Personal debt has increased exponentially all over the world. In particular, in the UK almost 9 million people are over-indebted, which can create a debt spiral where households borrow more to pay off existing debt. The COVID-19 pandemic has taken this situation to the next phase. As a result, it is estimated that nearly 250,000 small businesses could close once COVID-related support programs end.
Usually, businesses use debt collection agencies to collect unpaid debts. However, most collection agencies rely on awkward and impersonal phone calls and letters to engage with customers, leading to poor customer experience and negative publicity for organizations seeking reimbursement.
Client-centric debt management platform
This is where London-based Ophelos puts the customer at the heart of the debt collection process, allowing them to settle their debts on their own terms. Now the company is making headlines as it closes a $2.3m (nearly £1.6m) pre-seed investment round co-led by Connect Ventures and Fly Ventures to continue to build its customer-centric debt management platform, while developing customer engineering and operations teams.
Rory Stirling, General Partner of Connect Ventures: “Credit is a fundamental and growing part of our consumer economy. Fintech has brought us many great innovations, including better access to credit, but debt management has so far remained largely untouched and unloved. We see a huge opportunity to create premium digital products for consumers to understand and manage their personal debts. And, at the same time, it offers a strong customer-centric approach that companies expect to offer in all other areas of their business. Ophelos is the company that will make the difference here. He has a brilliant team rethinking debt collection for the 21st century and I look forward to working with them on this journey.
Matt Wichrowski, Partner at Fly Ventures: “The debt collection industry is in desperate need of an overhaul, but so far we haven’t seen anyone come up with the passion and insight to make a difference until now. Ophelos. Despite making billions of dollars every year, this industry has been slow to embrace modern product technology or thinking. We felt this was a unique opportunity to create a new technology-driven, transparent, and empathetic recovery category. The combination of the founding team’s incredible journeys and social impact mission will be integral to the success of Ophelos and we are excited to support Amon, Paul and Qingchen as they transform debt management.
AI-based debt collection
Ophelos is reinventing the debt collection industry to improve the financial health of consumers and businesses. It partners with companies to challenge and transform the $24 billion debt collection industry to help them improve their relationships with their clients. The company uses AI and behavioral science to optimize and digitize customer communications, deliver more affordable debt repayment plans, and achieve more accurate vulnerability detection. Ultimately, this improves the financial health of consumers and businesses, with customers more likely to engage and businesses more likely to collect their outstanding debts.
Customers communicate with the Ophelos team through digital channels, set up flexible and affordable repayment plans through a digital platform, or opt for other solutions such as breathe. Businesses gain insights gathered through Open Banking-backed digital accessibility assessments and vulnerability scanning to help them better understand their customers’ financial health and benefit from pattern analysis based on machine learning to detect regulatory and compliance risks, among other features.
The resulting debt collection process is accessible, anonymous and convenient for customers. It offers businesses improved recovery rates, intelligent insights, and reduced risk at a lower cost. Early results with launch customers show a 24% increase in receivables collected and a 28% reduction in costs for businesses. Additionally, customer engagement increased by 68% with this customer-centric approach.
Ophelos was co-founded by Amon Ghaiumy, Paul Chong and Qingchen Wang. The startup is also registered as Pending B Corp. Ophelos’ broader mission is to help create a world where everyone is financially educated, empowered, and equal. Starting with debt collection today, the company aims to understand and diagnose many of the underlying issues related to the financial health of consumers and businesses and create more products that address these issues in the future. .
Amon Ghaiumy, Co-Founder and CEO of Ophelos, said, “We launched Ophelos to create customer-centric products and services that nurture financially healthy and trusted relationships between consumers and businesses. The debt collection industry felt like a natural starting point for us because it allows us to understand, diagnose, and resolve many underlying financial health issues. It’s also an industry that desperately needs to move towards a more technology-driven and, most importantly, customer-centric approach. We want to create a world where everyone is financially educated, empowered and equal – reinventing the debt collection industry is just the first step towards our larger goal.