Debt collection marks one of those challenging areas for financial services organizations, and here’s why: The high-tech advancements that have bolstered other areas of banking, such as chatbots and mobile deposit capture, haven’t always made the impact this specific niche needs.
And that adds up to a pain point, not just for the banks but also for customers—who’ve made it clear that they prefer a tailored experience that’s delivered in accordance with their preferences.
But where others have pondered the possibilities, Alior Bank, based in Warsaw, Poland has harnessed data analytics and artificial intelligence. In the process, they’ve taken the debt collection experience for employees and customers alike to a new level of efficiency.
As winner in the Innovation in Internal Process Improvement category at the 2016 BAI Global Innovation Awards, Alior edged out three other outstanding competitors. The other finalists were CaixaBank of Barcelona (winner in the Innovation in Payments category), Citi Retail Services, and Türk Ekonomi Bankasi (TEB) of Istanbul (winner in the Innovation in Societal and Community Impact category).
“Alior delivered a re-imagined collections experience that became a win-win solution for the bank as well as their customers,” says Miranda Hill, director of commerce strategy and digital innovation at ThoughtWorks and a judge for the BAI Global Innovation Awards. “Their three-pronged approach incorporated a debt collection optimization assessment, an intelligent dialer system, and AI agent used for outbound campaigns.”
In breaking down Alior’s advancements further, “the AI component stood [out],” Hill says. The Smart Collect system supports natural language processing, voice recognition, and speech synthesis—all of which adds up to a more personalized collections call experience.
In other words, Smart Collect marries the high-tech world of AI and the time-honored best practices of person-to-person banking to produce a pioneering framework for debt collection.
“The solution demonstrates how AI can be combined with traditional operations to provide instant responses without sacrificing the warmth of a genuine human,” says Adrian Li, deputy chief executive of The Bank of East Asia in Hong Kong and also a judge for the BAI Global Innovation Awards. “Furthermore, by integrating the latest technologies, Smart Collect significantly raises efficiency and effectiveness while reducing risk.”
Smart Collect is an outgrowth of a technology known as Dronn, an intelligent virtual agent designed to provide quick, consistent interaction with customers via personalized conversation. Dronn was introduced into the nascent Smart Collect system in 2015, and the bank’s statistics point to impressive performance.
In fact, Smart Collect handles conversations with clients so well, that just eight months after its launch, it surpassed all estimations.
Alior saw significant improvements in debt collection, rescued balances and answered calls—along with drops in time spent on manual activities and calls to voicemails.
Insofar as the customer-facing side of things, debt collection is a sensitive subject, to say the least. In general, a bank’s efforts, no matter how well intentioned, always run the risk of pushing buttons with consumers. Introduce a non-human intermediary and there’s a further risk of a potentially a cold, detached interaction.
Yet Alior’s innovations across the board achieved the exact opposite: a win-win for all parties.
“The collection process can be fraught with emotion and highly sensitive back-and-forth conversations between the customer and the bank on re-payment deadlines and options,” Hill says. “Rethinking the process through the use of AI takes some of the stress out of the process and streamlines the communication. Both customers and bankers benefit from this optimized approach.”
And as for the banking side, especially from a FinTech perspective, “So far development has focused on the end-user interface,” Li observes. “As the related technology evolves, back-end processes must follow suit to further enhance the customer experience and drive down costs.”
But there is more: High-tech components such as voice recognition, speech synthesis and natural language processing “can be applied to all interactive user interfaces,” Li says. As capabilities in these technologies improve, they will doubtless be employed in more and more situations in the years to come.
Thus in the final analysis, Alior’s leap ahead in debt collection heralds a future to which the banking world owes a debt of gratitude.
Lou Carlozo is the managing editor of BAI.
The BAI Global Innovation Awards will start accepting nominations for the 2017 Awards soon. To learn more or join the mail list, please visit BAIGlobalInnovations.com.