Fintech for too long has been focusing on UX, and with the advent of AI, there have been many firms focusing on customer journeys, that would lead to closure of a transaction. However, in recent times, the focus has shifted to back office operations, and adding efficiencies to these processes.
Germany based collectAI automates and digitizes invoices, dunning and debt collection processes and is the first digital end-to-end provider in receivables management. They have achieved significant traction in Europe by processing €25 Million since launch in 2016.
We had a chance to talk to Mirko Krauel, CEO of the firm on their progress and plans, and here are the key points he mentioned about his journey with collectAI.
What led you to collectAI?
After a Diploma in Business Administration, I was working as a management consultant within digital innovation of Banking and Payments industry. During my corporate experience, I noticed inefficiencies in various back office processes. I also noticed that the Fintech startups at that time were mostly focusing on customer experience. I chose the problem to solve and I felt AI would have to be my go-to technology for the problem.
What was the best part of the journey and what were the challenges?
The best part of the journey was getting the team together, the initial days of getting the product design and getting to the MVP. We had quite a few challenges with the Go-To-Market strategy and our sales cycle was also too long. So we had to sit down and work out a way of going after mid-sized clients to have a few closures and build credibility. We also employed a few project managers who were able to bring deployments to closure on a plan.
The other challenge we had was getting access to quality data to build the software, but with time, we are getting better at that too.
Tell us about the AI software you have developed
The AI software has got better over time as we have learnt and the software has done so too. It now evaluates
- The best timing to send a message for the payment collection
- Payment methods to include
- The tone to be included (friendly, neutral, strict tone)
- If SMS, Post, Email is better for a customer
- If a payment plan should be offered
And as a result we end up with a customized communication strategy for every customer.
How do you measure performance of your AI program?
I think it would have to be based on the efficiencies achieved. We have introduced an intelligent email functionality that led to an increase of the collection rate of 33%, while processing costs have been reduced by up to 41%.
It is a big market in Europe alone where about 23% of debts are not paid on time. We have managed £25 Million processed through collectAI in the last 12 months.
Those are big milestones that we have achieved within 12-18 months, and they wouldn’t have happened without the hard work of the team in building a capable software.
Where do you go from here, what is in pipeline?
We need to scale the team across various functions. We need a bigger IT team, enrich our operations team and also get a few PMs. I have also plans for developing some self service features within the product, which will help customer experience and conversion.
There are a number of AI startups coming up across Europe focusing on back office operations. However collectAI are well funded by their parent company Otto Group, Germany’s largest online retailer, and they have also demonstrated execution in the last 12 months. There is serious competition across the Atlantic, however, they seem to have the advantage in the European markets.
Arunkumar Krishnakumar is a Fintech thought leader and an investor.
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