Your Bill Isn’t a Priority Anymore: How AI and Behavioral Economics Get Past-Due Customers to Pay Faster

Your past-due message isn’t being ignored because customers don’t care. It’s being ignored because it sounds exactly like the thousands of other messages they’ve already tuned out.

Consumers today are overwhelmed by digital communications. The average person is exposed to thousands of messages every day across email, SMS, apps, and social platforms. This digital fatigue has made it increasingly difficult for enterprises to get mindshare, especially when it comes to paying past-due bills that compete with rent, groceries, credit cards, and other financial priorities.

How companies interact with their past-due customers is changing rapidly, and enterprises need to keep up. The use of AI, powered by principles from behavioral economics, has created new opportunities for more effective, personalized and scalable outreach approaches that can improve payment velocity by 5X. 

The Costly Reality of Traditional Approaches

For decades, enterprises have been plagued by inefficiencies when it comes to recovering past-due payments: high operational costs, burnt out staff with high turnover, and poor customer experiences result in suboptimal recovery rates. Traditional approaches rely on stagnant, standardized communication strategies that fail to account for individual circumstances and behavioral patterns. Large enterprises routinely have as many as 10-15% of their base in late payments, tying up billions of dollars in revenue. These enterprises write off as much as $500 million to $1 billion in bad debt expenses annually.

Enter AI-Powered Solutions

Your customers want to know that they are more than just a number. They are demanding personalized service, regardless of the health of their account. The enterprises that will retain more customers are those that can provide authentic personalization at scale. This is where AI comes in. 

AI can analyze vast datasets to identify patterns in payment behavior. By examining factors like payment history, communication preferences, and response to previous collection attempts, enterprises can prioritize accounts by likelihood of payment and optimal engagement strategies.

To increase the likelihood of a customer taking your desired action, the Multi-Armed Bandit methodology when combined with AI sends thousands of compliant messages at once. Using AI to scale, winning messages receive more concentration and new ones continue to be tested. The system never stops experimenting because customer behavior is always changing.

Using this approach, payments are made three to six days sooner and write off rates, a metric that is notoriously hard to move, improves by over 3%. This means you retain not only more revenue, but more of your hard to replace customers.

Personalized Communication Strategies

Every consumer responds differently to communications when they have missed a bill payment. Some prefer direct phone calls, while others are more responsive to digital channels. AI can determine:

• Optimal communication channels for each individual

• Best timing for outreach

• Most effective message framing and tone

• Personalized payment reminders that align with the consumer's financial situation

New technology such as Rich Communications Services (RCS) allows enterprises to send branded video, live chat, photos and payment links to customers on their platform of choice. Enterprises using static one-size-fits-all email and SMS communications need to jump on the opportunity to modernize and personalize their outreaches. 

Limitations of Traditional Behavioral Science Research

While traditional behavioral science research has provided valuable insights, employing dedicated behavioral scientists to analyze collections behavior is often prohibitively time-consuming and expensive. These studies typically require months of careful experimental design, data collection, and analysis, often yielding insights that may be outdated by the time they're implemented. 

AI and machine learning systems can continuously and rapidly test thousands of micro-experiments, refine them based on real-time customer feedback and behavioral economics principles, and deploy the winning strategies at scale across thousands of customers. All without the substantial overhead of traditional research methods. 

This allows strategies to evolve dynamically in response to changing consumer behaviors, economic conditions, and individual circumstances, something that simply isn't possible with conventional behavioral research approaches.

The Future of AI for Past-Due Outreaches

The marriage of AI and behavioral economics represents a win-win for both enterprises and their customers. Companies benefit from improved recovery rates and operational efficiency, while consumers experience more respectful, personalized approaches that recognize their unique circumstances. Looking ahead, we see several emerging trends in AI-powered collections:

• Voice analytics to detect emotional states during calls

• Advanced natural language processing for more human-centered AI digital interactions

• Predictive models that identify financial hardship before it impacts payment behavior

• Integration with financial wellness platforms to help consumers build long-term financial health

KredosAi is committed to advancing these technologies while ensuring a human-centric use of AI to put people at the center of the past-due payments process. We are transforming a traditionally challenging experience for customers into an opportunity for delinquency prevention and financial education. 

If you’d like to learn more about how we apply these principles to Fortune 50 enterprises and the results they are seeing in telco, financial institutions and auto lenders, contact us today.