Have you ever wondered or asked someone, ‘why banks become bankrupt if they are the institutions to get the highest deposits of money more than any other industry? Even while adhering to compliance and tons of rules and regulations in lending money, you might wonder why they still have a hard time while recovering money back from the borrowers? As per Federal Reserve Board, there was about $4.225 trillion in total outstanding consumer credit during last February 2020.

Well, banks and loan providers make huge profits if everything goes excellent; they receive massive deposits, give loans with the highest interest rates, and get hefty mortgages. But if even the smallest thing goes wrong at scale, and two out of ten people fail to repay, it turns on a dime, and banks float on the verge of bankruptcy.

A high collections ratio is necessary to build revenue. And every lending institution knows that! Small boosts in collections will grow long-term profit extensively, and small losses in collections can give BFSI industries a tough time, sometimes beyond what they can handle! But you cannot just let the sleeping dogs lie and expect an overnight miracle.

In this blog, we’ll explore the top three reasons, why financial institutions are failing in their debt-collection process.  Well, the cherry on the top is-we will even give you insights on how to end your collections woes once and for all!

Lack of dynamic and personalized communication with customers

Gone are the days when a one-size-fits-all strategy worked for reminding customers about their payment due dates. Today’s customers are time-poor and occupied with a lot of other things. It’s not fair to expect customers to pick up calls from agents during busy days and months. However, somehow you must remind them, maybe five or six times a day, without giving up hope. Doesn’t sound easy, right?

Even though it is difficult to reach borrowers, persistence is the key to getting them to pay on time without generating awkward scenarios of embarrassment. No one wants to become a defaulter by choice!

Solution: With automation enabled by conversational AI bots, you can persistently reach out to customers, streamline payment, automate reminder communications without the need of a human agent until necessary!

Slow in assessing profiles that may turn into NPAs and potential defaulters

A loan’s value is always related to the creditworthiness of an individual or business that opted for a particular sanctioned amount. And to determine creditworthiness, lenders must have enough data about the individual or company. Without having insights from customers’ accounts and their online and social activities, it turns very daunting to detect potential profiles that are going to default and at the same time take corrective actions before an individual becomes a defaulter or delinquent.

Solution: Leveraging AI technologies such as machine learning (ML) and natural language processing (NLP) can help assess and analyze borrowers’ digital footprints and identify their financial situations. For example, if a borrower’s monthly income dips and his digital or social media profile indicates a job loss as a reason, lenders can take the right action at the right time and prevent potential defaults.

Automation Eliminates the Chances of Insolvency

Automation increases collection efficiency while reducing bad loans and debts. Undeniably, AI-based technologies are not at par with human counterparts when it comes to collections and recoveries. Be it speed or non-intrusive means of communication; conversational AI wins it all! It wouldn’t be wrong to term conversational as the antidote for banks and loan providers who want to get back delinquent customers into the mainstream.

Along the same vein, conversation AI-powered virtual assistants will witness a considerable adoption in the BFSI sector. In no time, we will see conversational AI being incorporated into their core strategy to enhance customer experience, increase revenue collection, boost collections rate, and save a lot of money that goes into handling delinquent customers. All we need to do is wait and keep an eye out for this booming AI space.

How can Gnani.ai save you millions in debt collections?

In a typical scenario, collection agents would call and contact debtors overcall without collating necessary insights about the borrower. If human agents are involved in the calling process, follow-ups might not get done in a time-efficient way. However, with automation freeing agents’ time and engaging them in other high-value tasks, debt collections can be achieved in a short duration of time. Since the beginning, automation has remained one of the vital focal points of Gnani. Let’s understand how we enable automation with robust AI technologies.

Gnani.ai worked with a leading loan provider and automated their end-to-end Collections process with AI virtual assistants. The goal was to improve the collections rate and reduce efforts and costs involved in managing delinquency. Within six months of deployment, our conversational AI-based virtual assistant, assist365 turned out to be an agent of change in the client’s contact center, bringing about some significant benefits such as:

  • 80% Reduction in collection costs
  • 93% Customer Outreach rate with 42% increase in collections rate

A high collection rate is necessary to become a powerful and successful lending institution!

If automation is your goal this year, get in touch with us today!