The debt collection software market is projected to reach US$ 6,068.25 million by 2028 from US$ 3,177.26 million in 2021; it is expected to grow at a CAGR of 9.9% from 2022 to 2028.
The debt collection software market growth is attributed to increased adoption of self-service payment models. A growing preference for debt collection software to streamline collections and automate the loan collection process is expected to drive market growth in the coming years. The debt collection software market is projected to witness robust growth as businesses increasingly implement self-service payment platforms to keep track of their customers, track bill payments, and maintain credibility. Additionally, the growing need for multichannel communication to reach debtors and improve the collection process through automation is expected to boost the debt collection software market analysis over the forecast period.
There is a growing trend of self-service solutions that help businesses achieve their goals and prepare for the future by enabling secure acceptance of all payment methods, including Europay MasterCard (EMV), Magstripe, and Near Filed Communication (NFC), eliminating the need for cashiers or attendants. KISOK Information Systems, the world leader in self-service solutions, launched a direct bill payment business model. The system automates all payment services for unbanked or underbanked customers while eliminating the expensive processing of individual payments. In February 2022, Sila Inc., a fintech software platform that provides payment infrastructure as a service, announced that it has partnered with TrueAccord, a leading debt collection company providing smart traps and digital trap solutions to ease the operations of Sila. Overdue and delinquent account management is an important element that fintech needs to have as part of its overall fund management. Thus, the growing adoption of self-service payment models drives the debt collection software market growth.
Impact of COVID-19 Pandemic on Debt Collection Software Market Growth
The collapse in economic activity led to losses in fiscal revenues, as several countries increased government spending to mitigate the impacts of the COVID-19 pandemic. Due to restrictions on conducting businesses, debtors and creditors increased their default rates and had limited options to collect the outstanding debt from the market. The major factors affecting the debt collection software market analysis are massive export revenue loss, limited access to external finance, high spending needs, and insufficient borrowing resources. However, debt collection agencies took immediate action by highlighting the outstanding debt and offering an opportunity to the debtor with a reasonable amount, which boosted the recovery of debt management and collection procedures. Further, in emerging economies-the pandemic has affected the commodity exporters, who have been accumulating debt faster and engaging in higher lending, further impacting the debt collection software market. Moreover, several countries correspondingly received debt service, which compelled governments of different countries to respond to the economic and social emergency and contain SARS-CoV-2.
China accounts for the largest debt collection software market size in Asia Pacific, followed by Japan. China's debt collection industry is largely unregulated, and the business has been defined by harassment and violence. In addition, China's debt, when measured against the size of its economy, had declined severely due to the COVID-19 pandemic. Moreover, the debt has grown dramatically, and the country's government identified the huge debt pile as a potential threat to its economic stability. The government imposed several measures to reduce the economy's reliance on debt for growth. Debt collection and credit management companies are increasingly offering comprehensive coverage of every stage of the credit management and debt collection processes across personal and business risk solutions. Conversely, several Chinese fintech startups, such as Shenzhen-based Zhai Zong Guan, are implementing and adopting digitalized procedures to overcome debt collection issues and have started listing problems related to loans on online platforms. As a result?, the demand for debt-collection software continues to rise in the country.
Banks operating in the Middle East are experiencing high debt collection costs and a surge in bad debt write-offs; therefore, there is a growing need for higher provisions against loan losses. Also, a retail banking environment is characterized by significant non-performing loans (NPLs) and?robust technological change. Banks are increasingly adopting specialized debt collection software, as managing credit loss is a key business driver that directly impacts profits.?In Saudi Arabia, NPLs as a percentage of total gross loans have witnessed a steady rise, creating a market opportunity for debt collection software market players catering to the financing segment. Moreover, the usage of customer self-service (CSS) platforms has increased as they offer several benefits. In this platform, lenders and collectors can get a single view of each consumer and their payment status, including automated follow-up actions and recommendations to streamline the debt collection process. Furthermore, as automation increases, debt collection companies are resorting to digital collection techniques that successfully engage customers by emphasizing that the lenders will assist them over the shared platform.
Chetu Inc.; FICO; CSS, Inc.; Experian Information Solutions Inc.; EXUS; Loxon Solutions; FIS; Pegasystems; Quantrax Corporation, Inc.; and CGI Inc. are a few key players operating in the debt collection software market.
The overall debt collection software market size has been derived using primary and secondary sources. To begin the research process, exhaustive secondary research has been conducted using internal and external sources to obtain qualitative and quantitative information about debt collection software market analysis. The process also obtains an overview and forecast of the debt collection software market size with respect to all market segments. Also, multiple primary interviews have been conducted with industry participants and commentators to validate the data and gain more analytical insights. This process includes VPs, business development managers, market intelligence managers, and national sales managers-along with external consultants such as valuation experts, research analysts, and key opinion leaders-specializing in the debt collection software market.