3 Ways Conversational AI Aids Collections & Customer Support
The advent of Generative AI opens the door for more targeted and effective messaging when payments are late – learn about the benefits
Leveraging advanced technologies like conversational AI can significantly improve customer experience, collections effectiveness, and operational efficiency. According to a report published by Gartner, by 2026, contact center interactions using conversational AI will increase tenfold, making it the most used customer service channel.
Here are three key ways conversational AI transforms collections and financial support:
1. Scalability and Efficiency
Conversational AI enables financial institutions to manage large portfolios of customers more effectively. Traditional methods, such as manual dialling or outdated dialer technology, are not sustainable for handling high volumes of customer interactions. By using conversational AI, organizations can intelligently segment customers and automate outreach processes, leading to substantial operational benefits. At the same time they can focus their human agents on those cases most in need of a personal touch. This approach ensures that institutions can scale their debt recovery efforts without compromising on quality or efficiency.
2. Personalized Customer Engagement
Effective communication is not just about reaching out to customers; it's about doing so in a personalized manner at the right time, with responses frequently needing to be in real-time. Conversational AI allows financial institutions to tailor their interactions based on individual customer preferences, ensuring that messages are delivered at the right time, with the right tone, and with relevant content. Personalized engagement increases the likelihood of meaningful responses and successful resolutions, enhancing the overall customer experience.
3. Omni-Channel Engagement
Combining conversational AI with an omni-channel contact strategy amplifies its effectiveness. Whether through push notifications, SMS, voice, or WhatsApp, delivering personalized and automated messages across multiple channels ensures that customers can engage in their preferred medium. This comprehensive approach not only improves the financial support processes, it also provides a seamless and convenient experience for customers, fostering better relationships and outcomes.
While the benefits of AI-powered technology are clear, it's also critical to manage the transition to this technology responsibly.
To ensure the responsible use of conversational AI, it is crucial for banks and financial institutions to select a partner with an AI roadmap that supports responsible AI practices. This includes using AI to understand customer intentions and map them to appropriate responses, rather than allowing AI to generate its own responses without oversight. Additionally, businesses should ensure that AI systems are secure, respect customer privacy, and that the business remains accountable for the AI systems used.
By the integration of conversational AI into their operations, financial institutions can achieve greater efficiency, personalized customer interactions, and a cohesive omni-channel strategy, ultimately driving better results for collections and financial support.
How Conversational AI Works Within FICO’s Omni-Channel Engagement Capabilities
- Find out more about FICO’s omni-channel engagement in FICO Platform
- Discover FICO’s solutions for collections
- What should collections operations do next to improve – view the Expert Spotlight
- Read the blog: How Conversational AI Boosts Collections as Delinquencies Rise
- Read the blog: How compassionate digital collections can improve your bottom line
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<p>FICO’s latest research on <a href="http://www.fico.com/en/blogs/risk-compliance/us-credit-quality-rising-the-beat-goes-on/" target="_blank">national FICO® Score distribution</a> shows that US credit quality continues to trend upwards, with an increasing number of consumers scoring in the highest scores ranges. Given that, we decided it was time to refresh our study on “<a href="http://www.fico.com/en/blogs/risk-compliance/infographic-what-does-a-high-credit-scorer-look-like/" target="_blank">FICO® Score high achievers</a>,” where we examine the credit behavioural profiles of consumers with higher credit scores.</p> <p>As expected, our latest study showed that older people generally have higher scores, as has been the case in our <a href="http://www.fico.com/en/blogs/risk-compliance/age-before-beauty-credit-worthiness-before-youth/" target="_blank">past research</a>. 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I further broke this down by looking at the characteristics of the youngest 15% in each group, which occurs at age 29 for the 750-799 group and 43 for the 800-850. We used FICO<strong>®</strong> Score 9 for our analysis, and examined typical variables of the categories that go into the make-up of the score.</p> <p><a href="http://www.fico.com/en/blogs/wp-content/uploads/2016/10/FICO-Score-High-Achiever-table.png"><img class="alignnone size-full wp-image-29367" src="http://www.fico.com/en/blogs/wp-content/uploads/2016/10/FICO-Score-High-Achiever-table.png" alt="fico-score-high-achiever-table" width="715" height="747" /></a></p> <p>Since there’s a lot to dissect in this chart, I’ll highlight a few findings that struck me: <ul> <li><strong>Credit history.</strong> Higher scores are undoubtedly associated with a longer time on file. What’s striking is the higher average time on file for the 800+ group, both overall and for revolving accounts (the most common trade line). Clearly, it helps to start credit use early in life – but that’s not the sole determining factor for high scoring. The younger cohorts in both the 800+ and 750-799 groups have time on file medians significantly less than their older counterparts.</li> <li><strong>New credit.</strong> High credit scorers do, in fact, pursue new credit. We see little variation in months since last trade line opening and last inquiry among all groups observed.</li> <li><strong>Pay on time.</strong> As you might expect, the further in the past the delinquency, the higher the score – and that’s <u>if</u> a delinquency ever happened. 95% of the 800+ people and 72% of the 750-799 group have never been delinquent, which is a striking contrast to the 57% for the total population. The percentages for the younger groups are even higher, especially so for the 750-799ers. Collection items are also scarce for these high scorers. While 23% of the national population have collection items greater than $99, the figures are only 0.5% for the 800+ group and 3% for the 750-799 group. It is clear that, in conjunction with starting a credit file early, paying on time is a key trait of the FICO® Score high achiever.</li> <li><strong>Balance and utilization.</strong> Finally, we look at how credit is being used, focusing on revolving product use. (Since most people only have one mortgage or one auto loan, variation in instalment product figures is minimal and driven by payment history, which is near perfect for high scorers, as we’ve seen.) FICO® Score high achievers tend to have more open revolving accounts. While the % active trades and utilization are generally lower, by no means do high scorers avoid the use of credit products. What drives the difference here is the amount of <u>available</u> revolving credit utilized. The 800+ group is roughly 1/4 of the national median, both in total and on their highest utilized card; they also have lower balances and more cards<em>. </em>The 750-799 group is more active and higher utilized, but still only at 2/3 of the national figures. The young 750-799 group compensate with lower revolving balances and, as a result, lower utilization, which is in line with what we see for the 800+ group.</li> <li><strong>Benchmarks.</strong> I’d like to point out that while this study provides good benchmarks of the typical credit traits of the FICO® Score high achiever, individual credit profiles will vary widely. And keep in mind that when we sort groups of consumers as a whole by different behaviours, some results may look superficially odd. For example, the 800+ band has a longer median average open account time (128 months) than average revolving months on file (140 months).</li> </ul> So, what do we conclude? A huge takeaway is that high scorers don’t have too much in the way of serious delinquencies and negative public record data.</p> <p>In most respects, the young 800+ people are like their peer group. They really only differ markedly in their shorter credit history and higher non-mortgage balance, both of which are a function of life stage. Our results show that you don’t have to be a credit product hermit; these high scorers have more credit cards. The takeaway is to start credit activity early and maintain well-managed and moderate usage.</p> <p>In many ways, the young 750-799 people are more interesting because their age profile is much younger. Their credit characteristics differ more from their peer group, particularly in terms of length of credit history. They compensate by having almost pristine credit records and lower balances.</p> <p>Ultimately, 39% of US consumers are FICO® Score high achievers, which they accomplish by following common-sense credit practices. It ain’t rocket science!</p>
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