According to IBIS World, as of the year 2022, the debt collection industry in the US is valued at $18.8 billion. That is quite a sharp rise from just three years ago when it was valued at $11.5 billion.

We have encountered trends that have significantly grown and shaped the collection sector year after year. The previous year witnessed some notable transformations, particularly the big one to the Regulation F law, the gradual shift to omnichannel communication by agencies, the digitization of banking, etc. The industry is continuing to evolve and rise, and at this rate, we expect to change as a theme right through the end of 2023.

Here are the top 5 trends that are believed to shape the debt collection industry in 2023.

Increased transparency for customers: 

More customers are becoming increasingly concerned about their finances. They are now being more attentive to even the minutest details about their money. As a result, consumers are on top of it even in a simple instance, like a small amount deducted from their bank accounts.

They would demand to know the reason behind those deductions. Or when they’re going through their borrower information form trying to apply for a small business loan, they’d be curious to understand those various form fields and details. Or, when they’re working with a healthcare provider, they’d want to see the details of covered services and expenses in their medical bills.‍

They’ll also demand more openness from businesses that assist people with their finances. To achieve a more efficient collection procedure, debt collection agencies can set an example by being more transparent and informing consumers about their rules.

Taking into account how agents look for, produce, and receive context during conversations is one of the best steps agencies can take toward openness. Think about standardizing and automating call notes and providing in-person agent support. Both will give customer service representatives more information at their fingertips and the most precise context throughout a chat. 

A Shift to Omnichannel Intelligence 

Debt collection companies’ desire to establish an omnichannel presence was a hot topic in 2021. That requirement became more crucial in light of Regulation F, which restricts the number of times an agency can contact the borrower and requires communication via the channel of their preference.

The value of each attempt a collector makes to get in touch with the borrower increases; as a result, they should give precise information top priority. As a result, more encounters of a better caliber and more data to evaluate will raise the need for omnichannel intelligence.

Before we move forward, let us first know in detail what omnichannel intelligence denotes: it’s when communication with customers takes place across multiple channels that are integrated with one another and have the ability to gather accurate context from one another.

For instance, the agent on the call should be aware if the borrower has said something important in a previous email. The borrower should let the agent know in subsequent contacts if he discloses to the chatbot that he is unemployed or has a repayment problem.

A focus on accuracy and quality also lowers the risk of noncompliance while enhancing communication.

Rising Number of Accounts With Reduced Account Balances 

There are a lot of accounts with declining account balances in the financial services sector. That’s because consumers are attempting a variety of alternatives to standard credit card debt as a way to get creative with paying off their bills. Hence, the potential this variation presents to collections teams.

People now have a variety of options, even for healthcare. They are experimenting with a variety of services in addition to the traditional out-of-pocket costs to pay for their medical bills. Debt collection agencies here give their best collection efforts and also make consumers aware of the various rules and regulations that must be followed while opting for a loan and the method of repayment. 

Emphasizing Collaborative Intelligence Over Artificial Intelligence 

Together, humans and machines can use collaborative intelligence to solve problems. It is necessary when AI requires a lot of human assistance, especially in delicate situations like debt collection, when every discussion may, by its very nature, entail stressful or tense moments.

Top debt collection agencies employ AI to document the call between the agent and the borrower, which is one example of how AI is being used in debt collection. It listens to the dialogue between the agent and the borrower and extracts important details into a succinct summary of 20 to 50 words.

The AI-generated notes, however, can have material added or removed by the agent. As a result, the AI model gradually increases note accuracy over time. It cannot succeed without human input and context, and vice versa.

Going a step further, these comments can offer standardized information to facilitate better suggestions for agent efficacy when used in conjunction with a real-time assistance solution. Working together with the same information are both humans and machines. The “collaborative” trend is undoubtedly coming, so keep an eye out for it. 

Forgive and Forget: Debt Forgiveness 

Recently, the government decided against sending some student loans to collectors and instead decided to forgive a tiny portion of them. Although it may seem strange, there are ways to have debts forgiven, such as student loans, by participating in income-based repayment plans or by performing volunteer work. Later, their credit bureau scores no longer reflect them.

Other sorts of debt are also subject to this, although only in infrequent circumstances. You must consider this important topic for the year since it is one that is likely to persist. Keep a closer eye on how it affects your firm going forward. 

Think Forward 

The debt collection industry is moving at a very fast pace. Because it is ever-transforming, keeping up with these trends will require much work. But here, one important takeaway is: it’s time for leading, forward-thinking collection agencies to build an intelligent, data-driven, omnichannel approach. ‍