Demystifying AI and ML in Collections
Discover how AI and ML can revolutionize your debt collection strategy, boosting efficiency, reducing costs, and increasing recovery rates.
Imagine you were asked to participate in a race around the world against one other person. The winner gets $1 million. The loser gets nothing. One of you will have to rely on a map and compass; the other will have a state-of-the-art GPS device. Who are you betting on? This is what Artificial Intelligence and Machine Learning can do for your collection operation.
UNDERSTANDING AI AND ML
AI and ML aren’t just buzzwords anymore. They are changing how companies operate. But there is still a lot of confusion and uncertainty about what they are and what they can do.
- Artificial Intelligence (AI) is a machine-based simulation of human intelligence that is programmed to think like humans and mimic their actions. Or, to put it more simply, AI is like a “smart” assistant that can learn and make decisions like a human
- Machine Learning (ML), a subset of AI, involves the use of algorithms and statistical models that enable computers to perform specific tasks without using explicit instructions. It is a way for computers to learn from data and improve over time without being explicitly programmed
PRACTICAL APPLICATIONS OF AI AND ML IN COLLECTIONS
Both of these forms of technology have many practical applications in collections.
- Predictive Analytics in Debt Collection: AI and ML can analyze vast amounts of data to predict which accounts are most likely to be collected, and identify which accounts will be the most profitable. This helps prioritize efforts, allowing collection agencies to focus resources on the most promising cases.This type of analysis can augment the expertise of your in-house strategies and improve productivity and efficiencies.
- Customer Segmentation: ML algorithms can segment customers based on their behavior, payment history, and other variables, which allows companies to create more personalized communication strategies using data already collected.
- Automated Communication: AI-powered chatbots – like those offered by Skit.ai – can handle routine inquiries and payment reminders, freeing up human agents to tackle more complex cases. These systems can operate 24/7, providing consistent and timely communication. And they never have to use the bathroom or call out sick.
- Enhance Human Capabilities: While AI can handle routine tasks, human agents bring empathy and negotiation skills to the table. For example, an AI in collections system can flag high-risk accounts, and a skilled agent can then use this information to engage in personalized negotiations.Nearly three–quarters of consumers expect some form of personalization from the brands they interact with, according to one report.
- Assessing Risk: AI can assess the risk associated with different debtors by analyzing various data points such as credit scores, employment history, and social media activity.
It’s important to note that AI and ML are tools to enhance human capabilities, not replace them. Empathy and negotiation skills remain irreplaceable components of successful collection operations, with AI and ML serving as powerful allies in your mission to optimize collection strategies.
The question isn’t whether or not it’s a good idea to use AI and Machine Learning for debt recovery to make your collection operation more efficient and productive. The question is how long you can stay in business if you don’t start using this technology. By embracing these technologies, collection agencies can improve their efficiency, reduce costs, and ultimately increase their recovery rates. You wouldn’t win a race with maps against a GPS and collection operations that don’t embrace AI and ML will be left behind, too.
Don’t get left behind — contact us today to see how AI and ML can transform your collection strategy.