Debt Collection Industry Trends 2025: What’s Reshaping Strategies

The debt collection industry is undergoing a transformation driven by technologies like Rich Communication Services (RCS), AI, and behavioral science. These trends are reshaping strategies to meet consumer demands for convenience and self-service. Cloom, with over two decades of digital collections expertise, provides insights to refine consumer-centric strategies in this dynamic financial landscape.

25 Years of Digital Collections Development

Cloom is at the forefront of digital collections, evolving with consumer behavior, technology, and regulation. From early digital tools for high-volume card collections in the 2000s to loan modification engines during the mortgage crisis, Cloom has driven innovation. Today, multichannel outreach, intelligent automation, and adaptable platforms are essential, yet many organizations lag, relying on fragmented capabilities. Cloom’s experience ensures modern, integrated solutions that deliver results.

Why Consumer Demand for Self-Service Capabilities is Important

Consumers expect instant, secure, and frictionless self-service options. Beyond basic payment portals, a holistic digital journey balances self-service with human touchpoints. Some prefer full self-access, others need personalized assistance, and many want both. Cloom emphasizes “engagement channels” over multi- or omni-channel terms, focusing on serving consumers as they prefer. Secure, compliant self-service solutions elevate satisfaction, reduce costs, and boost efficiency.

How Some Banks are Winning

Leading banks demonstrate success in self-service:

• Citizen’s Bank offers digital assistants, savings trackers, and automated scheduling.
• Bank of America’s AI assistant, Erica, manages over a billion interactions.
• U.S. Bank uses predictive personalization for auto-pay and payment flexibility.

How AI is Reshaping the Debt Collection Industry

AI transforms consumer engagement by analyzing data for personalized interactions. Cloom’s AI-powered tools predict consumer behavior, optimize repayment plans, and direct complex cases to agents, improving contact center efficiency. However, AI’s adaptability requires careful management to ensure compliance and fairness, avoiding discriminatory practices. Cloom uses AI to enhance, not replace, human expertise.

Behavioral Science and Consumer Choice

Cloom has advocated behavioral science in collections since 2004, treating collections as a “marketing event” to prioritize repayment. Strategies include:

• Choice Architecture: Simplifying repayment options to guide decisions.
• Social Proof: Highlighting popular repayment options to encourage action.
• Default Bias: Structuring plans as default to boost adherence.

This shifts collections to a consumer-centered experience, fostering engagement and long-term relationships.

RCS: The Future of Collections Communication

Rich Communication Services (RCS) transforms texting into interactive, app-like experiences. Consumers can view balances, select repayment plans, or pay securely within messages. For example, a 15-day past-due auto loan notice via RCS allows payment, plan setup, or agent contact without leaving the app. RCS offers higher engagement, reduced friction, and better outcomes compared to SMS. Cloom recommends evaluating RCS providers now to stay ahead.

Live Agents Remain Essential in the Digital Era

Despite digital advances, live agents are vital for complex, emotionally charged cases. Cloom’s approach automates routine tasks, reserving agents for personalized support, empathy, and escalation management. A 2025 survey shows 50% of consumers prefer live agents for customer service. Cloom enhances agent performance with data-driven coaching, financial literacy training, and speech analytics, improving interactions and outcomes.

Embrace the Future of the Debt Collection Industry

To stay competitive in 2025, Cloom recommends:

• Enable SMS Immediately: Meet consumer expectations.
• Explore RCS Providers: Adopt interactive messaging.
• Balance Self-Service and Human Support: Offer flexible engagement.
• Test AI and Behavioral Science: Enhance personalization.
• Modernize Compliance: Align AI and digital tools with regulations.
• Train Agents: Equip teams for complex cases.

Digital adoption is a competitive necessity. With over 20 years of experience, Cloom guides businesses through digital transformation. Schedule a demo to modernize your collections strategy today!