With advances in Artificial Intelligence and Machine Learning, it is possible today to make loan default management hassle-free. Based on access to large volumes of unstructured data, AI can predict red flags or green lights when it comes to onboarding consumers in the first place, and where credit is first extended. This can help identify potential instances of default and initiate action before it occurs.
AI, the next wave of opportunity in debt collection
Historically, lenders used to make go-no go loan decisions based on a loan applicant’s credit score. Digital lending platforms believe that this kind of information does not paint a complete picture of a loan applicant’s creditworthiness. Firms can use artificial intelligence which is based on the premise that machines can learn and adapt from experience, rather than rely exclusively on pre-programmed logic.
Online brokers, lenders and credit bureaus use algorithms to assess eligibility for credit. On the flip side, AI can also match business owners with the right lender. AI analyses and authenticates users’ transactional data, income verification and spend analysis helps highlight risk factors used for a richer credit scoring experience. This reduces the risk of default and increase borrowers’ financial profiling.
Leveraging Artificial intelligence for debt collection
Implementing AI in loan default management helps lenders reimagine the delinquent customer journey. Collections is not just about recovering overdue instalments and regularize their loan accounts. It goes beyond suggesting a way out of the crisis and that is when AI can act as a bridge between lenders and customers.
Identify potential defaulters: Chatbots built using machine learning (ML) and natural language processing (NLP) technology helps to analyse customers’ digital interactions to identify customers facing adverse financial situations.
Reduce Unproductive Agent Time: Virtual Assistants (AI Assistants) answers inbound phone calls that can provide a great opportunity to automate self-service for non-revenue generating transactions. This reduces the influx of unproductive inbound calls received by the agents.
Augmented Intelligence: With the help of augmented intelligence, collectors can use real time analysis to guide the conversation with the debtor in the right direction.
Real-Time Analytics: Using advanced analytics and applying machine-learning algorithms, lenders can move to a deeper, more nuanced understanding of default customers. With this more complex picture, customers can be classified into microsegments and more targeted—and effective—interventions can be designed for them.
Automated Transactions: With AI, firms can reduce the overall investment by automated processes and significantly condense the price of serving customers.
AI-powered solutions can potentially transform the way collections are handled and ultimately help lending firms to improve customer experience and create exponential value.
AI implementation made simple with Insight Consultants
While the potential of AI in loan default management is immense, it requires substantial investment in infrastructure to enable collection and storage of data, as well as skilled resources. We can help you provide
- Actionable advice to begin an AI initiative with the right approach and perspective
- Implement AI for accurate risk segmentation, delinquency prediction models
- Build AI-powered analytics framework
- Supplement existing processes with AI for higher operational efficiencies
So, if you are looking for ways to harness the power of machine learning and AI in your debt collection strategy, CONTACT US
