How to implement digital debt collection: A blueprint for innovation

Most businesses appreciate the importance of digital-first, consumer-centric approaches, but what are the actual steps needed to put innovation into practice? 

While customer preference for digital channels continues to grow, customer satisfaction with digital services hinges on your ability to implement them effectively. With consumers stating their main reason for dissatisfaction when engaging through digital channels is a poor user experience, how can businesses introduce new technologies that meet customer expectations? 

In this guide, we lay out a transferable framework to innovate your collections that:

• Considers organisational change and a structure that supports proactive development
• Lays out a step-by-step process for innovation 
• Identifies the optimal scenario for implementation 
• Covers the essentials on testing and deploying so your teams can make data-informed decisions on refinement 

It’s a step-by-step roadmap that can be used to structure, test and implement digital debt collection, as well as other innovative technologies.

A step-by-step process for collections innovation

1. Research: Seek inspiration from progressive companies and your network

Goal: Research the opportunity at hand, look to people and organisations who have done it before

Leverage the experience of others by stepping outside of your organisation to understand how other businesses implement high-performing digital engagement strategies that hit the mark. Globally, consumers view the following industries as the ‘most successful at using technology to create a great customer experience’:

1. Technology
2. Communications
3. Media and entertainment

When it comes to collections, many industry movers have already adopted AI to enhance their operations such as human-in-the-loop, collector training and much more. Research and analyse technological advancements to find new, applicable solutions that can be adapted to enhance your collection processes and meet your customer needs.

Tactical step examples:

• Research advancements in customer experience both within and beyond the collections industry - register for webinars, connect with people on LinkedIn, read case studies of any tools or providers you’re considering
• Capture insights and discuss internally with your team to judge how these advancements could improve your operations 

Key takeaway: Learn from the experiences of others and research opportunities to understand what works and what doesn’t. You’ll gain a clearer vision to guide your next steps.

2. Create a safe zone for experimentation: Sandbox testing

Goal: Trial new technologies in a risk-free environment

You’ve identified some tools, processes, system or operational changes, but before you get started on broader implementation, consider setting up a controlled environment (sandbox). A sandbox is a secure test environment where, even if something goes wrong, it won’t directly harm your host machines, operating systems, applications or data. This means you can trial new things without impacting actual customers. 

This allows any new innovation like introducing SMS communications, to be assessed and refined - ensuring efficiency and compliance before being introduced into a live environment. It reduces overall risk, allows vulnerabilities to be identified, and creates an optimal space for cross collaboration and engaging key stakeholders. 

Tactical step examples:

• Setting up a sandbox environment depends on your operating system, so you’ll need to engage your IT team 
• Engage in automated Quality Assurance to monitor data flow and interaction simulations
• Initiate small-scale, controlled live tests to assess customer and legal responses

Key takeaway: Gradual and risk-contained deployment helps identify and correct possible pitfalls before full-scale implementation

3. Strengthen your corporate skeleton: Legal and compliance 

Goal: Align every milestone with legal and compliance

All new digital debt collection technology must meet regulatory and legal standards to get the green light by your Legal and Compliance teams. This is crucial to guarantee that your collections operations adhere to best practices, protect consumer interests, and safeguards your organisation from potential legal issues.

If your objective is to introduce SMS collections in the United States, any new debt collection technology must be reviewed in line with the TCPA and FDCPA. In 2022 alone, communication tactics accounted for 6% of CFPB complaints made against debt collection agencies, which makes it increasingly important to ensure ongoing monitoring and supervision for compliance and customer experience. 

Tactical step examples:

• Engage legal and compliance teams during sandbox testing and implementation phases.
• Ensure your policies and processes are updated or that new ones are created, with a plan for ongoing monitoring and supervision in your operations.

Key takeaway: Innovation and compliance should walk hand in hand to safeguard your business and uphold customer trust.

4. Structure your organisation for innovation

Goal: Align organisational roles and structure with innovative implementation.

This involves re-evaluating and possibly re-structuring your workforce and workflows to adapt to the implementation of new technologies. Tools and systems may reshape roles within the team, and skills gaps may be identified during this stage. It’s essential to create the right capabilities, roles and structure where teams and tech work in harmony. Clear ownership and the right roles to implement and maintain are key to ensure that your innovations aren’t damaging the resulting customer experience.  

Tactical step examples:

• Skills gap analysis: Make sure you’re also setting your team up for success - specific roles and accountabilities may change, and if there’s any capability gaps identified, have a plan for upskilling or recruitment.
• Leverage AI tools for training and upskilling - particularly beneficial for collections agents who focus on customer escalations and interaction simulations.
• Implement technologies that aid live call scoring and notations, reducing non-value tasks for collection managers.

Key takeaway: Ensure your team and operations are set up for ongoing success to enable smoother integration of technological advancements.

5. Put your vendors to the test

Goal: Establish an additional layer of innovation in your outsourcing model

If you’re really serious about innovation, take it a step further by looking at your external partners, and even going to market for new ones. Your vendors should align with your goals, vision and strategy - and if you’re investing in digital and new technology, it’s important to check how high those items rank on their agenda.

If you engage third-party collections agencies, they should be able to evidence their ongoing investment in innovation. Be sure to quiz them on their performance data across digital debt collection channels, including engagement metrics and liquidation rates. 

Tactical step examples:

• Review your partners and third-party providers to ensure they align with your innovative vision
• Consider going to market through a RFP process to understand what other innovations and service providers are available to you

Key takeaway: Don’t let your external partners fall short of your investment in innovation - keep your customer experience consistent, whether managed through your team or a third party agency

6. Balance workforce and technology

Goal: Strike a balance between technological and human touchpoints in your customer experience 

It’s crucial to manage the interplay effectively so that technology enhances—rather than —obstructs the need to speak with a human being to seek support. Your customer support offering needs to be responsive to how people want to engage with you, while also optimising for operational efficiency. 

In intelligent collections, 80% of customers manage their debt with no interaction from our Customer Service team. However, the 1 in 5 who do reach out have a variety of queries that can require a human touch. From simple requests such as changing a payment plan, to more complex cases, it’s important to distinguish which interactions require an expert agent or more straightforward automation such as chatbots. While chatbots offer efficiencies, test and implement with caution as their capability can limit their use to simple inquiry handling.

Tactical step examples:

• Evolve the roles within the team around your technology in digital debt collection, focusing on more inbound, customer service-oriented interactions rather than using agents for outbound
• Use technology to reduce incremental costs (such as email vs. postal communication) while managing fixed human resource costs

Key takeaway: Ensure a balanced coexistence of technology and real people to enhance the customer experience and increase your operational efficiency

Digital, and beyond

Innovating towards digital debt collection practices calls for carefully considered and balanced planning. The transition to digital should be seen as an ongoing journey, with the most progressive collections operations continuously innovating and stepping into more intelligent capabilities. 

The goal is to foster an environment where innovation and customer experience run in parallel. A careful blend of the two will make way for collections that are more than just efficient and compliant, but respectful and compassionate.