What are the challenges of traditional debt collection and how digital platform can help?

[Kaushal Kumar]

One of the most difficult issues encountered by traditional debt collectors has been delayed and non-payment of bills. However, this is a headache that can be easily solved via efficient digital means. While some consumers have no intention of repaying their debts, the majority of them are really trying to get by. Traditional debt recovery done through aggressive agents, mails, and lengthy dispute settlement have resulted in so many difficulty for lenders and banks that they are left frustrated and intimidate borrowers. Some of the most difficult challenges that traditional debt collection has are mentioned below.

• Traditional data gathering methods rely significantly on old systems, resulting in an increase in the amount of time spent manually processing data. Manual data processing is inefficient not just in terms of sorting and evaluating hundreds of borrower papers, but it also inhibits the lender's ability to provide personalised response to borrower issues.
• Most of the time, lenders are faced with a scarcity of reliable information on borrowers, which, when paired with costly attorney and court fees, makes any legal choices they pursue very uneconomical, resulting in a significant drop in the success rates of legal procedures.
• Traditional collection tactics use analogue communication methods, which are antiquated and inefficient in an age where the average borrower spends a lot of time per day on their smartphone.
• Traditional collection methods are struggling to keep up with the growth of international eCommerce, as well as the digitalization and globalisation of services. Most collection service providers are still extremely reliant on their location and only give on-site consultation during limited office hours.

However there is a way to avoid these hurdles and problems. The best solution is digital debt collection mobile app. Lets take a look at some of the benefits of Debt Collection Management Software. 

Lenders can use omnichannel contact strategy's digital collection techniques to gather various borrower signals at the same time and automatically segment them using complex algorithms, allowing them to create personalised contact strategies based on the borrower's profile. Lenders can also use historical data to build enhanced borrower profiles and use predictive analytics to estimate future repayments and default risks. Both allow the lender to reduce risk while also allowing them to better plan for the future.

The lender may improve communication across all channels and move their focus from standardised scripts to personalised client-centric offers by using digital collection methods effectively. Lenders may use their pre-configured borrower profiles to gain a better understanding of their customers' mindsets and implement an active shift in communication that emphasises sympathetic concern rather than passive-aggressive collection notifications.

The lender can use digital collection software to create a system that gathers 360-degree information about consumers. Capturing more data not only helps lenders better understand borrower behaviour, but it also allows them to take an insight-led strategy, where they can use historical data to forecast future changes and plan appropriately.

These are the several challenges of traditional debt collection and also the right solution to now avoid these problems through digital collection software. The benefits of using digital debt collection which has features like Video PD and credit personal discussion helps in standardisation, faster credit evaluation and activity wise location tracking. 

There are few reliable providers of Borrower Credit Assessment software. One of the best Digital credit management is offered by Credility. Using cutting-edge technology they have created a fully functional platform where credit managers may have a one-on-one conversation with borrowers to assess their creditworthiness. goCollect is a debt collection software which has real time performance dashboard and manages all delinquents in one place. 

The article clearly explains the benefits of digital credit. The mobile app helps in credit evaluation by personal discussion and you can generate digital credit pd sheet in real time.