What is artificial intelligence?
Over the past 10 years, digitalization and the development of lightning-fast computers have helped pave the way for artificial intelligence (AI). But what exactly is it?
AI is a field of computer science that works to develop intelligent machines and software that think and react like humans. Voice recognition, learning, perspective taking, planning and problem solving are some of the areas that it strives to emulate.
Two different types of AI are distinguished: strong and weak. Weak AI refers to systems that are able to provide limited human actions. An example of this is Amazon's voice software, Alexa, which is able to change the track on Spotify or regulate the light in your room. Strong AI, on the other hand, are systems that actually think and not just simulate human intelligence. For now, strong AI is just a hypothesis, as it has not been invented yet and it is not known if it will ever become a reality.
Is the future of debt collection powered by AI?
The work on artificial intelligence across industries is a continuous process that will eventually result in the creation of increasingly advanced IT solutions. The debt collection industry is no exception. Here, debt collection companies are looking for technologies that can deliver better customer experiences, streamline the customer journey, and improve overall debt collection while taking into account the individual debtor.
Initially, several companies in the industry focused on optimizing the collection process by analyzing big data and implementing champion/challenger programs to identify the most efficient collection processes based on debtorand case type. Now, the focus has shifted to developing and utilizing the technology behind chatbots, including virtual agents, to streamline case management in the collection process and automate the communication flow.
What is a chatbot and why are they important?
A chatbot is software powered by artificial intelligence that is able to simulate conversations (via text or voice recognition) with users through, for example, chat programs, websites and mobile apps. Chatbots are often described as one of the most advanced and promising forms of human-machine interaction. However, from a technical point of view, the chatbot represents the evolution of software capable of recording and answering predefined questions. Some are very sophisticated, while others simply scan for keywords and based on this, the chatbot delivers an answer that matches the detected keywords or matching phrases.
Virtual debt collection agent
One of the more recent inventions in the AI universe are virtual debt collection agents (combination of AI and chatbots), which are able to communicate with debtors and perform case-related tasks.
Examples of tasks performed by virtual debt collection agents:
Setting up an instalment facility
Setting up a moratorium
Display of case information
Referral to debt counsellors
Answers to general questions
At the moment, virtual agents are just an idea, but it is far from unlikely that we will see them in the near future. Collectia and several other financial companies are already looking at the possibility of realizing this dream.
Are virtual debt collection agents the future?
We believe that the next step in the work on artificial intelligence in debt collection is virtual agents that, with human characteristics, can act as debt counselors and negotiate repayment independently. The virtual agent of the future will be a further development of the existing chatbots found in apps and on websites today. It will be able to simulate human emotions and characteristics and play an important role in the debt collection process of debt recovery agencies.
It is impossible to predict what the future will bring. However, one thing is certain. Digitalization, regardless of industry, will drive innovation and competitive advantage for businesses going forward. One of the main benefits of a digital recovery strategy and the use of artificial intelligence is the ability to leverage automation to determine actions in the customer journey (the recovery process) where a real human interaction should be performed to deliver the best and most efficient service. Although in theory a virtual agent can handle large and important parts of the debt collection process and communication with the debtor, there are situations where human intuition, understanding and decision-making are needed to make the collection and customer handling more efficient.
Chatbots, including virtual agents, play a role in the overall automation of call centers and outbound departments of debt collection agencies, as they can combine machine learning with expertise based on the experience of real debt collection agents. Chatbots taking over certain functions in the collection process can potentially result in the following benefits:
Debtors will have 24/7 access to a support function that can answer questions and help the user through the process
Debtors can use the virtual agent to define preferred communication channels early in the recovery process. Information that will subsequently be included in the dynamic recovery process to improve the possibility of recovery.
Debtors can talk about their debt problems in a safer environment as they are not talking to a real person (in our experience, many debtors feel uncomfortable talking about their debts).
The debt collector can automatically obtain information about the debtor's behavior and the circumstances of the case based on indicators recorded in the conversation. This means being able to identify and initiate situational activities such as suggesting a call from a real debt counselor.
The virtual agent can identify situations where human interaction is necessary. The agent can then present contact information to the company's support center
Chatbots and virtual agents, we believe, will represent indispensable tools in the recovery process to combine digital and traditional communication channels. At the same time, the technology is seen as a unique way to leverage artificial intelligence to concentrate human resources in situational activities to boost overall recovery.