AI in Debt Collection Is a Game Changer

The pandemic reshaped payment behaviors, leading to the “Great American Payoff” with high repayment rates. As economic pressures like inflation emerged post-pandemic, debt collection faced new challenges. Cloom’s AI-driven solutions help collectors work smarter, supporting borrowers with timely messaging and self-service options to stay current on accounts, enhancing efficiency and customer experience.

How the Pandemic Changed Payments and Debt Collection

During the pandemic, reduced spending and supplemental income led to unprecedented repayment rates. Post-pandemic, economic pressures like inflation increased loss mitigation challenges. From 2023 to 2024, data on 130 million U.S. consumers showed 18% making only minimum credit card payments, up significantly. Missed payments rose by 5.3% (one payment) and 6.3% (two payments), signaling financial strain and the need for revised outreach and underwriting strategies.

A Cloom survey revealed 88% of consumers value their experience with financial institutions as much as products, but only 28% report a good experience due to disjointed communication. Timely, clear messaging and easy self-service options are now critical to meet consumer expectations.

Omni-Channel Communications in Debt Collection Strategies

Traditional phone calls yield low contact rates (8–10%), while consumers prefer text messages or push notifications for reminders. Email is less effective alone but valuable in an omni-channel strategy with SMS, voice, and notifications. Cloom’s integrated omni-channel approach sequences multiple channels daily, boosting contact rates. By identifying preferences—sometimes by simply asking— Cloom tailors outreach, ensuring the right message reaches customers at the right time via interoperable channels.

Using AI to Improve Debt Collection Strategies

Cloom’s AI enhances debt collection through:

• Segmentation of Accounts: Analyzes data like payment behavior to group accounts and personalize outreach.
• Optimization: Identifies optimal channels and times to increase response rates and payments.
• Communications: Uses natural language processing (NLP) for conversational AI, enabling advanced self-service.
• Engagement: Generates personalized messages for hyper-personalized interactions across touchpoints.

Optimizing Outcomes by Using AI in Debt Collection Strategies

Cloom’s AI optimizes outcomes by analyzing customer data to schedule communications at ideal times and channels. For example, identifying a customer who prefers afternoon voice calls increases response likelihood. This approach moves customers from late to early responders, reducing costs and over-communication. It also boosts self-service rates and identifies at-risk customers for proactive outreach, improving outcomes for both parties.

Conversational AI, powered by Cloom, enables chatbots to handle payment arrangements and hardship scenarios, reducing the need for live agents. Combining AI-driven decisioning, conversational AI, and dynamic content creates hyper-personalized engagement throughout the delinquency lifecycle.

The Time for AI in Debt Collection Strategies Is Now

AI drives measurable outcomes like higher containment rates (resolving issues without agents), response rates, and positive customer experiences. Cloom’s solutions focus on:

• Prioritizing metrics like resolution, containment, and response rates.
• Personalizing outreach with tailored timing, tone, and channels.
• Modernizing with digital tools like conversational AI for self-service.

Cloom’s AI empowers customers to resolve debts independently while optimizing resource allocation. Schedule a demo with Cloom today to revolutionize your debt collection strategy with AI-driven solutions!