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How Banks Are Using Technology to Help with Debt Collection

 Posted on August 05, 2020 in Bank Collections

Chicago debt collection attorneysWith the ways that technology has changed consumer behavior, lenders have been rethinking their approach to debt collection. A room full of people calling delinquent debtors may no longer be the most efficient or effective way to collect debts. Instead, lenders such as banks are using communication technology to more quickly reach clients with a tone that sounds and feels less aggressive.

Efficient debt collection may become a necessity given the current financial status of households and businesses throughout the United States. Many lenders have allowed borrowers to defer payments or use forbearance because of the financial hardship they are suffering during the COVID-19 pandemic. When the deferrals have ended, however, lenders may need to ramp up their debt collection efforts.

New Ways to Facilitate Collections

There are three main ways that banks are using technology to help with debt collection:

  1. Automated Messages: It would be an inefficient use of time for bank employees to call every borrower who misses a payment. With more and more people relying on cell phones, they are also less likely to answer calls from numbers they do not recognizes. In addition, personal phone calls can come off as threatening to clients. Instead, many banks are using automated response systems that send a text message or email to the borrower when they have missed a deadline to make a payment. The message serves as a gentle reminder about the payment and whom to contact if they have questions. The message is often enough to spur payment from borrowers who have simply forgotten. Other borrowers may feel more comfortable negotiating with the bank after receiving the message.
  2. Artificial Intelligence: Many banks already use interactive voice response (IVR) systems to answer incoming client calls. Today’s IVR systems are good at providing information based on client questions and performing basic tasks. Some banks are using more advanced artificial intelligence that allows borrowers to modify their loan agreement without talking to a live agent. The idea is that the AI will use information about the borrower’s financial situation to determine which types of modifications the borrower qualifies for.
  3. Advanced Analytics: A borrower who is unwilling or unable to pay requires a different debt collection approach than someone who is going through a temporary hardship. By using predictive analytics, banks can better identify the risk associated with borrowers. Data on a borrower’s credit history and past behavior can predict whether they are less likely to cooperate and require a more aggressive approach.

Contact a Chicago Debt Collection Lawyer

Automated debt collection can separate cooperative borrowers from those who may not willingly repay their debts. When your attempts to collect from a borrower are not working, an Illinois debt collection attorney at Dimand Walinski Law Offices, P.C., can help you receive a judgment in court that requires the borrower to pay you. To schedule a consultation, call 312-704-0771.



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