Artificial intelligence · Financial Services

What about debt collection startups? Why fintechs Entrepreneurs are not looking for debt collection?

Rafael Sandroni Cofounder, CEO at BotDaddy. Eng. at Itaú Unibanco, first dev at Aliado (Exited), Data Science Ms USP

Last updated on October 9th, 2017

Hey there! I'm looking into the debt collection market niche and I see a big market, archaic process. I see a lot of opportunity to innovate and really resolve problems of peoples/companies. Why entrepreneurs that start at fintech niche do not look for debt collection? I know startups such as TrueAccord, eCollect and others exist. But there is little competitors if compared with the verticals of payments, loans, etc.

Do you foresee any block or difficult process in order to start working with debt collection?

Do you believe AI could play a big role in order to improve the relationship?

K. Robbins Head Moose at Moose WorldWide Digital

October 9th, 2017

Are you thinking about collecting on unpaid invoices for businesses, or a company that helps people restructure debt? To answer your question there aren't many people doing these things because they are much more complex than they initially seem. B2B debt collection is difficult to sell, whereas B2C debt restructuring is amazingly complex due to the regulatory environment.

Parvez Husein Co-founder and CTO @ Portable Office Company. Exited.

October 9th, 2017

Hi Rafael,

I'm going to assume that your question is specifically focused at B2B.

The first thing to say is that yes i think that there will be some sort of disruption in this space. I'm not quite sure what shape it will take though. There are a number of opportunities that someone could focus on.

Having said that i see lots of blocks. These blocks are regulatory which translates into a very expensive platform build cost. Every country has their own regulations around debt collection. For example if a business owes money in the Middle East it is a criminal offence, whereas in Europe it is a civil matter. So to build a digital platform you would have to do it country by country and maintain it would be quite expensive. Not impossible, just expensive. Having said that, this high build cost would act as a natural barrier to entry giving the first entrant into this market a significant advantage.

AI could well play a role in helping fix a specific aspect of the process. For example more accurate pricing of debt, or even routing certain types of debt to particularly focused agencies automatically. Basically AI could be used to make it more operationally efficient to manage debt collection.

I've been thinking and playing with creating a simple bot that helps someone through the process in each country, and then for the more complex cases refers them to a specialist firm. You could monetise this by charging the debt collectors a fee for each qualified referral you send them.

Anyway hope that helps ... and good luck if you build it :-)

Ohad Samet Cofounder and CEO of TrueAccord

October 11th, 2017

I think the main reason is that it's so highly regulated, so complicated, that it's scary for many people. I can tell you it's extremely difficult to do.

Anonymous

October 12th, 2017

The reason there's not many people clamoring over debt collection opportunities is because only terribly horrible people choose that as a career / business.

Joseph Wang Chief Science Officer at Bitquant Research Laboratories

October 13th, 2017

Because it's a really, really tough business that turns out to be very labour intensive. Most of debt collection involves just having a human being contact the debtor, and it's not obvious how AI can help with the workflow. Also like other things its very hard to scale. The system that allows you to collect debt with group A and person B doesn't work with other groups.


The other big issue is that most people that do startups are idealists, and you very, very quickly become cynical and depressed if you work in this space. People that collect debts are not the nicest of people, and you just can't collect debts if you are "too nice." Also people that go into debt, makes you depressed. Either the people who go into debt are "nasty people" or they aren't. Either way you get very depressed very quickly.





Emil Halili Training & Development | Social Media Marketing | Affiliate Program | Outsourcing-Offshoring

October 10th, 2017

I agree debt collection is good niche. . AI is a good option.. I am currently in the Debt Management Affiliate Program Model..

OHENEANTWIB Don't Live the Legacy of others but rather Live your own Legacy,

October 13th, 2017

Yes a debt collection startup is very good idea, but it di entail a lot of hard work but it is not impossible, also you will have to hire body builders to aid in the recollection process and is possible have registered fire arm. Why I am saying this is because debt collector normally face a lot of dangers from the people the recollect the debt from.