The Indian banking system is beleaguered with non-performing assets (NPAs). At the beginning of every month, there are 5-30 per cent loan repayment failures (depending on category), thus putting hundreds of billions of dollars at risk. At the country level, it contributes to 11 per cent NPA. A tech-based collection platform can help banks and NBFCs reduce inconsistencies in unsecured and secured personal lending, and improve the overall experience for borrowers.
According to a E&Y survey, 56 per cent Indian bankers felt that technology and data analytics should be leveraged to identify red flags and early warning signals.
A smart, intelligent learning platform can automatically match delinquencies to agencies across regions. It can improve speed and security and help lenders track collection process in real-time with the help of live dashboards, data analytics, and insights.
This can also help in closely monitoring customer data, so that one is able to have a more granular customer segmentation, apply sophisticated data science measures like sentiment analysis, and deliver customised communication to the audience base that is timely and relevant or suggest a strategy for a field agent or caller.
For example, from data analysis, the platform can identify that, Sushil in Nashik is likely to respond better to a SMS in Marathi at 2.30 pm on Tuesday than Kavita from Pune would likely to respond to a phone conversation in English at 11am on Friday.
Many lenders unfortunately do not have real-time reporting, which hinders efficiency and speed on collecting as well as creating stress. It is essential to have clear visibility at each stage of the cycle. In addition, the data should be stored in a secure environment, which is 100 per cent regulatory compliant.
Technology steps in where muscle men used to. The job of technology is to make repayments a positive – even pleasant – experience. With the right data analysis, one is able to determine the real-time state of the customer and deliver the appropriate message accordingly.
Many Indians happen to be first-time borrowers, hence often unaware of the implications of not paying on time. Educating the user is the key. Educational videos and digital messaging campaigns in local languages can help borrowers understand the importance of good credit scores.
Second, a debt collection call can cause a lot of anxiety for people. A technology platform that records every call or interaction between a borrower and an agent is critical - it helps to train callers to listen to the people they call and acknowledge the stress they might be in. It also means nobody can contact customers outside the closed-loop system, which means standards and experience can be enforced and measured. We are working with the assumption that no one wants debt piling up, so the inability to pay could be linked with life circumstances.
It is therefore important to offer non-invasive and non-threatening communication and outreach to the customer base. Local language also plays a pivotal role. Moreover, it is important to take a step further by engaging with the customer on preferred mediums of communication that work best for them.
In an economy driven by data, digital connections, and multiple electronic devices, it makes no sense to still follow archaic methods of debt collection or customer engagement. With 200 million consumer loans disbursed in India annually, we are staring at a massive lending market (growing at 28 per cent), which technology can organise and influence.
Collections are a reality of lending whether in India or in other markets for small and new fintech lenders to massive multinational banks. A tech-based platform provides insights, optimisation, and efficiencies for all as well as empowering Collection agents with better performance and improved resolutions.
The Author Is The CEO and Co-Founder at CreditMate