Digital Debt Collection: Returns Without The Risk • InDebted (New Zealand)
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Digital Debt Collection: Returns Without The Risk

The long-held stigma around debt collection has meant organisations often choose to write off overdue debts rather than risk tarnishing their brand. But a digital model offers the potential for commercial returns without the risk.

Debt collection is an industry that has traditionally struggled with its image, characterised by poor customer experiences as a result of one-size-fits-all strategies, inefficient and antiquated processes and collection methods that can feel harassing. This stigma has meant many businesses have written off overdue debts rather than potentially risk their brand reputation by pursuing customers. However, the emergence of digital debt collection is changing the face of the industry and bringing with it the ability for businesses to achieve greater commercial returns without increasing risk. 

While businesses want their outstanding debts to be recovered, they increasingly want the process to be done in a way that supports those customers who are experiencing financial difficulties. A digital approach allows for this by contacting consumers about their overdue debts through digital channels, such as email, SMS or WhatsApp where they can then respond and make payments or set up payment arrangements via mobile optimised landing pages when it suits them. This frictionless approach and ability to self-serve leads to more satisfied customers and addresses the customer misalignment that has existed within the traditional debt collection model.

Positive customer experiences enhance brand image

Adopting a more empathetic approach goes a long way towards reducing any reputational damage that may result from chasing overdue debt, which in some cases can see customers turning to competitors. This is obviously a situation businesses are trying to avoid as they focus on maintaining their current customer base and getting customers who are struggling back on track. 

How Digital Debt Collection Improves Customer Experiences


One of the key benefits of digital debt collection is its customer-centric focus, which delivers improved experience as a result of two key factors. One is meeting the preferences of an organisation’s customers by engaging with them in the way they prefer. When this occurs, a debt collection agency is on a better footing in terms of being able to have a conversation with them about their situation, and ultimately being able to help them in the best way possible. The second factor is what really differentiates a digital debt collection agency from the traditional models – having the vast majority of collections occur without additional people getting involved.

“Of the vast majority of compliance breaches that happen in collections, around 95% of them happen when there's people involved.”

Founder and CEO of digital debt collection business InDebted, Josh Foreman, says most of the risk that occurs in debt collection occurs when people are involved. “Of the vast majority of compliance breaches that happen in collections, around 95% of them happen when there's people involved – not through using automated systems or processes,” he says. “It’s very easy to set up a platform so a customer is sent an SMS, which the system checks is going to the right person and says the right thing. The vast majority of any risk exposure usually happens when there is a conversation between a collector and a consumer, often as a result of the wrong information being given.”

Digital debt collection addresses the risk of incorrect information being sent because there is such little interaction between people – most of the communication is undertaken using technology. Also, in InDebted’s case, staff are remunerated based on how they deal with customers rather than on the amount they collect. 

“This means we don't have employees who could have the wrong motivations, especially around payments,” Foreman says. “We have people who are incentivised to look after the consumer, which greatly limits any risk to an organisation’s reputation. This is the key differentiation point for digital debt collection.”

Using data analysis to provide greater customer insights

Through its technology, a digital debt collection model stores all interactions with clients’ customers onto a platform where data analysis is then conducted to improve the experience. Typical data points include when a customer opens a message, how or whether they respond, or if they attempt to complete a one off payment or set up a payment plan. These data properties are then leveraged by the platform to determine what action to take next. 

Foreman says data analysis has helped InDebted create a number of scenarios around consumer behaviour. “For example, of the millions of people we might contact via digital channels in a year, a certain percentage will write back and say they don't want to pay,” he says. “But because of the scenarios we’ve created, we know the best means of re-engaging with them. For example, our follow-up message to them might be to assure them that we’re there to help and then outline the benefits of getting their account back on track.”

The data analysis undertaken by digital debt collection involves many different data points that allow for deeper insights into the consumer and their preferred behaviour. This results in a much improved customer experience that minimises the reputational risk to businesses.

Reducing Reputational Risk And Improving Returns


Digital debt collection not only helps consumers better manage their overdue account, it delivers commercial benefits for businesses through reduced reputational risk and improved returns. The efficiencies offered by a digital-first approach result in a greater proportion of debts being collected, more quickly and potentially at a lower cost.

While lower costs are achieved through having far fewer people on phones calling an organisation’s customers, the real efficiencies come from the ability to scale – a process assisted by the use of technology. For example, a traditional debt collector may be asked to make 100 calls, which might take all day. But if they were then asked to make 60,000 calls in the same time frame, it would be impossible.   

Digital debt collection, when set up properly, can engage with either one customer or one million in the space of a few seconds. While there would likely be pushback if one million customers immediately responded, such a situation is unlikely to occur, as the data analysis provides intelligence around how many people are likely to respond and at what times. 

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The benefits of adopting a consumer-centric approach 

Debt collection models can no longer rely on a one-size-fits-all approach to deal with the overdue accounts of clients’ customers. That model is broken. Instead, a customer-centric and digital-first approach that creates less stress for consumers and greater benefits for businesses is required.

InDebted’s process is simple and seamless. Once a business sends through its collections data, it’s ingested into InDebted’s platform, where behavioural and machine-learning models determine the channel, template and time that messages are sent to the organisation’s customers. 

“These processes have been enhanced over time, so the type of message consumers are getting, the channel it's on, and the time it arrives, is statistically correlated to that consumer’s preferences for contact,” Foreman says. 

Digital debt collection can engage with either one customer or one million in the space of a few seconds.

InDebted offers customers of its clients the ability to self-serve, an opportunity that roughly 90% of them take up. This functionality lets them access the message when they want to deal with it, set up a payment plan, pay in full or dispute their account. They can also choose to respond using whatever channel they want, including email, SMS, WhatsApp, phone or live chat.

“Any communication we have with a client’s customer is routed back into our platform to produce a unified view that allows us to see what it is they need,” Foreman says. “The power is going back into the consumer’s hands, both about how to pay and how to resolve their account.”

Empowering the consumer pays dividends

Empowering the consumer is important for helping reduce the reputational risk an organisation may suffer from chasing overdue debts. Organisations are constantly undertaking risk-management exercises on how much they can collect before they could suffer damage to their brand. This risk analysis also flows into conversations about churn, including how many customers could leave an organisation after being contacted by a debt collector, and what could be done about re-engaging them. 

Foreman says when an organisation is dealing with overdue debts of thousands of customers, the danger of increased churn becomes more of a challenge when using a traditional debt collection model. This is because, with a traditional model, a business’s risk increases with every consumer that’s contacted.

“Digital debt collection doesn’t have this issue because of its ability to scale,” he says. “Each message that is sent is checked by our platform and approved, so there is no room for the errors that traditional models are known for. We can also rapidly scale to expand to accommodate our clients’ new geographies and customers as they come on board.”

How InDebted Exceeds Industry Returns


If an organisation, especially a large customer-focused one, is to change the way it has done things in the past, it needs a very good reason. InDebted has been able to demonstrate to its clients that a customer-centric, digital-first model helps deliver above-industry returns while also providing a better experience to their customers.

InDebted’s results show a 40%-plus 12-month outperformance against traditional agencies on a head-to-head basis. This has been achieved largely through its use of machine learning technology that optimises how it reaches consumers. Its collections performance improves with every customer interaction, which it aims to make as simple and pleasant as possible. This approach is reflected in the 4.9 out of 5-star reviews it has garnered on Google – an extremely rare scenario for the debt collection industry. 

InDebted’s digital offering is the only product that consumer brands need for debt collection. So how does it deliver its results?


The graphic above highlights how InDebted has democratised the different components involved in the collections process. 

“Our platform gives our clients a single API [application programming interface] to support their operations no matter where they are based,” Foreman says. “We have all our services – messaging, payment, compliance and intelligence – sitting under one platform wrapped into one centralised system. This provides our clients, especially those that want to operate in multiple markets, with just a single interface.”

Single interface simplifies reporting process

The key advantage of a single interface is that no matter where an organisation’s customers are based, InDebted can take all the debt-collection elements that need to be dealt with, including compliance requirements for each country, and present the information in a standardised format. “Our platform automatically recognises whether you’re allowed to send SMS or emails in a particular region and at what hours it can be done,” Foreman says. “It also instantly knows what a message is allowed to say as it takes care of all of the compliance and regulatory requirements. Even the different payment processes and payment options for each geography are built into our platform.”

“Our platform automatically recognises whether you’re allowed to send SMS or emails in a particular region and at what hours it can be done.”

Being presented with such detailed information in a standardised format is a key attraction of using InDebted, especially for larger organisations. “If you consider a global fintech, for example, they could have customers in many countries, but with us, they only need to deal with the one interface,” Foreman says. “They receive our reports in the same format, irrespective of where their customers are based. And that's not something that's ever existed in collections before.”

Why RPC is no longer the best metric for debt collection

RPC (Right Party Connect) is one of the most commonly used metrics in debt collections. It’s an outbound call metric that measures how many times an agent connects with the right person. According to Foreman, the RPC rate for traditional debt collectors has plummeted over recent years to around 1.3% to 2%. Not connecting with the right person could be due to many reasons such as they don’t answer, you get a voice message, the line is engaged, or you speak to someone but they’re not the person you want.

“We don’t use the RPC metric in our business because we don't make many outbound phone calls,” Foreman says. “But we also don’t think it's the best way to understand how effective our interactions with an organisation’s customers are.”

InDebted tracks effectiveness using ways that are more in line with digital marketing, such as email delivery rate, open rate, click rate, and conversion rate. This allows it to see that, for example, what the open rate of a particular email template is that it sends.

“You could think of that as being like an RPC but we then look at how many people open that email and then click on the link,” Foreman says. “And then how many people who clicked on the link, then set up a payment plan. The RPC metric doesn’t provide us with the holistic view we need to better engage with our clients’ customers.”

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