United Kingdom Debt Collection Software Market

Market Overview

The United Kingdom debt collection software market size was valued at USD 186 million in 2021 and is projected to reach USD 530 million by 2031, registering a CAGR of 11.1% 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.

Significant shifts toward digitalization in nearly every industry vertical have accelerated the demand for automation, particularly in banking institutions. An increase in the need to automate the accounts receivable process among banking institutions worldwide is expected to be a significant factor propelling the growth of the debt collection software market during 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.

Market Dynamics

The United Kingdom 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.

Increased Need to Reduce Problematic Debts and Optimize Collection Expenses

Organizations aim to reduce the number of problematic debts written off due to the rising need to strengthen debt recovery strategies. A debt collection software reduces problematic debt by providing features such as locating difficult-to-find debtors and monitoring unpaid debt, which is expected to be a major factor driving the growth of the market in the coming years.

In addition, the need to save time on administrative tasks, such as prioritizing daily activities or preparing for calls, to concentrate on value-adding tasks, such as reducing bad debts, including communication with customers, resolving disputes, and requesting payments, by automating the routine tasks, such as preparing for calls, contributes to the expansion of the debt collection software market.

The United Kingdom 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.

The United Kingdom Debt Collection Software Market Opportunities:

Rapid Digitalization

The debt collection software market is influenced by rapid digitalization in nearly every industry vertical, an increase in the need to automate the accounts receivable process among banking institutions worldwide, an increase in the need to reduce delinquent receivables, and an increase in the need to optimize collection costs. However, complexities associated with integrating debt collection software with legacy systems and implementing diverse debt collection regulations across the globe, which lead to misinterpretation between various debt collection policies, limit the market's growth to some extent.

In contrast, emerging advanced technologies necessitates enhancements to the current debt collection software to maintain market competitiveness. In addition, the increased adoption of analytics technology, which provides decision-based insights, is driving the deployment of various software applications, including debt collection software.

Regional Analysis

The United Kingdom is a significant revenue contributor and is expected to grow at a CAGR of 11.1% during the forecast period. End-users in the United Kingdom favor vendors who provide integrated software for multiple functions in the debt collection process, as this reduces integration issues. Integrated software suites from the same vendor support additional functions and integrate seamlessly with the system. The market for debt collection in the United Kingdom remains comparatively fragmented, with numerous small companies collecting primarily commercial debts instead of consumer credit. A significant factor driving the market growth in this region is the soaring demand for debt-collection software among European governments. According to the Danish Ministry of Taxation, nearly forty percent of loans (10.7 million Euros) taken out by international students have yet to be repaid. Therefore, the government intends to hire private debt collection agencies to assist the Danish government in recovering the debts.

It is observed that the domestic Finnish company's payment behavior is exceptional, as payments are processed in an average of 25 days. It may be advantageous to encourage debt collection-related enterprises in Finland further. Household indebtedness has decreased due to debt restructuring, write-offs, and debt relief measures while emerging disposable income and a surge in asset rates have altered their equity position. In addition, the Icelandic government agreed with creditors of the defunct banks' estates and the majority of "offshore króna" holders. Thus, the danger of uncontrollable capital outflows and deteriorating macroeconomic stability was mitigated.

Segmental Analysis

The United Kingdom 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 12.2% 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 14.4% 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 12.3% 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 10.8% 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.
• 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.