase in collection rates – a positive impact for the debt collection process itself.
Interactive SMS allowed agents to have multiple conversations at once, and complete simple tasks like agreeing payment schedules.
A measure of how successful this technology was is simple: it’s become hardwired into the business model and any uplifts that they first brought have long since become the norm in terms of campaign expectations.
The challenge facing the industry is a complex one: how do we help people to meet their debt commitments in an effective and yet empathic manner?
In these Covid times, creditors are keen to see debt being paid but have to be mindful of debtor mental wellbeing.
We can balance debt and mental wellbeing through artificial intelligence (AI).
When it comes to debt and Conversational AI (how technology can engage with humans), it’s worth checking out the work of Litha Group.
Conversational AI is nothing new. In fact, as consumers, we are all very accustomed to its use, from ordering a pizza to discussing the fit of a new item of fashion clothing. From our use of Apps on phones through to food being recommended to us on a touchscreen in a fast-food chain, AI is already here and already in use.
But, being practical, what does that really mean in the world of debt management?
It’s probably best to talk about debt management before it becomes debt management.
If we are able to understand the real needs and motivations of someone seeking credit in the first place, we can start to understand their willingness and ability to repay it.
Our Debt Management solution starts as a credit management facility – engaging with customers through whatever digital channel they like to complete the initial credit application. Helping them to fill in the forms through conversation helps the customer to expand upon key points that form doesn’t allow and, in doing so, enriches the application.
This is particularly useful for people who would like to apply for credit but may have some difficulty with the forms.
During this part of the process, our Psychology Platform within the conversational AI is gathering insights. What this means is that, as an insight, it may be that, on paper, the customer is a credit risk but the technology has identified that they can not only repay the debt but are willing to do so.
On the flip side, of course, you may have someone who excels at completing forms and making sure that their latest credit snapshot is great (but they also know that, next month, 3 new credit applications are going in, they’ve missed two utility payments and a CCJ is about to be confirmed). The Psychology Platform won’t be picking up these hard facts about the near-future credit status but it will pick up on the psychology of the customer – and feed this into the application as an insight.
Already, we are managing the future debt.
In my experience, people can take as long as 12 months before facing up to a failing debt.
While we look at the propensity for people to pay a debt, in the majority of cases, the cause for default is because of circumstance:
- Reduced income
- Dependency (e.g. gambling, drugs)
- Insufficient savings for big one-off (surprise) expenses
- Poor money management
Responsible debt management should start with being in contact with the customer throughout the life of the debt. The proactive Conversational AI from Litha means that the customer can have ongoing financial coaching conversations and flag a problem before it happens. Creditors will always try to help where they can (as they are protecting their asset of being repaid!).
People are more comfortable in giving bad news to technology – and we need to give people the opportunity to speak about an issue without fear of judgement or retribution.
From the creditor side, it’s better to know in advance rather than have customers hide from it.
Informed by the model of some of the leading Debt charities, we are answering the question about how a debt can be repaid.
If we are smarter in identifying the desire to repay a debt, supporting customers through the life of their debt, spotting when a debt will default then debt collection becomes more empathic.
At a time of financial stress, getting the knock on the door from a Debt Collection Agent can only add to the anxiety of the debtor.
Through Litha’s Debt Management Platform, we are able to help DCAs transition into a more empathic approach where the debtor is supported rather than intimidated.
Incorporating the platform into a credit approval process and also the debt management process will not only give agents as much as 40% more time to deal with the complex issues that arise every day but also give reliable insight into those customers that frustrate the most, the “won’t pay” parties.
Imagine all that whilst also deploying a tool that will ensure that the mental wellbeing of your staff and customers is front and centre.
That’s something worth shouting about.
People in debt are not entries on a database.
Debt is an outcome of life and even those who find themselves in debt through mismanagement are still deservedly protected by the vulnerability legislation that now governs the debt management industry.
Eric Darling is a highly-regarded business professional who has been working within Banking and Financial Services, Telecoms and Utilities for over 30 years.
With a focus on deploying IT to improve the effectiveness of corporations, he has helped to shape solutions around payment systems, debt management, customer experience and more.
Eric is working with organisations of all types to introduce Litha’s Authentic Conversation suite of products.
“Litha has been creating a groundswell of support for the products in its laboratory and, I’ve been privy to what’s ‘under the bonnet’. The AI Psychotherapist alone is high-impact as it brings together fantastic therapy with an engaging conversational front-end. The insights from this alone will change how enterprises operate.”