AI debt collection vs. traditional methods: what's different?

While traditional debt collection is increasingly seen as out of touch, a new generation solution is disrupting the landscape — AI-powered debt collection. It puts the power back into customer’s hands, to manage their debt their way.

With up to 7x higher engagement than traditional methods, this customer-first approach raises the standards for liquidation performance. Find out how it compares to traditional debt collection and how it is changing the world of consumer debt recovery for good.

What is AI-powered debt collection?

AI-powered debt collection uses artificial intelligence to deliver a personalised and frictionless collections experience, for every customer.

The difference is in the technology. While other solutions rely solely on traditional or digital-only communication methods, AI-powered debt collection’s machine learning models offer an omnichannel experience that responds to the specific needs of a customer.

Backed by a human Customer Experience team and the highest-rated security and compliance, AI-powered debt collection gives businesses a better way to collect by helping customers get back on track faster.

What is traditional debt collection?

Traditional debt collection relies on teams of agents to recover debt using traditional methods such as phone calls and letters.

Agents are responsible for reaching out to customers, negotiating payment plans, managing compliance regulatory requirements and data security with little to no use of automation.

Decisions are based on intuition and driven by the need to meet KPIs, rather than what’s best for the individual customer.

Contact centre debt collection is a traditional model, and modern consumers are demanding a change.

AI-powered vs traditional: what type of debt collection is right for your business?

Research shows that 2 in 3 adults in the UK found their experience with a debt collection agency ‘stressful’. Repetitive phone calls and aggressive tactics leave consumers feeling disempowered, driving a disconnect between the consumer and the client.

The long-term result? Traditional practices are doing more harm than good.

With a low consumer engagement rate of ~0.5%, underperforming recovery results, and manual-driven compliance, it’s clear that traditional debt collection has passed its sell-by date. Debt collection must anticipate and adapt to consumer expectations, or risk being left behind.

AI-powered debt collection is the future-forward solution driving change. Its built-in security, intelligent compliance, high engagement rates, and leading liquidation performance make it the global recovery solution of choice. This is the new generation of debt collection.

Four key advantages of AI-powered debt collection

1. Machine learning

Harnessing millions of data points, AI-powered debt collection uses machine learning models to predict and adapt to customer behaviours in real-time.

For customers, this means a personalised collections journey that’s second to none. In a matter of clicks, customers can receive the information they need, when they need it, on the channels they prefer. It empowers people to make payments on their terms when it’s convenient for them, with the support of a real Customer Experience team when they need it.

This supercharged collections data also unlocks invaluable insights for clients. Machine learning models enable businesses to see their real-time portfolio performance, knowing that their compliance and data security are entirely taken care of. Reports, forecasts and more are at their fingertips, enabling clients to grow and scale with one streamlined solution.

With 40% higher liquidation results, AI-powered debt collection outperforms traditional collections agencies across the board.

2. Engagement intelligence

Instead of limited communication channels, AI-powered debt collection is omnichannel. From live chat to email, phone support to self-serve – consumers can engage how they choose and experience a consistent, unified collections experience.

With AI, every customer touchpoint is maximised, but human empathy is still preserved.

Tools like our AI Copywriter are trained with high-performing communications to generate engaging email messages using the tone, language and structure customers are proven to respond to. It combines best practices and compliance with unprecedented efficiency – generating 32% higher conversions than human-written responses.

Our Voice AI feature also has the same impact on voice channels. In the first week of launch, this technology empowered 91.9% of engaged customers to restart their payment plans, resulting in a 7% conversion rate.

Using AI to do the heavy lifting gives our team the focus they need, to support customers who need it most. It also alleviates teams from simple tasks so they can stay at the forefront of regulations and data security, keeping compliance at the top of our priorities.

3. AI agents at scale

In the traditional model, growth and scalability goes hand-in-hand with agent headcount. The larger the team, the greater the operational costs, and the higher the risk of human error. But with AI-powered debt collection, this balance shifts entirely.

AI technology breaks the restraints on debt collection to offer infinite customer volume and unlimited referral capacity. This means that accounts can be referred with no maximum capacity, with a personalised collections experience given to every customer.

With this type of debt collection, customers have the freedom to manage their debt at their convenience with full self-serve capabilities. Preferred by over 4 in 5 customers, this functionality instantly makes engaging with debt easier.

To take this even further, we launched our AI Collector. This latest feature uses conversational response AI to handle inbound email inquiries. It can respond, provide information, escalate cases and offer tailored payment plans - at scale.

When consumers need extra support, the AI Collector is programmed to alert our Customer Experience team. By automating straightforward customer queries and flagging complex cases for further support, our teams are empowered to work smarter and more efficiently. Ultimately, this enables greater capacity to scale and adapt to markets across the globe.

The AI Collector marks the next generation of debt collection – and the results show that customers agree. While currently in live Beta in Australia, it’s increased collections by 20%.

4. AI-driven compliance

In traditional collections, the risks of non-compliance and human error are significant. Businesses are forced to rely solely on agents and manual processes to protect their customers and adhere to compliance regulations. Combined with automated diallers and outdated engagement practices, this is rarely a recipe for success.

With AI-powered debt collection, clients rest easy with our hard coded multi-market compliance engine backed by a team of specialist experts.

Continual investment in our compliance engine means AI-powered debt collection stays on top of multimarket regulatory requirements. Every advancement in data security infrastructure is written and deployed as code, meeting the most demanding localisation constraints.

To ensure client and customer data is protected to the highest standards, all information is regulated under global standards such as ISO27001, ISO9001, SOC Type 2 and PCI. Alongside failsafe mechanisms, including audits, state-of-the-art encryption protocols and regular system reviews, AI-powered debt collection is amongst the most reliable solutions on the market.

Collect: AI-powered debt collection with human support

Our AI-powered debt collection solution, Collect, is the recoveries partner of choice for organisations across the globe. Combining AI technology with the highest-rated Customer Experience team, Collect is changing debt recovery for the better.

Replacing the need for traditional collections and going further than debt collection software, Collect is redefining the collections experience for both businesses, and their customers. Delivering 40% increased recovery performance and empowering 4 out of 5 customers to resolve their debt independently, Collect is the future of debt collection.

Experience the new gold standard of AI-powered debt collection with Collect—the only collections solution for future-thinking businesses.