United States Debt Collection Software Market

Market Overview

The United States debt collection software market size was valued at USD 1,283 million in 2021 and is projected to reach USD 3,220 million by 2031, registering a CAGR of 9.8% 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 States Debt Collection Software Market Drivers:

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.

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.

The United States Debt Collection Software Market Restraints:

High Maintenance Cost Associated with Debt Collection Services

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 States 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 States is a significant revenue contributor and is expected to grow at a CAGR of 9.8% during the forecast period. 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.

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 debt collection software market.

Segmental Analysis

The United States 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 11% 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 9.5% 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.
• May 2022- Payix, a REPAY company and a national leader in borrower-facing collections and communications tools, expanded its exclusive partnership with Nortridge Software, a leader in software for lenders and loan servicers, to offer eCash, or online cash payment acceptance, to Nortridge clients.

• 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.