Debt Collection Software Market Research Report and Outlook by 2028

The debt collection software sector is anticipated to grow significantly, reaching a valuation of approximately US$ 6,068.25 million by 2028, up from US$ 3,177.26 million in 2021. This growth represents a compound annual growth rate (CAGR) of 9.9% from 2022 to 2028.

The expansion of the debt collection software market is primarily driven by the rising adoption of self-service payment solutions. Businesses are increasingly turning to debt collection software to enhance their collection processes and automate loan recovery, which is expected to propel market growth in the near future. The market is set to experience substantial growth as organizations implement self-service payment systems to monitor customer interactions, manage bill payments, and uphold their reputations. Furthermore, the increasing demand for multichannel communication strategies to engage debtors and optimize the collection process through automation is likely to further enhance the debt collection software market analysis during the forecast period.

A notable trend is the rise of self-service solutions that empower businesses to meet their objectives and prepare for future challenges by facilitating secure acceptance of various payment methods, including Europay MasterCard (EMV), Magstripe, and Near Field Communication (NFC). This innovation reduces the necessity for cashiers or attendants. KISOK Information Systems, a leader in self-service solutions, has introduced a direct bill payment model that automates payment services for unbanked or underbanked customers, thereby eliminating the costly processing of individual payments. In February 2022, Sila Inc., a fintech platform offering payment infrastructure as a service, announced a partnership with TrueAccord, a prominent debt collection firm that provides intelligent traps and digital solutions to streamline Sila's operations. Effective management of overdue and delinquent accounts is crucial for fintech companies as part of their overall fund management strategy. Consequently, the increasing adoption of self-service payment models is a significant driver of growth in the debt collection software market.

Impact of the COVID-19 Pandemic on Debt Collection Software Market Growth

The economic downturn caused by the COVID-19 pandemic resulted in significant fiscal revenue losses, as many governments increased spending to alleviate the pandemic's effects. Business restrictions led to higher default rates among debtors and creditors, limiting their ability to recover outstanding debts. Key factors influencing the debt collection software market include substantial export revenue losses, restricted access to external financing, increased spending requirements, and inadequate borrowing resources. However, debt collection agencies responded promptly by emphasizing outstanding debts and offering debtors reasonable repayment options, which improved debt recovery and management processes. Additionally, in emerging markets, the pandemic has adversely affected commodity exporters, who have been accumulating debt at an accelerated pace and engaging in higher lending, further impacting the debt collection software market. Many countries faced debt service challenges, prompting governments to address the economic and social emergencies caused by the pandemic.

In the Asia Pacific region, China holds the largest market share for debt collection software, followed by Japan. The debt collection industry in China is largely unregulated and has been characterized by aggressive practices. The COVID-19 pandemic has significantly impacted China's debt levels relative to its economic size, leading to a dramatic increase in debt. The Chinese government has recognized this growing debt as a potential threat to economic stability and has implemented measures to reduce reliance on debt for growth. Debt collection and credit management firms are increasingly providing comprehensive solutions that cover all aspects of credit management and debt collection for both personal and business risks. In contrast, several fintech startups in China, such as Shenzhen-based Zhai Zong Guan, are adopting digital solutions to address debt collection challenges and have begun listing loan-related issues on online platforms. Consequently, the demand for debt collection software continues to rise in China.

In the Middle East, banks are facing escalating debt collection costs and an increase in bad debt write-offs, leading to a heightened need for provisions against loan losses. The retail banking sector is marked by a significant number of non-performing loans (NPLs) and rapid technological advancements. Banks are increasingly utilizing specialized debt collection software, as managing credit losses is a critical business driver that directly affects profitability. In Saudi Arabia, the percentage of NPLs relative to total gross loans has been steadily increasing, creating opportunities for debt collection software providers targeting the financing sector. Additionally, the adoption of customer self-service (CSS) platforms has surged, offering numerous advantages. These platforms enable lenders and collectors to gain a comprehensive view of each consumer's payment status, including automated follow-up actions and recommendations to enhance the debt collection process. As automation becomes more prevalent, debt collection agencies are turning to digital collection methods that effectively engage customers by emphasizing the support lenders can provide through shared platforms.

Key players in the debt collection software market include Chetu Inc., FICO, CSS, Inc., Experian Information Solutions Inc., EXUS, Loxon Solutions, FIS, Pegasystems, Quantrax Corporation, Inc., and CGI Inc.

The overall size of the debt collection software market has been determined through extensive primary and secondary research. The research process began with thorough secondary research utilizing both internal and external sources to gather qualitative and quantitative data regarding the debt collection software market analysis. This process also involved obtaining an overview and forecast of the market size across all segments. Additionally, multiple primary interviews were conducted with industry participants and experts to validate the data and gain deeper analytical insights. This included discussions with VPs, business development managers, market intelligence managers, and national sales managers, as well as external consultants such as valuation experts, research analysts, and key opinion leaders specializing in the debt collection software market.