September 26, 2017
Debt collection is definitely not the sexiest segment in the financial services industry. To be honest, the experience just straight-forward sucks for everyone involved in this horrendous process — lenders and borrowers alike. Nonetheless, debt remains a constant in the lives of a massive number of individuals around the world. By the end of Q2 2017, total outstanding consumer debt in the US alone hit $3.7 trillion (+$9.14 trillion of housing debt) – a volume not yet sufficiently addressed neither by financial institutions, nor by technology startups with the exception of a few interesting examples (like True Accord, InDebted, collectAI, Symend, Collectly).
According to the latest International Debt Collections Handbook (USA) published in June 2017, the estimated success rate of collections between 01/2014 and 12/2016 in the United States was just at 36.7% (with the same metric for Canada estimated to be at 17.7%, UK at 65.8%, Mexico at 38.7%, China at 23.9%, India at 17.3%, Germany at 63.9%, and France at 67.8%). Despite the potential market size and almost miserable collections success rate in a large number of developed and developing countries, debt collection startups are some of the most underrepresented ones in the global FinTech community.
Lack of transformative work and attention to this common practice left debt collection practices very retrograded for 2017. It’s almost hard to believe that technology startups addressing this massive issue are the loneliest ones (although, on ...