Johannesburg – A phone call regarding an overdue account is generally one of the most dreaded conversations a consumer can have.
Even when a missed payment is merely an oversight, the interaction feels deeply personal and embarrassing.
Yet, as South Africa grapples with an escalating household debt crisis, a surprising trend is emerging in customer experience: some consumers are finding genuine comfort in talking to AI voice agents rather than human debt collectors, explains Bruce von Maltitz, CEO of 1Stream.
The reality of South Africa’s credit crunch
Von Maltitz says one of the more interesting trends emerging currently is that some consumers are seemingly becoming more at ease engaging with an AI voice agent than a human debt collector.
If this trend continues and more such services come online, millions of consumers – and the thousands of businesses serving them – could benefit in very real ways.
Eighty20’s latest Credit Stress Report indicates that around 40% of the country’s credit-active population is currently more than three months in arrears on at least one loan.
In addition to that, recentTransUnion industry insights show that approximately 35% of South Africans expect to miss at least one bill payment in the current cycle.
“Debt is a difficult topic to address under the best of circumstances,” explains Von Maltitz.
“When debt becomes overdue, or the topic then moves to debt collection, things become even more difficult – practically and emotionally.
“There are people who have serious financial problems leading to defaulting, but there are also many cases where a debit order simply didn’t go off because of a mistake, or a payment was missed, and the customer fully intends to pay.
“In those instances, you often need a fast, consistent way to notify the person and help them resolve the issue.”
De-stigmatising the conversation
For retailers, the 15.77% default rate on their credit products, recently reported by Experian, is even more difficult to manage than other types of credit.
There are currently 22.2 million individual credit accounts with retailers.
“Retail credit accounts are small in value, relatively speaking,” says Von Maltitz.
“But with so many at play, collecting on overdue debt can quickly stop making sense for the business.”
Historically, it was unprofitable for organisations to dedicate human collections teams to chase these small, low-value retail accounts consistently.
AI voice agents change this dynamic, offering a highly cost-efficient, scalable, and non-judgmental way to remind consumers of outstanding balances.
“Of course, when the conversation becomes more complex, it should move to a human agent,” explains von Maltitz.
“But there is an emotional value for customers who may feel less judged or embarrassed since an AI voice bot is only there to ask relevant questions and confirm information.
“AI voice bots have no egos, no moods, and no capacity for personal judgment, so consumers feel far less embarrassed.
“It normalises the interaction. The bot is simply there to confirm details and arrange a payment path.”
Using AI where it fits best
Research into AI-led collections is still developing, but findings in other areas of AI/human interaction suggest that people may generally be more willing to use chatbots for embarrassing or sensitive topics, while still preferring human support when emotion, anger, or topics of fairness come into play.
Von Maltitz says the point is not to remove people from the process, but to use AI carefully for the conversations it is best suited to handle.
“That first conversation is where we see the demand,” says Von Maltitz.
“If you can get a promise to pay using a bot, that is quick and inexpensive.
“If the situation is more difficult or complex, then you pass the call to a human agent who remains essential in cases where there’s a dispute, distress, and a need for discretion and empathy.”
He adds that there is another operational advantage in terms of when a business reaches out to customers about outstanding payments.
“A company that reaches a customer early in the month, while there is still money available, has a better chance of resolving the account,” says Von Maltitz.
“AI can help businesses make contact sooner and at greater scale, rather than slowly working through a list based on how many agents are available.
“This has to be done carefully, of course, because consumers are already overwhelmed by spam calls, so AI collection needs to be part of a thoughtful communication journey, supported by SMS, email, and clear identification of who is calling and why.”
Used well, AI voice agents could make debt collection less confrontational and more consistent for all parties involved.
For businesses, it creates a sustainable way to recover lower-value debt, while for consumers, it may offer a less intimidating first step towards resolving an account before the matter becomes more serious.
*This article first appeared in our sister publication techfinancials.co.ca
