How can optimized and empathy-driven communication improve debt collection?

The evolution of debt recovery series. Part 2.

In the previous blog, we explored how AI and emotional intelligence are transforming the mindset behind modern debt collection. We looked at how companies are moving away from pressure-driven tactics and instead embracing data and empathy to better support borrowers improving customer experience solutions.

That support starts with how we communicate.

How we say things in debt collection matters as much as what we say in customer experience

Reaching out about an unpaid debt is a sensitive subject, and the way we approach it makes all the difference. For a long time, debt recovery relied on rigid scripts and one-size-fits-all policies. That method might have worked when options were limited, but today, it's out of step with reality. People expect personalization. They expect humanity.

Let's think about the borrower's experience. Imagine someone who's already overwhelmed by financial stress. They prefer email or text, but instead, they get repeated phone calls. Each one feels more invasive than the last. That's not communication — it's noise.

AI removes the guesswork. It identifies which channels each borrower prefers and adjusts communication accordingly. If someone responds best through a messaging app, the system can automate that touchpoint. If another person prefers email on certain days, AI can schedule around that behavior.

According to a survey by TransUnion, 47% of companies now use AI to recommend communication methods aligned with borrower preferences.

More than half of companies with over 20 full-time employees now use text messaging as part of their outreach strategy. One of TP clients saw a noticeable improvement in repayment rates simply by incorporating messaging into their recovery process.

Not every borrower has the same story — why personalization matters in debt collection?

We also have to recognize that not all borrowers are in the same situation. Some are facing challenges that go far beyond finances, like job loss, illness, language barriers, or other personal difficulties.

These are the borrowers who are most at risk of falling through the cracks. And they're also the ones who need empathy and clarity the most.

AI can help us detect early signs of vulnerability. It might be something in the tone of a message, a keyword that signals distress, or a sudden shift in behavior. Once flagged, these indicators can prompt agents to take a different approach, offering a longer repayment window, connecting the borrower with a specialized support team, or simply taking more time to listen.

For example, if someone mentions a medical emergency, the system can recommend an extended plan without requiring the borrower to navigate a complicated process. That's what it means to build empathy directly into the workflow.

When messages feel human, people respond — blending AI customer experience and emotional intelligence

Yet technology alone isn't enough. It's the human response that makes the difference.

When AI handles routine tasks like sending reminders or providing background data, agents are free to focus on connection. They can take the time to listen, respond, and find solutions. That's where EI plays its role in moments that require flexibility, understanding, and trust.

Companies that empower their teams in this way are seeing real benefits:

• Fewer complaints
• Higher contact and resolution rates
• Increased customer satisfaction

Why? Because when borrowers feel seen and heard, they're more willing to engage. And when engagement improves, recovery improves.

This smarter outreach not only improves recovery results but also makes life easier for customer experts. They're not wasting time chasing down leads through channels that don't work. Instead, they enter conversations already warmed up, ready for a meaningful exchange.

That leads to:

• More productive interactions
• Lower operational costs
• Greater consistency in repayment outcomes

From pushing to partnering: A shift in mindset for modern debt collection

This evolution in outreach also reflects a bigger shift in how we think about success. It's not about talking people into paying. It's about understanding their situation and offering a way forward.

We're moving from persuasion to personalization.

This change in tone from collector to collaborator made all the difference. What could have been a default turned into a structured repayment plan. And more importantly, it created a relationship based on trust, not tension.

Trust is another foundational element of modern debt recovery, and it deserves a dedicated article. Specifically, we'll look at how fairness, transparency, and compliance are shaping the future of collections and why these principles matter more than ever.

In the meantime, don’t hesitate to dive deeper into the topic and explore more ways how technology combined with human approach can change debt recovery in our latest white paper released in partnership with Harvard Business Review Analytics Services. Follow the link to download the full document.

How is your organization approaching communication today? Are there strategies that have worked particularly well or challenges that still need solving?