After nearly two years of ups and downs due to COVID-19, India’s economy is finally showing signs of recovery. An important indicator of this recovery is strong demand for retail loans. However, banks and NBFCs have another problem to deal with, namely the increase in delinquencies on two-wheeler loans, property loans and personal loans. According to data released earlier this month by credit monitoring agency Transunion CIBIL, NPAs in the two-wheeler segment increased by 140 basis points, by 30 basis points in the loans against property segment. and 11 basis points in the personal loans segment. These NPAs make a big dent in the lending books of lenders and cripple the banking ecosystem.
Dr. Rashi Gupta, Chief Data Scientist and Co-Founder, Rezo
While many loans fail for important reasons like loss of income, fraud and lack of intention to pay, it is surprising that many fail for mundane reasons like borrowers forgetting the EMI date or the cash withdrawal to pay NBFC etc. Traditionally, lenders would appoint a loan collection agency who used muscle strength or other ugly means to collect the money. The whole process would seriously affect the relationship between lender and borrower forever. After strict RBI regulations, this evil practice has come to a significant halt, leaving borrowers to find other ways to deal with delinquencies.
Fortunately, financial institutions can automate pre- and post-delinquency management cycles with AI-powered contact centers like Rezo.ai. Financial institutions send SMS and email reminders to borrowers at the pre-delinquency stage. This approach does not cross sections in a country where literacy rates are low and people speak hundreds of languages and dialects. The AI-powered Rezo.ai contact center can place robocalls to borrowers to remind them of their EMI dates. This call can be personalized in different languages and dialects to ensure that the borrower understands the message and does not have trivial reasons for non-payment. This is not a one-way call, but the conversational AI capability allows the borrower to answer like a regular phone call. Automated speech recognition enables the system to assimilate audio data, convert speech to text with high accuracy, and perform sentiment analysis, as well as empathy and tone analysis. This analysis can be constructive in predicting the intention to pay. If there are red flags, financial institutions can take additional steps to ensure timely repayment.
The AI-powered contact center can also adapt to the post-delinquency management stage. In the back-end, the system generates insights based on in-depth data analytics. This information is valuable in creating meaningful boosts for borrowers. For example, the system can suggest which borrowers resume after missing 1-2 EMIs and which ones are likely to default. As a result, those who are starting to repay do not need a hard push (home visit). Instead, they can receive robocalls to track their sentiment. For others, lenders may provide additional measures. This ensures cost optimization and better recovery rates.
“It is vital for the socio-economic progress of India to regularly disburse loans to individuals. At the same time, it is essential to ensure the safety of the entire banking ecosystem. To a large extent, AI-powered contact centers can solve this problem.These systems can be customized to meet the specific chargeback management requirements of financial institutions.The best way to start a digital chargeback journey is to identify a technology partner that can deploy an AI-powered contact center for financial institutions,” noted Dr. Rashi Gupta, Chief Data Scientist and Co-Founder, Rezo.ai.