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AI and Debt Collection

Our founding Partner Ari Witkes was a featured speaker at the National Creditors Bar Association annual conference in Minneapolis this May. The following is an excerpt from his presentation.

The Future of Debt collection:

Historically debt collectors relied heavily on manpower to call debtors and carry out skip tracing. As technology invades nearly every aspect of our lives, the debt collection industry is at a crossroads of innovation. Artificial intelligence presents an intriguing new frontier that few companies are rushing to embrace. But waiting is no longer a luxury they can afford. 56% of all consumer financial transactions now occur online, making digital the primary channel for modern banking. That figure stood at 33% just 4 years ago. It's time for debt collections methods to adapt to its customers and consumers expectations. How can AI improve the client-debtor experience from its first steps in collections all the way through legal action?

AI often conjures up mental images of self-check-out lines in grocery stores, pestering online chatbots, and among the pessimists among us, a dystopian future of mass job loss. As the debt collection industry is so dependent on manpower there is a tangible hesitancy to disrupt the current status quo, accounting for a serious delay in innovation. But these fears should be somewhat quelled as the optimum use of AI will not be the supplanting human interaction with the technology, but instead using the technology in addition to human interactions. This collaboration will improve the debtor and client experiences across the board in the creditors rights industry. What does this mean practically speaking?

Used properly, AI software will pool together thousands of hours of recordings of debtor phone calls and use this information to learn the most optimum answers and document the most successful routes of conversation. Debt collection consultants can then benefit from real time AI analysis on how best to maneuver a conversation with a debtor. As the software matures AI could analyze the consumer, account history, current circumstances, and then customize a script for the consultant to use in their attempts to collect on an account. Besides for the obvious benefit of improved productivity, this could also greatly reduce possible friction between reluctant debtors and consultants. AI can also save the consultants valuable time. Chatbots can be used to answer frequently asked questions, and solve menial issues, to free up consultant time to work through more involved details with an account.

AI works best in collaboration with a human to maximize efficiency. Obviously chatbots cannot replace Lawyers in the courtroom, conduct complex litigation, or sue on accounts, but they can greatly streamline the process to allow a much larger volume of legal action than ever before. AI can be used to analyze and gather together large pools of information automatically. Large, quick, and accurate data collection, and flagging will greatly increase the yield of a skillful attorney. Bringing home, the point again that by gainfully incorporating AI into your legal/collection practice, you will increase your capacity to succeed.

As AI continues to mature, what does the future hold? Collections will likely become completely technology-dependent, requiring analytics, machine thinking, systemic compliance and robotics all in collaboration with human consultants on the ground. Primary communication channel for consumers will shift from phone calls to web-based and self-service options and online portals. Barring legal issues, text messaging and associated mobile technologies will be widely adopted to reduce costs and improve customer service. The CFPB seems to be making some cautious strides to embrace the future of collections as indicated in its proposed rules.

In conclusion, the debt collection industry must prepare itself to innovate. Who would’ve thought a small scrappy app like Uber could take down the Taxi mafia across every major international city? Here at Witkes Law Firm, based in Columbus, Ohio, not only do we understand the need to innovate, but we are actively calibrating our technology to enhance our entire legal process. WLF aims to be a leader in AI use and state-of-the-art technology in the collections industry. Refusing to step into the future simply isn't an option anymore. It’s time to modernize and wake up, or be left behind with the likes of Yahoo, Blockbuster, Nokia and the Taxi industry. The future is bright, as long as one embraces the future!

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