OVERVIEW
Today’s debt collection landscape remains largely manual—relying on phone calls, letters, and prescribed and static outreach methods that often feel impersonal and aggressive. Unfortunately, this approach frequently leads to customer dissatisfaction, strained relationships, and, ultimately, lost business. In deploying a unique approach with the Wiserpay AI engine, Migdal Group is revolutionizing debt recovery by shifting the focus from simple recovery to customer retention—this new innovative debt collection project is called Migdal AI-Collect.
By leveraging advanced AI, Migdal AI-Collect creates a personalized, seamless experience that transforms the debt collection process into one that prioritizes retaining and improving the relationship between Migdal and the customer. With our customized integration of the Wiserpay AI engine, we’re analyzing a debtor’s behavior, predicting recovery rates, and offering personalized solutions to pay debt. The outcome is higher collection rates, lower recovery costs, improved customer satisfaction, and a stronger relationship between Migdal and the customer.
CHALLENGE
Like any company, Migdal has lost debt. After attempting to recoup a customer’s late payments, this debt is ultimately written off as a loss. This has a significant negative impact from a financial perspective by reducing revenue, increasing expenses through unsuccessful collection and losing customers—and recurring revenue—in the process. The traditional debt recovery process can leave the debtor feeling ostracized, belittled, uninterested in resolving the debt, and wanting to move on to another insurance provider.
OPPORTUNITY
Most people want to resolve their debt. Creating a debt collection process that considers a debtor’s personal, psychological, and behavioral factors offers an empathetic approach, addressing the challenges they face in making payments. By communicating through their preferred channels, at the right times, and offering flexible payment options, the process becomes more customer-centric. But each person is unique and has different barriers to making good on their debt. This is where artificial intelligence comes in. By using AI to analyze each person’s actions or non-actions, we’re able to automatically customize each step in the collection process to increase the likelihood of a successful payment by meeting the needs of that particular individual.
PROOF OF CONCEPT (POC)
We kicked off this project in September 2024, focusing on a portfolio of previously written-off debts. Our goal with this POC was to focus on 1 million NIS (US$330K) with a target of 10% collection rate. Within just three months, we’ve already achieved a 60% collection rate, significantly exceeding our initial expectations.
We discovered how individual customers respond differently to various communication channels. From varying hours of the day to different days of the week, and from preferring SMS communications to social media interaction, we realized that these communication challenges carried more weight with customer debt collection, than we initially understood. Injecting an AI engine into this equation produced remarkable results. We achieved customer satisfaction of 90%, and that’s numbers representing surveys completed by the debtors themselves! And we raised our ability to recover what otherwise was lost debt by 60%, in only 3 months!
DIFFERENTIATORS
- Using AI to Learn Client Behavior: By understanding the optimal times to contact clients when they are likely to engage and settle their debts, we enhance debt collection by analyzing debtor behavior.
- Multiple Payment Methods: Previously restricted to one or two options, Migdal can now provide multiple payment methods, enhancing convenience and flexibility for customers.
- Ability to Pay Via New Channels: The new process allows payments through multiple channels, like text and WhatsApp, 24/7. Previously, payment options were limited to specific channels and limited hours when staff were available.
- 24/7 Communication & Payment Options: Before, customer communication was limited to set hours. With the new AI-based, automatic communications are sent at times that are convenient for the customer.
TECHNOLOGY
The POC’s success lies in the innovative technology we’ve employed, along with the strategic approach we adopted. We prepared all relevant departments ahead of time, from legal to customer facing, so that our readiness corporate-wide is maximal and the hurdles during deployment are minimal. We trained insurance agents and their supervisors to expect the outcomes of the AI engine’s activation, which resulted in some customers calling them to ask about this novel mode of communication. The proprietary algorithm analyzed each debtor’s behavior throughout the process, better understanding their preferences. The conversational AI-based CRM platform seamlessly managed the entire collection journey, from data ingestion to automated customer interactions.
By relying on data sources (CSVs, APIs) and leveraging advanced AI, we employed a powerful system that tailored various communication methods deemed optimal for each individual. Whether it’s providing additional explanations, offering flexible payment options, or simply reminding them of their outstanding balance, our AI-driven approach ensures timely and effective engagement. Additionally, the debtors’ interactions dictate our system’s next step in the collection journey. Ultimately, the POC’s technological approach demonstrated that AI automation streamlined our operations and enhanced overall CX.
METRICS & PERFORMANCE
POC Inputs & Goals:
- Launched September 2024 and would run for 3 months, through end of November 2024
- Took 1M NIS (US$330K) of lost debt that was already assumed wouldn’t be recovered, which was held by 1,600 debtors
- Our goal was to collect 10% of this debt (or 100k NIS)
POC results—quantitative:
- Result: 60% debt collection, which far exceeded our target collection rate of 10%
- Success rate: 1,000 debtors paid
- Engaged debtors: total 1,300 debtors reacted or engaged with our communications in some way, which is over 80% of the debtors in our POC
POC results—qualitative:
- Customer satisfaction survey stood at 90% satisfaction
- 60% of paid debtors completed the survey
FUTURE GROWTH
Building on the success of our POC, we plan to expand this approach beyond lost debt and apply it across Migdal. By proactively addressing customer concerns and offering flexible payment solutions, we can prevent accounts from deteriorating into lost debt. This strategic shift will significantly increase the scope of our customer-centric initiatives, as we implement it across our entire customer base. By focusing on customer satisfaction and communication, we will boost collection rates and enhance customer retention.