Debt Collection Through Automation
Debt collection is an important pillar in lending as it directly impacts the lender’s overall revenue and profitability. Growing purchasing power is accelerating the consumption of debt-based products in India, thereby, creating a promising growth opportunity for lenders. But at the same time, the need to recover debts is also increasing due to multiple factors. This brings forth the need to focus on improving collections and enhancing the operational efficiencies in this area and start considering debt collection through automation.
According to the recent RBI reports, the overall gross non-performing assets in the banking sector are expected to rise to 8.1% by September 2022 and may reach 9.5% in the event of extreme stress. The challenges posed by the pandemic over the past two years and the prevailing economic sentiments worldwide are further likely to keep collections under the radar for lenders.
Regardless, with automated and digital processes backed by data-driven insights, financial institutions can manage collections effectively and boost their debt collection rates.
The traditional and manual debt collection approach requires relentless chasing of borrowers after the loan default, which is a problem in the lending sector. However, loan recovery is also delayed because of certain challenges in the internal collection process such as:
Archaic operations rely on manual processes and human intervention
Multiple teams / functions / solution providers operating in siloes
Manual updating of payment activity and status
Missing tracking of debt field collection agents
Broken / lack of seamless communications with debtors and internal teams
Language barrier in debt collections
For all the challenges listed above, automation and digitization of the debt collections process is the solution. It begins with identifying the defaulters to the final settlement of funds. One of the best enablers of automation and digitization in debt recovery is the Credgenics debt collection platform which automates and streamlines the entire collection process, including nudging customers to pay with integrated communications across channels, integrating payment gateways, and managing legal processes. It helps in personalized engagement with borrowers through AI-driven collection strategies and increases overall collection rates. Businesses can see immediate results once they start automating.
Automation significantly improves both the recovery time and efficiency of the collection process. Digital solutions make it easier for lenders to prioritize their efforts for maximum outcomes, fast-track processes, get real-time visibility and transform the customer experience for brand loyalty.
