The psychology of debt collections

Debt collections have experienced a revolution in customer service over the last few years. Technology has transformed what used to be a stressful, antagonistic activity into a cooperative, consumer-led one.

Many banks – as research by the Gartner Group shows – are now turning to technology to modernize collections and make them more efficient. While this tech-led transformation has yielded many benefits, it’s still only one half of the puzzle: to create a truly customer-focused collections channel, banks must use technology in a truly human way.

“Good intentions may do as much harm as malevolence if they lack understanding.” Albert Camus

“Technology serves humans. Humans do not serve technology,” as the designer Josh Porter puts it. The human side of debt collections is easy to overlook, and this is a mistake because successful collections depend on helping your customers make the right decisions.

“A choice architect has the responsibility for organizing the context in which people make decisions.” Richard Thaler

Let’s look at a few ways you can combine psychology with technology to build a truly successful collections operation.

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