Second, there is an unprecedented amount of data available, and new AI-based technologies can decipher insights from this data. This means that the days of taking a standardized approach to collections are gone. We can now segment our delinquent portfolios at a granular level, create customized risk models based on numerous variables, decide on how these insights will transform existing underwriting models, and ultimately help lenders make decisions on how to use collections outreach as a way to build customer relationships and drive long-term value.
Finally, from an execution perspective, there is a need to engage with borrowers in a more meaningful way in order to overcome operational roadblocks. Lenders can derive more value from their collections function by taking certain important steps. These include creating omni-channel mediums of communication, which enable borrowers to interact with the lender 24/7; empowering collectors with tools (backed by data-generated insights) to provide multiple resolution options to defaulters; and training collectors on soft skills like relationship building, empathy, and understanding.
Auto financiers now have the ability to execute on the insights gained from understanding borrower personas and interpreting the available data. By keeping the bigger picture in mind, lenders can justify the key investments needed to the collections department to broaden its strategic impact – because it’s clear that a standalone approach is no longer sufficient.
Emerging customer segments, dynamic lending scenarios, and fast-changing regulations are examples of the multiple forces impacting the auto finance industry. Using digital tools and AI-based technologies, auto lenders have the opportunity to enhance their collections function, and to leverage it as a key element in their overall auto finance strategy.
This article was authored by Vijay Negi, Vice President and solution architect – Asset Finance, Genpact. The article was first published in Auto Finance.