The growth in these newer, low-transaction-value collection markets means they now account for 70% of the total volume of debt cases in Germany.
Many companies are operating in the low-transaction-value space across Europe. They include InDebted (UK), PAIR Finance, collectAI, COEO Inkasso and troy (Germany), COLLECTIC (the Netherlands), RUBYPAYEUR (France), Collectica (Scandinavia and Germany), and eCollect (Switzerland and Germany).
Four key factors have been central to the new players’ success.
Firstly, they use a very high degree of process automation, including chatbots and mailbots. This makes handling of small files economical.
Secondly, the huge volume of individual files means that artificial intelligence can add considerable value to their collection strategies. For instance, algorithms can now meaningfully help collectors determine the optimal method, timing and messaging for contact with debtors more effectively than traditional experience-based analytical methods do, which allows successful individualisation of collection strategies.
Thirdly, they have built their businesses around a very high-quality level of end customer service and experience, which is increasingly important in a consumer-centric market and can help enhance debt recovery rates compared with more traditional, non-digital ways of collection. In addition, this helps sustain customer relationships after the unpaid debt issues have been resolved, where the creditors wish to do so (e.g. in digital subscriptions).
Linked to all of the above, the new economy companies that need their debt collected have considerable synergy with the new tech-led collections companies. They are well aligned both culturally and operationally, so they are natural business partners.