Consumer lenders invest considerable resources to figure out how best to target their marketing efforts and create frictionless application and loan origination processes. Since competition across banks, credit unions, and emerging nonbank players is fierce, these lenders are focused on creating an efficient and enjoyable borrowing experience. Consumers, now accustomed to user experiences from the likes of Amazon and Apple, have made this customer-centric approach the new table stakes for all lenders. Similar types of techniques can also be applied in the debt collection context—with the paired goals of preserving the overall customer relationship and increasing the likelihood of collecting on delinquent debt. Emerging strategies include using data analytics, machine learning, and artificial intelligence (AI) to better predict which customers may become delinquent and—if they do—determine the best communication channel, the message that may elicit the best response, and how to facilitate a customer’s preferred payment method. This white paper examines how far leading financial institutions are along this path toward a more customer-centric approach to debt collection and how they might more effectively collect debt in the future.
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