With the majority of the region’s debt collection being handled by small, provincial agencies, the process in Southeast Asian markets is still mostly manual. Digital debt collector AsiaCollect is hoping to change that.

Based in Singapore, AsiaCollect unveiled a standalone, AI-based platform called SmartAgent, which it plans to roll out in India in the coming months, Bank Innovation has learned.

“Operationally, [debt collection] is a nightmare to manage as the local agencies don’t have adequate resources to invest in infrastructure,” Tomasz Borowski, co-founder and CEO of AsiaCollect told Bank Innovation. “The agencies rely heavily on manual phone calls and traditional field collection, where unqualified agents use hostile methods to recover debts. This poses a huge reputational risk to the banks and non-bank lenders that use these agencies.”

Enter SmartAgent. The software-as-a-service (SaaS) platform uses artificial intelligence and machine learning to analyze the behavioral and emotional characteristics of borrowers based on their interaction with agents via call centers. By processing that data, the platform is able to provide the agent the best times and methods to contact the borrower, and thus increase recovery rates.

Digitalizing the debt collection process also benefits the borrower because it humanizes the process, Ohad Samet, co-founder and CEO of TrueAccord, a U.S.-based digital debt collector, told the audience at the Bank Innovation Ignite 2019 conference in Seattle last month.

Instead of relying on incessant phone calls to debtors, a digital platform uses gathered data to guide agents on how to talk to debtors about their specific needs, which, in turn, is more likely to produce better results for the lender as well. SmartAgent, for instance, has a feature called “best time to call,” which predicts the right time to connect with a debtor. Another one of its features is called “emotion detection,” which is able to evaluate the psychological state of the debtor during a call, thereafter creating a customized strategy that the operator can use for the next call.

“Ultimately, we want to change the Southeast Asian collections market by transforming the collections business from one that is focused on local field-collections with low efficiency and high risk, to one where digitization and AI are used to improve debt recovery, ” Borowski said.

As of now, the SaaS solution applies only to call centers, but a chatbot is also in the works. However, Borowski said she could not disclose additional details on the project.

Digital debt collection is a niche market, not just in Asia, but across the world. Taking advantage of such specialized, untapped markets is a growth opportunity for fintechs, said TrueAccord’s Samet. Startups, he noted at BI Ignite 2019, have a unique opportunity to move into “niche services,” as traditional banks are moving out of it. For banks and FIs, digitalizing services like debt collection creates efficiencies and reduces costs by cutting down calls and call times. It’s a win-win situation for both fintech and FI, he said.

The California-based TrueAccord is a data-driven debt collection platform powered by machine learning and digital-first communications.

Like TrueAccord, SmartAgent is designed for collection agencies and digital lending fintechs, as well as banks and non-bank FIs. AsiaCollect is currently in talks with some collection agencies and digital lenders in India, where it will launch in the coming months.

AsiaCollect operates in the Asian emerging markets of India, Indonesia, Philippines and Vietnam. Founded in 2016, the company has, so far, raised $6.7 million and plans on completing a Series A funding round next quarter. Terms of this latest round will be disclosed upon its completion, Borowski said.