AI in Collections an Inevitability
Artificial intelligence (AI) is becoming more integral in improving collections, according to banks in Asia Pacific (APAC). In a survey conducted at the FutureCollect event in March, seven out of ten senior collections managers revealed they plan to implement and integrate AI into their collections systems within the next two years, and 24 percent said they will do it next year.These new findings are consistent with FICO’s insights on AI earlier this year, predicting companies will focus on operationalizing AI in 2018. Almost half (48 percent) of banks believe that the use of AI will help them optimize their collection decisions, while 41 percent feel it will enable them to accurately predict consumer behavior.
AI-powered analytics can improve automation in collections in many areas, from optimizing contact strategy settings to ensuring human agents make sophisticated decisions when restructuring debts or even calculating provision rates at an account level for IFRS 9 compliance.
“AI is in the spotlight within the boardroom of most banks,” said Dan McConaghy, president for FICO Asia Pacific. “Lenders understand that they need the tools that allow them to stop relying on gut-feel decisions or out-of-date models, and collections is a key area where AI has the potential to improve business decisions as well as the customer experience.”
The survey was conducted at the recent FICO® FutureCollect 2018 event in Tokyo, Japan, which was attended by 53 representatives from banks and financial institutions across Asia Pacific & Japan.
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AI in Collections - CCS enhancements
AI enhancements for the FICO® Customer Communication Services (CCS) solution are being rolled out this year, and will further lift the significant impact that automation continues to deliver.“We believe that Customer Communication Services has a lot to offer late-stage collections,” said McConaghy. “Automated collections helps to reduce the number of customers that end up in these late stages through early intervention with early contact strategies that work. Now with the addition of AI, we are also seeing significant improvements in minimizing roll rates across credit card portfolios.
“When customers move past the 90 days bucket, our AI is able to arm highly skilled agents with options to make more sophisticated decisions when restructuring payments for this group. This means customers are more likely to repay and remain customers, while still giving the organization the benefit of making a profit on the offer made.”
Our head of analytic consulting for Asia Pacific, Phillip Norman, explains how AI will affect collection strategies. The probability to pay, the likelihood of cure rates and the cost to collect, are just some of the areas that will be optimized and automated.
Further AI modules, to be added to CCS in the second half of 2018, will see even more benefits delivered for contact strategies, next best action, treatment optimization and more.
