North America Debt Collection Software Market

Market Overview

The North America debt collection software market size was valued at USD 1,431 million in 2021 and is projected to reach USD 3,571 million by 2031, registering a CAGR of 9.7% during the forecast period (2022-2031).

The debt collection software is a set of procedures for the collection of debt, beginning with the initiation of the loan process and concluding with the resolution of the loan with paid debt. Software for debt collection is extensively deployed on third-party systems, and the financial account containing debt details is shared with the software. This form of organization is referred to as a debt collection agency. If a borrower cannot repay the debt, the account is transferred to a collection agency or sold to one. The software for debt collection includes agency management, reminder scheduling, automated notifications, client management, compliance management, commission management, and contact management.

Increased need to improve debt levels and delinquency rates, as well as rising student loan debt rates, are propelling the growth of the North American debt collection software market. Moreover, credit-issuing companies attempt to manage and monitor cash flow and costs by outsourcing debt collection services at a premium. This is anticipated to fuel the growth of debt collection software in North America over the forecast period.

Highlights

• The services segment dominates the market by component.
• The cloud-based segment dominates the market based on deployment type.
• Large enterprises dominate the market by organization size.
• The bank segment dominates the market by end-user.
• North America dominates the Global market.

Market Dynamics

North America Debt Collection Software Market Drivers:

Increased Demand for Accounts Receivable Process Automation

Accounts receivable are legally enforceable claims held by businesses that have not yet been paid for products or services purchased by end users. The demand for automation has been driven by the need to expedite day-to-day operations by reducing labor-intensive administrative tasks and transferring them to technology. As automation of accounts receivable processes enables the migration of invoicing processes to digital practices, the market for debt collection software is anticipated to expand rapidly.

In addition, the automation of the debt collection and recovery process increases the efficiency of debt collection by sequentially identifying the causes and decreasing the time required to process the cases. The demand for automated debt collection solutions is anticipated to increase significantly as organizations that collect debts are under intense pressure to reduce costs while enhancing processes and increasing revenue. This factor is anticipated to significantly contribute to the expansion of the market for debt collection software.

Rise in Multichannel Collection Strategies

The collections processes are advancing due to a significant transition toward multichannel digital strategies. In addition, due to an increase in individuals' preference for digital engagement due to increased personalization, the collection software is in high demand despite minimal person-to-person contact.

In addition, the widespread use of smartphones presents a significant opportunity for more efficient collection procedures. As smartphones have narrowed the communication divide between borrowers and creditors, creditors have realized the importance of capturing customers' attention across all marketing and sales channels, which will increase the likelihood of debtor contact. Consequently, an omnichannel digital collection integrates vast capabilities into an existing mobile application or web portal.

North America Debt Collection Software Market Restraints:

Debt Collection Services Entail a Substantial Upkeep Expense

Enhancements to software for adding new features and the need to maintain the software up-to-date lead to increased maintenance costs. Incorrect implementation of debt collection software can take years, as it necessitates the entry of a vast amount of data. As issues associated with software deployment with an organization's IT infrastructure can be time-consuming and costly, it delays the intended return on investment from this software. This factor is anticipated to inhibit the growth of the market to some degree.

In addition, a lack of knowledge regarding new processes and tools, a lack of practice and training before implementation, and difficulties with internal and external communication are the most significant restraints on the market. Moreover, data migration issues are significant obstacles to the expansion of this market, as data management is costly and raises security concerns.

North America Debt Collection Software Market Opportunities:

Analytics-Enabled Collections Models

Predictive analytics has emerged as a key enabler that helps segment customers into identical groups based on their attributes and formulates individualized debt management and advisory policies for each customer segment. It combines various debt collection techniques, including data mining, machine learning, artificial intelligence, and statistical modeling. WNS, a utility company, implemented predictive analytics to increase its debt collection by 50 percent. This significant improvement occurred over three months with no reduction in consumer engagement. Moreover, big data analytics facilitates the acquisition of the most pertinent information regarding debtors. Information such as demographic data or behavioral aspects, such as the time a debtor will respond to contact, can significantly impact the success of debt collection calls. Moreover, big data analytics provides access to data that facilitates the personalization of debt collection. Thus, introducing analytics in debt collection will be advantageous for the market.

Regional Analysis

North America Dominates the Global Market

North America is the most significant revenue contributor and is expected to grow at a CAGR of 9.7% during the forecast period. Increased need to improve debt levels and delinquency rates, as well as rising student loan debt rates, are propelling the growth of the North American debt collection software market. Moreover, credit-issuing companies attempt to manage and monitor cash flow and costs by outsourcing debt collection services at a premium. This is anticipated to fuel the growth of debt collection software in North America over the forecast period. In addition, market leaders are employing various strategies to increase debt, contributing to the market's expansion. Repay Holdings Corporation, one of the foremost providers of vertically integrated payment solutions, partnered with Katabat, a global provider of debt management software solutions, in June 2020. The partners anticipate enhancing operational efficiencies for their integrated customers across the United States and Canada.

Moreover, the increase in household debt is advantageous for companies operating in this region. Wide acceptance of debt collection software among end users due to its increased automation, adaptability to change, and ability to circumvent existing database systems with collections environment is another major factor driving the growth of the North American debt collection software market.

Segmental Analysis

The North America debt collection software market is segmented based on component, deployment, organization size, and end-user.

Based on component, the debt collection software market is bifurcated into software and services.

The services segment dominated the market and is expected to register a CAGR of 10.8% over the forecast period.

Based on deployment, the debt collection software market is divided into cloud-based and on-premise.

The cloud-based segment dominated the market and is expected to grow at a CAGR of 13% during the forecast period.

Based on organization size, the debt collection software market is categorized into small and medium enterprises and large enterprises.

The large enterprise segment dominated the market and is expected to grow at a CAGR of 10.9% during the forecast period.

Based on end-user, the debt collection software market is classified into banks, collection agencies, finance companies, Healthcare, and others.

Banks are expected to dominate the market, registering the highest CAGR of 9.4% over the forecast period.

Recent Developments

• November 2022- FICO and IMTF signed an exclusive agreement for essential software and intellectual property. This enables IMTF to enhance and expand the Siron Suite as well as provide global support for the apps and related software-as-a-service (SaaS) offerings. FICO will transmit all Siron-related customer relationships and obligations to IMTF as part of the transaction.

• May 2022- Sagent, a fintech startup that modernizes mortgage and consumer loan servicing for North America's leading banks and lenders, announced a five-year extension of its collaboration with Fairstone Financial Inc. to continue powering its loan servicing ecosystem.

• February 2022- Sila Inc., a fintech software platform that provides payment infrastructure, announced a partnership with TrueAccord, the leading provider of intelligent, digital-first collection and recovery solutions, to make TrueAccord's products and services more accessible to Sila's customers.