National Recovery Solutions, a Lockport, N.Y.-based accounts receivable company, has increased online payments by 25% and reduced delinquencies by 40% in less than a year by adding a Virtual Negotiator to its debt collection team.

The Web-based product, from Phoenix-based BillingTree, is designed to appeal to delinquent consumers by removing the embarrassment of talking to a human collector.

"Consumers can manage their debt without a level of humiliation," said Joseph Bonilla, director of product management for BillingTree. "And people who are engaged in virtual negotiation are more willing to pay because they feel as though they were part of the process."

Virtual Negotiator's purpose is to give consumers a payment plan that they are likely to stick to. BillingTree has found that it takes about 10 minutes to complete a negotiation through its technology, as opposed to the average of about 30 minutes for live phone conversations.

Consumers engage Virtual Negotiator, which customizes the repayment options in real time. Virtual Negotiator makes counter-offers based on the client's policies and parameters for repayments. It also determines, based on the collector's rules, when an account is too large or risky to handle digitally and needs to be handed off to a live agent.

The program also produces settlement reports and provides other details such as when consumers signed in and whether they set up payment plans. BillingTree is targeting agents that receive and process payments on behalf of credit card companies, banks and other companies that provide credit.

"We're looking for agencies that are seeing a drop-off in engagement of their customer base with calls and other similar processes," Bonilla said. "Or they may not be reaching the millennial market, which is used to virtual solutions."

NRS reported that Web traffic on its payments site has doubled since adding Virtual Negotiator, but did not provide a representative for an interview for this story.

BillingTree also offers technology to process loan payments for large-ticket items such as cars. The company has long contended that removing agents from collections can boost performance.

"I believe there is a fairly large body of individuals that prefer impersonal, reactive service to personal, proactive service," said Thad Peterson, a senior analyst at Aite Group. "For collections, an organization has little to lose by starting with an automated process. The cost would be much less than a collection call, and it would probably increase collection response for a percentage of consumers."

There is a risk in trying to blend the human and self-service models, Peterson added.

"My concern would be if an organization anthropomorphized the automated process, creating a 'bot' or 'avatar' to enable communication," Peterson said. "Humans are quick to see an artificial representation of a person, and my guess is that they would be less responsive."

Businesses should be mindful of consumer preferences for impersonal engagement, particularly among younger adults, said Mary Monahan, an executive vice president and research director for Javelin Strategy & Research.

Ninety percent of people ages 18 to 24 use text messages, compared to 79% of all consumers, she said.  

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