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How Data Analytics Can Help Debt Collection Agencies

August 29, 2023

Digitization has emerged as one of the most topical issues among business executives for a good reason. It offers an opportunity to build an agile entity capable of navigating the challenges of the modern economy. Data analytics and business intelligence have helped organizations make informed decisions. 

The best debt collection agencies leverage these advanced tools to identify high-risk customers, enhance operational efficiency, reduce cost and improve segmentation and customer experience, while reducing fraud and errors. Combined, these benefits lead to one ultimate result — increased revenue. We will discuss these advantages in detail. But before that, let's explain data analytics and business intelligence.

What Are Data Analytics and Business Intelligence?

Data analytics involves a process of gathering, transforming and using data to draw conclusions and make predictions. In other words, data analytics leverages volumes of information to drive organizations to make informed decisions, transforming valuable insights into actionable strategies and solutions.

Businesses worldwide use data analytics to achieve tremendous success. Meanwhile, business intelligence allows companies to build architectures, processes and technologies to convert the data into useful information to steer profitable actions. A comprehensive BI strategy encompasses process analysis, data mining, performance benchmarking and descriptive analytics.

6 Reasons Data Analytics Helps Debt Collection Agencies

Debt collection data analytics offer a wide range of benefits.

1. Identify High-Risk Customers

Before data analytics and BI, lenders often used account balances and credit scores to evaluate recovery efforts. Lenders assigned the highest priority to accounts with the highest credit scores or largest balances, while low-balance customers dropped further down the priority ladder. This simple approach worked to an extent. However, the primary challenge is that human behavior is more complex, and identifying high-risk customers requires tremendous time and effort.

Data analytics allows you to assess customers’ behavior, demographics, preferences and payment history to make more accurate predictions about potential defaulters. Instead of relying on experience and wisdom, debt collection agencies analyze data to identify payment trends and patterns even for new customers. Designing tailored installment plans that suit the situation increases the repayment rate.

2. Increase Efficiency 

Collection agencies rely on analytics to optimize their operations and determine the best strategies to increase performance. They do so by measuring and informing the impact of individual changes to collection approaches. With enhanced visibility, lenders can quickly shift effort and resources to areas that require more attention. Business intelligence also makes it simple to craft ideal strategies depending on market conditions.

3. Reduce Cost 

An accurate forecast of customers who are likely to make debt payments allows you to redirect your focus from infertile grounds. Without data, debt collectors may hunt fruitlessly for greener pastures. The best debt collection agencies use data analytics and business intelligence to direct their time and money to operations that yield the highest return. Ultimately, you can generate high collections with marginal efforts. 

4. Improve Segmentation

Debt collection is easier when you understand your audience, and one efficient way to do that is by categorizing customers into groups based on data. In addition to analyzing demographic, behavioral and transactional data, an effective BI tool tracks borrowers' responses to various categories of communication messaging and develops precise and efficient interaction channels. Thus, debt collectors know the most appropriate time and platform to reach customers and boost collection success.

Again, lenders may use data analytics as a target marketing tool. How does this work? With a better understanding of customer behavior, lenders can determine which segment is the most suitable target for various products and services. 

5. Enhance Customer Experience

Customer relationship management is integral to a successful business model, and the debt collection industry is no exception. However, satisfying customers' needs with limited information can be challenging. A better understanding of your base allows you to create personalized solutions that simplify transactions. 

Business intelligence offers organizations a platform to create individualized solutions that enhance the client experience. For example, debt collectors can leverage business intelligence to identify the best communication channel, messaging and tone for each customer. Since only 27% of people feel the financial services industry is customer-centric, improving relationships and experiences is an excellent way to set yourself apart. 

6. Reduce Fraud and Errors

Credit fraud is one of the most pressing issues in the financial service industry. According to the Federal Trade Commission, debt collectors generate more fraud reports than other industries. Also, debt collectors face challenges of incorrect entries, system issues and data errors. However, with multiple data sources available for authentication, smart data-reading capabilities, API integration, intelligent systems and improved automation, debt collectors can overcome these obstacles. 

Debt collection data analytics mitigate chances of fraud and streamline operations in areas such as field collections. Digital transformation makes transactions transparent and embeds checks at each stage. It also allows real-time tracking of agents, geofencing and instant digital receipt.

KUBRA — The Advanced Debt Collection Software Analytics and Business Intelligence Tool

At KUBRA, we have designed our BI and data analytics tool to improve operational efficiency and customer experience by converting your data into actionable insights. It eliminates the need to make critical business decisions based on intuition and offers accurate information to drive informed decisions. It enhances vital initiatives, micro-targets customer segments and increases customer satisfaction scores. 

Partnering with KUBRA simplifies modern-day business challenges. For example, you can compare the impact of different decisions based on synchronized data. Our software works by connecting multiple variables such as:

  • Decreasing call center volumes
  • Increasing e-bill and paperless adoption
  • Improving accounts receivable
  • Increasing customer satisfaction scores
  • Personalizing online customer journeys
  • Understanding the customer's voice

Learn More About KUBRA Today!

Data analytics and business intelligence guide small and large debt collection agencies to increase their revenue by making data-driven decisions — that's how to stay competitive in the modern financial market. However, the secret to increasing your return on investment is partnering with a service provider with experience to understand your industry and, most importantly, your specific needs.

KUBRA gives you access to a specialized team to help you formulate working strategies to transform your challenges into opportunities. Our system pairs data from our billing and payment and customer communications solutions with third-party data for a complete evaluation. Request a consultation now to learn more!

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