The pandemic didn’t start the conversation on artificial intelligence (AI) and virtual agents in collections, but it accelerated it. In 2019, offering a virtual agent as a part of your recoveries platform was a novelty. You could talk to service providers about this kind of tech at conferences and hear all about how it could transform your collections, but it wasn’t considered necessary. It was a bonus. It was the future.

Since the pandemic began, this dynamic has completely changed. Many service providers now lean heavily on AI, especially so with regards to virtual agents. Why? For three big reasons:

1. AI and virtual agents help companies scale much more efficiently

2. The technology is improving

3. Customers are growing accustomed to interacting with them

Solving the Staffing Issue

The pandemic resulted in unprecedented stimulus in the form of cash payments, which drove charge-off rates down and payment rates up. Agencies might be facing a lull in placements right now, but that won’t last forever. In a post-stimulus, post-pandemic world, there is speculation that charge-off rates could top off at 8.1% in 2021, compared with 3.8% in 2019.

With a virtual agent, you can scale more easily. Virtual agents allow agencies to maintain high levels of customer service and give customers 24/7 accessibility to assistance no matter how many live agents are on staff. Plus, since virtual agents usually handle the calls that fit within your defined “rules,” the more challenging calls go to your longest tenured and most experienced live agents. This creates an opportunity for different salary structures, more specific training, and could even lift morale. But maybe you’re concerned that your customers will be less likely to pay a virtual agent, or you think we’re talking about clunky, IVR-type systems that force customers to select from a menu or hit “1” for yes and “2” for no. Well….

The Backbone Tech of Virtual Agents Is Better than Ever

And the advances in Natural Language Processing (NLP) aren’t slowing down any time soon. Through NLP, machines learn to interpret text the same way that humans do. In today’s market, companies are using this solution to create virtual agents that barely differ from a live agent. Gone are the days of the clunky IVRs and using keypad entry to provide information. Today, across many verticals, we’re seeing virtual agents that use NLP to assist customers. You can call your airline and verbally give your name and phone number, and the airline can provide you with your flight information, any time of day, and without speaking to a human. Medical offices call insurance companies and give explanations to a virtual agent to get pre-certifications for imaging and other services. As the technology improves, customer satisfaction increases. Which brings up a good point…

Customer Comfort Is Key – and Customers Are Getting Comfortable

During the pandemic, we learned that customers are more comfortable with AI than ever, and that customers expected businesses to use the challenges presented by the pandemic to improve their operations, especially when it came to their digital offerings. In fact, 45% of consumers prefer to deal with some form of an AI system if it means their request will be handled faster than it would be if they waited for human assistance. This is a significant change from previous findings that 87% of consumers preferred talking to humans. Customers expect a good digital experience throughout the lifecycle of their account, and as more banks begin using AI and virtual agents with regularity, customers will expect quality virtual agent assistance in their collections experience.

As the technology improves and customers come to expect interactions with virtual agents, the use case for AI and virtual agents gets a lot stronger. Agencies must start to consider using a virtual agent as part of their strategy. Creditors, too, should consider whether or not a service provider without this option is a viable partner in recoveries.

Erin Kerr is the Director of Content at insideARM and the chair of iA Strategy & Tech – a conference for collections strategy executives. She is a seasoned receivables management professional, with recent experience in digital strategy and a passion for crafting digital solutions for a better customer experience.