Artificial Intelligence is the new buzzword for many industries, and the collections industry is no different. There are several AI-driven collection platforms on the market, with more to come. With the influx of new technology comes the excitement of what is possible. Within the collections world, features like multi-channel outreach, data pattern recognition, and virtual agents top the billing for AI collections platforms.
While many of these newly available features can improve collection work, it is important to keep in mind why members choose credit unions over other financial options: credit unions work with members and are active in the community they live in. People use credit unions because they are a member, not a customer.
While some members may prefer the automated digital contact provided by AI, some members may feel alienated or disenfranchised by the lack of interpersonal communication. How do you leverage the benefits of using AI while still maintaining a personal presence with your membership and in the community?
Available AI tools for collections
Before we can look at how to combine the warm personal touch of our collection staff with the cold efficiency of AI, we need to look at what AI tools are available in the collection space. The AI tools available to collectors are constantly evolving, much like the current AI landscape, with new companies and new tools hitting the market frequently. For the sake of our discussion, we will look at AI tools that increase efficiency within collections.
Before a collector picks up a phone or drafts an email, they have to decide which account to work on and how it needs to be handled. This can include reviewing the member’s payment history and looking at past interactions in order to determine the best path forward. Does the member respond better to text messages rather than phone calls? How many payments behind is the member, and what dollar amount is delinquent? Is it time to take punitive action such as ordering a repossession? All of this takes time.
One of AI’s most powerful tools is the ability to constantly monitor and report on accounts. AI collection tools can analyze delinquency data and cross-reference previous interactions to create actionable queues in a fraction of the time it would take in-person collectors to build the queues and input the data required to keep these lists up to date. Some AI tools will provide predictive models that push members most likely to miss a payment or least likely to get their loan current to the top of the working queues, saving time and reducing mistakes.
Besides reviewing and analyzing collection accounts, contacting members is one of the most time-consuming tasks for collectors. Whether it is sending texts and emails on early delinquencies, making calls to members, or dealing with third parties such as repossession vendors and attorneys, communication consumes much of a collector’s time.
AI-driven collection tools can help improve efficiency in these areas as well. Tools are available to send automated text messages and emails that include links for members to make payments and perform automated collection calls using AI text-to-speech programs. One of the newer tools entering the collections arena is the use of AI-created virtual agents. These agents can process incoming communications from members, provide the member with payment options, take payments, and schedule calls with collection staff.
All of these can decrease the burden on physical collectors and give them more time to focus on higher-risk collection items. These tools can allow collection agents more time to have meaningful conversations with members regarding their delinquent accounts.
Increased errors and compliance oversight
Given all of the benefits of using AI-driven collection tools above, one might ask why human collection agents are needed at all. Why not set up the entire collections process using AI tools and let it loose? While AI can improve efficiency when working delinquent accounts, there are some limitations, and if left unchecked, could cause member frustration and potential legal ramifications. Let’s look at some of these limitations.
Anyone working in collections knows that compliance plays a major role in how member accounts are worked. The Fair Debt Collection Practices Act (FDCPA) is a large part of this, as are state collection laws. Compliance issues as they relate to collection can revolve around numerous items such as restricted calling hours and what type of language can be used in collection messaging.
If these compliance guidelines change, it is easier for a human to adapt. If AI collection tools are not fed with this new data, they will continue to operate under outdated compliance guidelines.
In addition to being fed new data, AI collection tools also have to be monitored to ensure there are no unintended behavior changes once the AI has processed the new data. Failing to update AI logic or to monitor AI behavior after new parameters are input can result in potentially thousands of violations as AI operates at a quicker pace than human collectors.
In terms of compliance monitoring, typically 3% of human calls are audited for compliance adherence. Given that AI collection tools make thousands of decisions an hour, moving towards a 100% monitoring model is necessary; one mistake can be compounded into hundreds or thousands in a short time. We might reduce the number of calls a collection agent has to make by implementing AI, but we are also increasing the amount of compliance review work that is required.
AI can also provide information that may sound confident but is factually incorrect. Again, this will require collectors to monitor AI collection efforts and feed accurate information into AI tools to make sure they stay within compliance guidelines while providing members correct information. A human collector can notify a manager if they made a mistake because they can identify it in real time. AI tools do not have this luxury and will continue to operate out of compliance or incorrectly until someone notices it behaving outside of acceptable guidelines and makes the necessary adjustments.
Humans bring empathy and understanding
Compliance is one area that AI can be troublesome; another is the complexity of human interaction. Collection work is riddled with complex situations such as disputing a charge, large trust accounts, and sensitive scenarios such as the death of a joint owner or a member being out of work. AI is great in terms of increasing efficiency, but it can lack empathy and emotion.
For example, if a member has recently lost a family member, a human collector is able to process that information and create a response that fits the real-world scenario. Maybe they hold off on calling the member for a few days or use email instead of making a phone call. This approach to the situation carries more empathy and respect for the member’s situation and builds trust between the credit union and the member.
An auto-generated response from AI collection tools may feel cold and insensitive. Perhaps a member lost their job and is interested in refinancing options; a human collector can better relate to the member’s situation and provide a nuanced approach versus AI’s programmed responses.
These types of human interactions are one of the reasons members choose credit unions over other financial institutions. Relying 100% on AI-driven collection efforts can remove interpersonal communication from the member’s relationship with the credit union and can sometimes feel callous or cold, leading to member resentment or frustration.
Keeping the credit union difference
It is safe to say that AI is not going anywhere. As AI collection tools continue to grow and expand, it is important to identify how and when to best leverage their benefits while minimizing their pitfalls.
Using AI to analyze collection data and predict delinquencies can improve collection success. Having AI collection tools handle tedious collection work such as early delinquency collection calls and communication can free up human resources for more complex and sensitive situations.
It is also important to remember why members choose credit unions in the first place: people. They want to be a member of a financial institution that not only looks after their financial best interests but is also a part of the community that they live and work in.
