Why did Point72 Hyperscale decide to invest in the debt recovery industry?
Point72 Hyperscale invests in companies in data-rich industries where we believe applied AI can help improve products and services, amplifying the power of the workforce. We saw a compelling opportunity in the debt recovery industry and decided to invest. The data in the industry is rich, technology adoption is still low, and the market is highly fragmented.
We believed that an algorithmic approach to debt buying could be transformative to the health of the industry. We also saw space in the market for a more thoughtful approach to debt recovery – and for AI/ML to enable a more informed and better outcome for the consumer.
Why did you decide to invest in Spring Oaks Capital?
After speaking with more than 40 operators and more than a dozen tech companies in the debt recovery industry, we invested in Spring Oaks Capital. The Virginia-based company is a technology-focused consumer debt purchasing and collections platform, founded by four industry veterans, including CEO Tim Stapleford and Chairman Marcelo Aita.
Tim and Marcelo were previously CEOs of top debt buyers in the U.S. and we think they are among the most accomplished operators in this industry, with strong relationships and reputations. Debt recovery is a small industry where relationships are so important because there has been a “flight to quality” trend among creditors in the last several years, where the number of agencies creditors are willing to work with has been reduced. Creditors only trust the most reputable debt buyers and this reduction of key players in the space is likely to continue.
We were also interested in Spring Oaks Capital’s stated commitment to creating a more empathetic and consumer-centric style of debt recovery. They seek to empower consumers on their journey to resolve the burden of debt by leveraging machine learning, behavioral science and deep industry expertise. Their goal is to be able to thoughtfully reach out to consumers and create payment plans that will help them successfully pay off their debt, make the repayment process seamless, and exponentially increase the number of consumers reached. This commitment to the consumer starts with the culture and values instilled at the company – a supportive and positive environment built on teamwork, shared respect and going the extra mile.
How can machine learning improve a debt recovery business?
Debt recovery is an operations-intensive business, and we think a model-driven approach has the potential to improve a number of key processes including: identifying the best time and way to contact consumers, optimizing the offers presented, and monitoring and ensuring compliance throughout the process.
Successfully introducing and implementing this level of transformation requires a strong combination of technology, operations expertise and infrastructure. At this stage, our Foundry team of data scientists, data engineers, product managers and talent specialists can help drive change by working to integrate new technology and technologists into business operations.
How can you use data to improve how to contact customers?
Our approach in the debt recovery industry is to use AI/ML to improve outbound-call efficiency, drive self-service collections and build models that develop programmatic offers for consumers. Models can recommend contact strategies tailored to the consumer, create custom settlement offers, and support digital channels that allow consumers to make payments through their preferred method, which might be online instead of receiving phone calls.