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Why AI could be the answer when companies chase debt

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Any company with a credit and collection function will recognize the ‘promise to pay’ phenomenon. There is a tendency for customers, when chased by a collection agency, to exaggerate how much of a debt they will pay and how quickly. But while it’s a natural human instinct to tell them what they want to hear when faced with demands from you, this makes it difficult for companies to manage their debts; they don’t really know who will pay what and when.

Irish start-up webio, which is announcing a $4 million Series A fundraising round today, thinks the ability to overcome the problem of the promise to pay could be just one advantage of its communications technology. “People feel much more empowered to be honest when communicating in text, rather than through voice interaction,” explains co-founder and CEO Cormac O’Neill.

Launched in 2016, Webio has built a workflow and communications platform targeting businesses such as utilities, financial services, and e-commerce merchants, all of which need to put significant resources into debt collection. The front of the platform is a machine learning-powered chatbot that allows these companies to automate their conversation with customers through channels like SMS, WhatsApp, and web chat.

Simple questions, such as when to make payments and how to make them, can be solved without human intervention. More complex issues are automatically forwarded to the company’s agents, with Webio’s technology able to identify such cases by analyzing the chatbot conversation.

“Talks about debt are very stressful for both the borrower and the agent,” says O’Neill. “Having those conversations through a text interface can reduce that stress—then refer customers with particular issues or vulnerabilities to someone who has the expertise to help.”

A consumer who simply forgot to pay or doesn’t know how to pay can be completely settled with Webio’s chatbot, O’Neill explains, although he prefers the term conversational artificial intelligence (AI). Someone who is in financial difficulties, for example because he lost his job or was affected by a family illness, needs more personal support.

Webio has grown rapidly since its launch and accelerated during the pandemic as the shift to digital technologies accelerated. But in the current economic climate, with the inflation-driven cost of living crisis escalating across much of Europe, credit and collection functions will come under increasing pressure. A technology-assisted response will allow them to expand their capacity while still interacting with customers in a sympathetic way, O’Neill said.

He is sensitive to consumer skepticism about chatbots — often criticized as slow and frustrating — but points out that Webio’s technology is specifically tailored for the credit and collections market. “Going digital means businesses can create a whole new set of digital experiences,” he says. “That helps customers feel more confident in having those difficult conversations and can ultimately prevent them from getting into unnecessary and significant financial hardship.”

In any case, there is also evidence that younger consumers prefer these communication channels – and in an environment where more people work from home, privacy is an important consideration. Many financial services firms say one of the reasons their use of conversational AI and digital assistants has doubled during the pandemic was that customers don’t like to have verbal conversations about their finances while sitting at the kitchen table with friends or family.

To date, Webio has acquired 25 companies that are now using its technology and working with customers in the UK, Ireland and Italy. The company’s growth is more than 100% year-on-year and the workforce is expected to double in the next six months.

The company’s latest fundraising will support that expansion. The Series A round is led by Finch Capital, a specialist investor in European technology companies, and will provide additional financial firepower for the company. Webio spends half of its money investing in its technology — for example, it plans to significantly expand its R&D team — and the other half is dedicated to expanding sales and marketing capabilities.

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