Smart debt recovery benefits consumers and the insolvency industry
Debt recovery administration adds significantly to the operating costs of insolvency companies, with many still relying on manual and error-prone processes. The rapid rise in the volume of insolvency cases can also result in poorly managed cases, with consumer well-being overlooked and a growth in repayment defaults. Cerebreon developed a cloud-based data platform to underpin insolvency and debt recovery software and to support staff to better manage caseloads. Hosted on Microsoft Azure, users can securely access it through a web browser. EU funding to the Cortx project enabled the Cerebreon team to integrate feedback from potential customers to strengthen the platform’s usability and security functionality for the technical build. A key result was the realisation that the technology could also be integrated with debt portfolio software used in banking divisions responsible for non-performing debt and lending
Machine learning debt recovery
Cerebreon’s platform manages debt recovery based on predictions of likely outcomes, developed by machine learning techniques automatically processing and analysing insolvency documents. Both ‘supervised’ machine learning, where algorithms are trained on a set of historic data, and ‘unsupervised’ machine learning, where the algorithms work first-hand with live data, are used to identify patterns and automate case workflows. The platform was tested live in one of the United Kingdom (UK)’s leading insolvency firms, looking at its data capture and automation functionality. The system processed over 8 000 insolvency documents, clearing a significant backlog of cases within 2 weeks. Over 90 % of the documents were auto-validated, with no need for manual input, and the system achieved a data accuracy rate of over 98 %. The platform was 50 times faster than manual data entry. “EU funding meant we could avoid the common tendency for tech companies to build the technology first, rather than properly understanding the need it addresses,” says Kenneth Doherty, Cerebreon Chief Operations Officer and project coordinator.
Better risk management benefits all
Financial distress can have a life-altering effect on individuals, with poverty, mental health disorders and even suicide, prevalent among those struggling with crippling levels of debt. Credit-fuelled consumerism and more recently the COVID-19 crisis now make consumers even more vulnerable. Insolvency firms, creditors and the overall economy will benefit from automated processes, transforming the manual data extraction process to handle higher volumes of cases. But crucially, the platform ensures that vulnerable individuals are treated fairly and protected from foreseeable risks. For example, financial institutions can identify the early signs of consumer difficulty, and proactively support individuals. “While we are a commercial business seeking to be profitable, our ethos is that you should always strive to make a decent profit in a decent way, those objectives are not mutually exclusive,” says Doherty. The team envisage three different customer segments: insolvency practitioner firms that administer the case on behalf of the consumer/individual; creditors seeking to recover consumer debt; and creditor management firms, specialists working on behalf of creditors/lenders. The insolvency market in the UK will be targeted first, followed by Europe and North America. The route to market being explored includes direct market access supported by a specialist B2B commercial growth agency and partnerships with Accenture Fintech Innovation Lab and Microsoft. The team are now working to fine-tune the integration of the platform with customers’ systems, as well as performing continued security testing, with the aim of launching later this year.
Keywords
Cortx, insolvency, debt recovery, debt default, machine learning, debt, consumer, creditor, algorithms, COVID-19
