Artificial Intelligence and Debt Collections

Posted on: April 27th, 2017

Gather. Organize. Track

In the Spring of 2011 we launched masterQueue at in San Francisco. At the time, we had no idea it would take the lending industry six years to begin to recognize the value of Predictive Analytics, BigData Analysis, Artificial Intelligence and Automated Workflow in Debt Collections related software. To us, it seemed to just make sense compared to manually gathering data from web sites and relying on intuition of collectors to pick the most important data to drive RPC, increase repossessions and reduce losses.

In 2016, American Banker Magazine named us #11 of the Top 20 FinTech companies to watch; finally some recognition to what we we’re were trying to do, but companies we’re still manually gathering data, toggling between websites and copy and pasting random data.

Finally, as auto loan losses began to grow in Q4 2016, lenders started becoming more interested in looking for tools to reduce delinquency and losses. Now, we’re seeing more companies moving in this direction as Q1 2017 numbers start to come out, and the losses continue to rise. Those lenders who are beginning to finally embrace these tools and strategies, “The Innovators and Early Adapters” will win, and the “Late Majority and Laggards” who are still toggling, copy and pasting, will end up like Sears, wondering, “What happened?”

On May 8th at 11AM PST, masterQueue will be conducting a webinar to show you exactly how you can easily Gather, Organize and Track Data to improve RPC, lower delinquency and reduce losses. If you are interested in attending, click here to register:

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In an article today in Forbes magazine, the CEO of X Tech Ventures, a leader in consulting Fortune 100 companies on how to more effectively use technology in their business, states that he see’s Debt Collection as the next industry that Artificial Intelligence will disrupt:

“The players in the (finance) industry resemble large dinosaurs, stubborn, resistant to change, and simply awaiting the arrival of the asteroid to usher in the next wave of evolution,” Robert Szezerba, CEO of XTech Ventures writes in his article published by Forbes.

“The debt collection industry needs a major reset, and A.I. combined with automation, is seen by many as the answer”, Robert Bere, managing director at Brock Capital Group is quoted in the article stating. I couldn’t agree more.

When we launched at Finovate, Technology Innovators in Finance like @bradleimer saw masterQueue being demo’d live on stage in San Francisco, and his immediate response on Twitter was a nice validation we we’re on to something.

At the time, Brad was VP of digital strategy of a decent sized regional lender; Mechanics Bank. He’s now the Head of Innovation and FinTech Strategy for Santander U.S. one of the largest auto finance lenders in the country.

Tweets during masterQueue Launch @Finovate Spring 2011

So how do you develop an automated strategy around data to help improve several critical areas on every Collection Strategist’s mind these days:

• How can we more effectively, and in a compliant manner, use data to contact delinquent customers we have not spoken with in 10 or more days?

• How can we improve repossession rates?

• How do we effectively share data and stay compliant when accounts are being worked by multiple people, whether its in different internal buckets through the various delinquency stages, or with different repo, skip, forwarding, attorney, collection, loan servicing or debt buying vendors working as 3rd parties on your behalf?

• How can we use some of these new tools and strategies like AI, Predictive Analytics, Automated workflow and BigData analysis?
In my opinion, it all comes down to finding good technology and working with a partner who can help you get it implemented so you can effectively follow these three simple words:

Gather. Organize. Track.

Verb– Bring together into one group, collection or place; organize, take in from scattered places or sources. come together; assemble or accumulate.
How efficiently you make the process of gathering data is critical to process improvement in using data to contact your “no contact” customers, or to perform a deeper skip trace on more delinquent customers, or to more efficiently repossess collateral when collection efforts have failed.
• If your staff still toggles between various data websites to manually review data in their head, you have a problem.

• If you’re buying the same report and data over and over again, you have a problem.
• If the data they selectively pick is being manually entered to the notes section of an account window in a loan servicing software, only to be buried, unable to be used in a proper manner that can place positive or negative value on specific data attributes for proper analysis and placement into a structured workflow process to establish contact with a customer you have lost touch with, you have a problem.
• If you are using outdated technology and you would benefit greatly from an upgrade, you have identified the problem, but if you don’t act, then you may be the problem.
• Whether you’re gathering skip tracing data or performance or compliance data, it’s all about integrations, automation and streamlining data and the information gathering process.
• Without efficient gathering systems and process management, you can’t have:
• An effective modern day strategy built around
• BigData analysis
• Predictive Analytics
• Machine Learning
• Artificial Intelligence

ORGANIZE (aka Data Mining)
Verb -To form as, or into a whole, consisting of interdependent or coordinated parts, especially for united action – Arrange into a structured whole; order.
Coordinate the activities of (a person or group of people) efficiently.
Take responsibility for providing or arranging, Systematize.
Generally, data mining is the process of analyzing data from different perspectives and summarizing it into useful information – information that can be used to increase revenue, cuts costs, or both.
While the human brain and the intuition it has formed through years of skip tracing experience can be impressive, as a seasoned skip tracer can demonstrate, I have been skip tracing for thirty-five years and now that I see how valuable technology tools in data gathering, organizing and tracking can be, I would never rely on intuition again as it relates to the organization and use of data in early to mid stage skip tracing efforts. Late stage, to some degree yes, but only after the majority of the standard, high probability data had been exhausted.
• Replacing the current and widely used manual and intuitive process of organizing data in a persons mind with an automated gathering process that utilizes the tools in masterQueue to mine and organize the data in a structured manner will reduce losses and increase revenue. Its that simple.
“Data represents facts, and without the proper preservation of the context of the collection and interpretation, the data may become meaningless – this philosophy is supported by links below from researchers at Purdue University, Boston College and UCLA, showing the importance of the organization of data.
Articles of relevance regarding Data Mining

TRACK – (aka measure)
VERB– To follow and find something by looking at evidence, noting various points in the process.
To search for by following evidence until found, i.e. track down the source.
To observe or plot the moving path of something.
To keep track of something such as a trend.
NOUN – A course of action; a way of proceeding. Evidence, as a mark or a series of marks, that something has passed.
• “If you can’t measure it, you can’t improve it”
• Peter Drucker – the founder of modern management
• It’s critical to have real-time dashboard analytics with task and alert management tools, and the ability to pull ad-hoc data and reports
• Gathering and Organizing are critical components of your data strategy, but the software has to clearly show the results via Tracking reports and Dashboards so you can tweak your strategy until you achieve the highest possible results.

Innovation. That’s all it takes to build a data strategy. Its super easy when you have the right platform to manage the process, a willingness to believe this is the right strategy for your organization, and the guts to implement a change management culture that embraces technology and the change required to make it happen.

Ask Woolworths, Polaroid, Kodak, MySpace, Blockbuster and Borders how their lack of innovation and their inability to embrace change worked for them.

It amazes me that companies put accounts in their dialer to call the same numbers over and over again. Why not add new ph# when the numbers you have are not working? Why wait until the customer owes two payments, when you can spend 50c or a dollar on data and get actual results by inserting more numbers into your dialer. Worried about compliance, then use our scrub to ID TCPA liability and then use our built-in click-to-dial non ATDS telephony to make a compliant, recorded call to the cell#.

Every day we see a new article about the problems in auto finance, like these below that today stated Santander has cut way back on originations as losses are up:

or Ally not meeting their expectations due to rising delinquency and losses:

Across the board, everyone in the auto lending industry is starting to see increased losses, and while the Santander article states the delinquency percentages are up but not out of line, when you look at the increase in dollars delinquent versus the percentage increase, you see the real problem. Percentages hide the real numbers, i.e. dollars delinquent, as when there were so many loans made, percentages hide the issue.

Bill Ploog, former head of collections at Ally accurately captures this thought process in recent blogs he’s written here:

Look at the largest auto finance Lenders Quarterlies, and the story is in the numbers. Losses are up double digits in terms of dollars lost, single digits in percentages, but doubling down in dollars. Lenders are trying to hire collectors faster than they can, and those two situations are why Lenders should be embracing technology. We have a solution at masterQueue that works, and if you’d like to see a private demo or learn more, click here:

If you’d like to sign up for a group webinar on Monday May 8th at 11AM PST, we will be hosting a roundtable where we discuss the solutions mentioned above, and we’ll show you how they can come to life easily in our masterQueue platform. Click here to register, space is limited:

Click Here To Register

About the author

John Lewis is the President of Find John Doe, a nationally recognized Skip Tracing firm founded in 2007, and Intellaegis, founders of the masterQueue® collection, compliance, skip tracing and recovery management platform that’s used by some of the largest lenders and vendors in Auto Finance.

Intellaegis is also a founding partner in RepoRoute, a repossession field management platform that helps the repossession industry work more efficiently in the field.

John started his career in auto finance as a repossessor for Chrysler Credit in 1982, later becoming their corporate skip tracing trainer.  In 1988, he and his business partner (and wife of 28 years) Perla started one of the first skip tracing companies in the US; Skipbusters, and then they founded Crown Auto Recovery in 1990, River City Auto Recovery in 1993, and American Recovery Service, the first Repossession Forwarding company, in 1994.

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