The ongoing wave of digitization in banking that was further accelerated after the pandemic is evident, but the transformation is not uniform across the entire banking services footprint. Loan collections and debt resolutions segment has been ripe for digital disruption due to rising non-performing loans (NPLs), high operational inefficiencies, poor customer experience, extensive manual processes, siloed operations and lack of a data driven approach.

Certain key areas such as loan collections continue to remain ignored and have not yet benefitted from the advancements in digital technologies. Smruti Gandhi, Executive Editor, DynamicCIO – An ISMG initiative (henceforth DynamicCIO) spoke to Anand Agarwal, Co-founder and CTO, Credgenics (AA), a leading technology solutions provider in loan collections and debt recoveries on technology used in collection/debt recovery platform.

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DynamicCIO: Is technology an answer to India’s debt challenge?

AA: There are several reasons for increased non-performing assets (NPAs), mainly being unreasonable lending, deficiencies in evaluation and monitoring of loans, high delinquencies in priority sectors,  impulsive decisions by borrowers, inefficient management system, improper documentation, untimely communication to the borrowers regarding their due date, faulty credit management, credit appraisal system and due diligence.

All these concerns cannot be addressed completely by technology, it can definitely bridge the existing gaps, and thereby creating a strong case for technology led transformation in collections.

Adopting a digital debt collections agenda can go a long way in addressing the challenges of rising delinquencies, allowing efficient tracking and implementing suitable measures to boost recovery of dues. Replacing traditional practices like hostile agents, recurring calls, and outstretched dispute resolution with optimized and automated digital communication channels in multiple vernacular languages to nudge the borrowers makes a difference. It enables superior connect with customers that expect an intelligent, tailored and responsive communications approach.

Current lending processes usually rely on error-prone manual collections. They do not use analysis of borrower’s data and insights. A unified platform that consolidates all relevant data in a single place and provides much-needed visibility and analytics support can help identify customer behaviour patterns and enables better decisions. A technology-led loan collections platform that combines these elements can be a long-term solution for banks to develop nudges, determine customer preference, enhance customer experience and reduce NPAs in the process.

With automation enabled by conversational AI bots, one can persistently reach out to customers, streamline payments and automate reminder communications without any human intervention. Automated voice calls give a comfort level to borrowers to choose when and how they can repay loans. Their selections trigger text messages with online payment links and the bot stays on the call to help borrowers navigate the unfamiliar world of online money transfers. Hence, the value to lenders comes from the behavioural approach that nudges customers to pay on time.

Using AI and data science, a tech-first approach unlocks the potential of AI and ML for behavioural analysis and predictive models, improves segmentation efforts and enables tailored contact strategies with customers. Leveraging data to identify warning signals for possible delinquencies and defaults, predict why and when customers might miss payments, and offer customized solutions can be extremely helpful for lenders.  This will help clients increase recovery rates, reduce legal workflows, time for resolution, and collections costs, and transform customer experience.

The convergence of financial services and exponential technologies will be key in building a strong digital economy, leading banking transformation, and reducing NPAs.

DynamicCIO: You have a SAAS-enabled debt recovery platform. What kind of digital disruption did you want to create when you entered the market and why?

AA: There are huge gaps in existing systems and processes that hamper comprehensive outcomes. Lenders still rely heavily on traditional approaches to collections, which are based on human interventions, forcing customers to pay, using insensitive / untrained staff, chasing customers continuously, and threatening them.

The requirement was a platform where collections are handled digitally and efficiently with minimal human intervention and which meets the end-to-end collections related needs of banks and non-banking financial institutions of all sizes.

Our platform digitizes collections activities from pre-due stages to early stage delinquencies to legal action stages comprehensively. The analytics engine powers data driven insights at each stage to enable lenders to have complete visibility of collections and also tweak their strategies appropriately. They have complete control on the way they want to drive their collections as per the business strategy. The platform also transforms the borrower experience as it allows lenders to digitize their outreach, align tailored messaging to borrower’s preferences and focus on personalized engagements.

Our SaaS-based platform comes with innovative digital-first and data-driven capabilities that are unique to the collections industry. We are empowering lenders to reimagine their approach to loan collections to reduce their NPAs, boost their recoveries, enhance their operational efficiencies, and transform their customer on boarding.

On average, we have helped improve the collections amount by around 10%, reduced the average collection cost by around 9%, and reduced the collections time by 25%. Apart from this, our communication and legal practices have improved the legal efficiencies by 10%. We are supporting more than 70 leading Banks, NBFCs, FinTechs, and ARCs.

DynamicCIO: You have AI-powered predictor models for optimal collections strategy, field collections mobile app CG Collect, Billzy digital payments, comprehensive dashboards, and deep analytical models. How did you marry technology and debt recovery?

AA: Our technology-based solutions marry an empathetic collections approach with industry-proven-best practices to drive value across the collections lifecycle – pre-delinquency, and early and late-stage collections. There is an immense need for a more data-driven approach in collections so that you can measure it. The key goals for many lenders include making more accurate predictions of account delinquency, how to effectively segment they based on their payment behaviours and risk levels, which contact to prioritize, and then use this knowledge for appropriate collection strategies.

While automation and digitization provide tremendous efficiencies, AI and ML helps with customer segmentation, identification of best suited strategies, recovery predictions, prioritization of operations, and ongoing case management. Using AI automation, our debt collection process has evolved to meet the digital demands of the customer and has the potential to drive the overall business strategy.

As consumer preferences are shifting towards digital channels, machine learning tools assist in optimizing loan collections through non-intrusive Omni channel communications including WhatsApp, Emails, SMS, IVR, and voice bots, which optimizes the outreach of the collections process, reduces costs, and transforms customer experience. The platform also supports communications in vernacular Indian languages. Our AI-enabled Voicebots and Chatbots are used at early delinquency stages where promise-to-pay cases are sent soft payment reminders without any manual intervention and boost efficiencies while unlocking higher performance rates.

The Credgenics platform dashboards derive loan case data from API-based integration with lenders’ loan management systems and devise further strategies for difficult cases that require adept data analytics. The analytics uses ML models to analyse the data at each stage based on the borrower’s response and evaluate it for further action. Data analysis and deep customer segmentation help identify target risk areas and recommend the best suited strategies for collections at the beginning and throughout the customer journey to strategically design and execute tailored recovery approaches for different delinquency buckets.

CG Collect mobile app implements robust digital processes across the collections business value chain and empowers field teams. In rural areas where lenders rely heavily on door-to-door collections, this app enables complete digitization of collections operations. Field agents can manage their activities efficiently on the app and collect entire recoveries digitally to eliminate cash altogether. The central has real time info on all field activities. It simplifies agent’s plan with capabilities such as smart route planning, google map based navigation, geo fencing, geo tracking, visit setting, recording call outcomes with evidences, and app based calling and many others.

Billzy web application enables lenders to provide simpler, faster, and more secure digital payment capabilities to their loan borrowers and get complete visibility on loan repayments in real time. Borrowers can complete their digital repayments in few clicks with access to past transactions in a secure manner.

Our award-winning SaaS-based platform comes with Artificial Intelligence-driven Recovery Prediction capabilities. The Credgenics AI engine uses past loan accounts data to calculate the recovery chances, costs, and expected time along with recommending the most effective strategies for every loan account. Recovery chance predictor helps lenders target their collections efforts and prioritize accounts with higher chances of loan recovery.

DynamicCIO: Could you highlight your company’s recent innovations in AI/ML?

AA: AI powered Credgenics platform enables lenders to segment their customers as per multiple detailed parameters including risk profile, behavioural patterns, preference for a digital channel and propensity to pay. Thereafter, it allows lenders to assess the possible chances of recovery, cost to be incurred, and time to collect for the collections approach for each case. It also recommends the best possible collections strategy based on the data driven insights.

The ML based analytical capabilities in Credgenics allow lenders to identify and prioritize the collections cases for a specific communications and collections strategy. The model also keep learning and improving itself based on the outcomes for the data set. This helps improve collections, fast tracks recoveries and enhances the overall productivity.

As digital collections becomes a preferred mode of customer engagement for lenders, Credgenics platform allows lenders to create an intelligent and logic based completely automated communications strategy. This optimizes communications across channels. Each type of communication is based on standard pre-designed templates, which can be tailored with customer specific data and pointers automatically. Next stage is configured to be triggered automatically based on customer’s response to the previous stage. All possible scenarios are covered comprehensively and thus eliminate the need for manual intervention.

Credgenics offers AI-enabled Voicebots that are used at early delinquency stages where promise-to-pay cases are sent soft payment reminders instead of manual calling. This optimizes resource intervention and boosts efficiencies significantly while unlocking higher performance rates apart from changing the customer experience completely.

By Smruti Gandhi

Smruti has a rich academic & professional background. After completing post graduation from S P Jain Institute of Management Studies , Smruti has worked with Dun & Bradstreet, Great Place to Work before joining Grey Head Media.

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