TrueAccord, founded in 2013 by CEO Ohad Samet and CIO Nadav Samet and based out of San Francisco, is revolutionizing the debt collection industry. Their mission is simple: enhance the debt collection process for both enterprises and consumers alike by replacing traditional collection methods, like cold-calling and sending debt collectors, with more modern forms of communication, like texts and push notifications, with the intention of increasing payback rates and ultimately helping to relieve the consumer of debt. TrueAccord automates the debt collection process, eliminating the need for costly, cumbersome, unpleasant collection agencies.
TrueAccord uses machine learning and behavioral economics to perfect the ways in which it digitally contacts the consumer and ensures the best possible return for the issuer. Not only does this software benefit the company that uses it (increased payback rates and a better overall customer experience), but it also helps the consumer, as it notifies them of any debt they may have with a particular company in an empathetic manner (debt many times may go completely unnoticed by the consumer), and ultimately helps increase the users’ credit scores.
As one would imagine, the idea for this venture arose when in 2013 Ohad Samet started receiving abrasive, annoying phone calls from a debt collector inquiring about a $120 overdue balance on a store credit card, an overdue balance he was previously unaware of. Already an entrepreneur with experience in the FinTech industry, Samet became determined to invent a platform that would modernize the debt collection process and make the experience better for everyone involved.
With more than $47.1 million in funding – most recently closing a $12.6 million round in March 2019 – and backed by 14 investors including Nyca Partners, Khosla Ventures, Arbor Ventures and PayPal co-founder Max Levchin, TrueAccord is set to change the ways in which both companies and consumers interact with the debt collection process.
Specifically, TrueAccord is going after the financial problem of consumers in debt either being inundated with harsh collection notices that are oftentimes unproductive and do not provide for an adequate payment plan, or who are blissfully unaware of their debt in the first place and are racking up interest. As explained above, this is a 2-pronged solution as it helps both the company employing the software collect their outstanding accounts receivable, and also helps the consumer pay off their debt and increase their credit score. Ideally, TrueAccord partners up with an issuer of credit in order to handle their debt collection process, and they are then able to reach out to low-income customers who are in dire need of a straightforward, empathetic strategy to pay off burdensome debt. TrueAccord targets major banks, eCommerce companies, direct lenders, and other issuers as clients so they can offer mass amounts of people solutions to their debt problems.
What separates TrueAccord from its competitors is its use of machine learning technology and AI to personalize each customer’s experience, using data science to optimize conditions such as when to reach out, what type of language to use, on which channel to do so, and which payment structures to offer. This key differentiator results in genuine customer engagement and an overall more pleasant user experience. Take this example of a text message that TrueAccord sent one of its users, posted on an Inc.com article about TrueAccord:
"I've been sitting here eating ice cream and listening to breakup songs because I feel like you're avoiding me.”
The jovial nature that TrueAccord takes when contacting its customers is clear, and this is something not seen in this space before.
According to StackShare.io, in order to accomplish this machine learning technology, TrueAccord utilizes programming languages like Python and Java, as well as the jQuery JavaScript library and the AngularJS framework. According to the TrueAccord website, the collections strategy is driven by Heartbeat, an “artificial intelligence program that uses machine learning and hard-coded legal compliance to communicate with customers.”
There is no debate about the massive size of the debt collection market: according to Debt.org, after hitting its peak at $1.028 trillion in 2008, the credit card debt market has remained relatively level at $840 billion since 2011; that is an average credit card debt of $8,400 per American household. The credit card debt market, which TrueAccord specifically targets, is only a fraction of the total US consumer debt market, which stands at $13.86 trillion and is comprised of credit card debt, mortgages, auto loans, and more. Even more, according to an article on Medium.com written by co-founder Nadav Samet himself, more than 77 million US consumers deal with collections every year.
To accommodate this increased demand in debt collection software, the debt collection software market is expected to grow from $2.9 billion in 2019 to $4.6 billion by 2024, as the need for companies to automate collections processes and enhance customer experience continues to increase; TrueAccord is in good position to lead the charge.
Although not necessarily a traditional domain, TrueAccord falls directly into the Debt Reconciliation domain. More traditionally, however, TrueAccord fits nicely into two financial domains: Payments/Billing on the enterprise side and Personal Finance on the consumer side. While this company may not be a traditional personal finance company (in that it does not focus on managing money, tracking spending or budgeting), it is still a personal finance company as it deals directly with an individual’s finances. This is the main reason I chose to research TrueAccord – I found its mission unique and have personally never thought about how the debt collection industry needs modernizing.
Debt collection, up until the recent rise of FinTech companies, has been a stale industry that uses the same, tired, ineffective practices. TrueAccord, in a June 2020 blog post, attributes this to a slew of regulatory concerns and a general wariness of adopting new technologies. Over the last 10 years, however, the industry has adapted to accommodate a more technologically sound consumer who places emphasis on customer experience. According to CallMiner.com, which did a deep-dive into industry trends and statistics, cold calling by third-party collection agencies (sometimes up to 15x a day) was the primary way in which issuers recovered outstanding debt; sometimes, they did not even make any attempts to recover at all, as litigation is timely and costly. As we have seen in recent years, however, more startups are popping up that focus on debt reconciliation and even large corporations are dedicating significant internal resources to the cause. Code-driven solutions have been the trend in recent years, as this automation allows for mass service and eliminates the need for customers to speak to individual agents.
Going forward, Covid-19 will play a huge role in this domain as more and more individuals fall behind on payments and fall into debt. A caring, communicative platform like TrueAccord is a much superior alternative to other traditional collection methods, especially during a time of great stress and anxiety.
Competitors of TrueAccord include larger, more established companies like FIS, FICO and Experian, as well as smaller startups like D2R Collect, ClickDebt and Funding Gates. However, as previously explained, what separates TrueAccord from its competitors is its use of machine learning technology and data science to customize each consumer’s experience and ensure that their software reaches out at the most opportune time possible, in the most opportune manner possible.
TrueAccord, as the following will show, is more than just a nice idea – since inception in 2013, it has had a significant impact on the industry and has helped turn the tide when it comes to how companies fight debt collection.
The essential, and obvious, metric that companies in this domain use to measure success is overdue accounts successfully collected from and overall balance recouped, both compared to those same metrics but with collections delivered via more traditional means. TrueAccord, according to statistics on its website, can improve returns by 50% over more traditional means for credit card issuers looking to recoup credit card debt, with an average recovery rate 26% higher than traditional call-based collections agencies. Since inception, TrueAccord has worked with over 13 million US consumers (“hundreds of thousands” of which have resolved their debts), has recouped more than $156 million in total debt and has sent more than 197,000 debt collection emails.
Debt collection is a crowded space with some big, established players in the market. Yet these players tend to be more traditional-thinking and do not focus on the customer and how to best interact with them to achieve their goal, recouping their debt. Recently founded startups, like TrueAccord, also play a large role in the market at large however and are gaining traction specifically because it has made the industry rethink the way collections should be done. According to CrunchBase.com, TrueAccord ranks #2 behind Symend for top debt collection startup; Symend has $53.2 million in total funding, while TrueAccord has $47.1 million (Symend is based in Canada). Online reviews for TrueAccord are excellent, and I think it says a lot when people actually enjoy interacting with a collection agency. TrueAccord is poised to continue to partner with prominent companies, like their recent partnerships with Yelp, UpWork and LendUp, in order to increase the bottom line for its business partners and increase the credit score and overall financial picture of the end user.
According to Samet’s Medium.com blog,
“Debt collection is part of TrueAccord’s identity. Yet it’s only one aspect of the entire ecosystem that it’s building.”
To me this says that Samet has the bigger picture in mind, and is ultimately concerned with his customers’ overall financial health. In this light, if I were to advise the company, I would suggest some sort of credit score integration in which the consumer could track their credit score increase as they progress through their payment schedule, all without having to leave the TrueAccord platform. This would benefit TrueAccord because ultimately, their goal is to increase their customer’s credit score and financial independence. Paying off debt and increasing one’s credit score go hand-in-hand, and TrueAccord users would appreciate a feature in which they could instantly see their score. I am unsure exactly what sort of technology this would require, but perhaps accessing an API would be necessary. As far as I understand it, APIs allow for one company’s database to interact with the database of another company. In this example, that means a TrueAccord user could connect their, say, Credit Karma account to their TrueAccord account and instantly track their credit score progress as they pay down their debt.
Perhaps another offering of TrueAccord could be some sort of budgeting help. It is interesting to ponder that with this sort of app, if its founders truly value the financial wellness of their customers, then they would want their users to actually not have to use TrueAccord at all. Implementing budgeting software into TrueAccord’s platform could expose already debt-riddled customers to an easy-to-use tool embedded in TrueAccord’s platform that helps them plan their money more wisely. This would also benefit the company because once their users eventually pay their way out of debt, and therefore no longer have a need for TrueAccord, it would keep them on the platform and help retain users. Similar to the example above, an API may be useful for this. Also, after doing some more thorough research, it looks like if TrueAccord wanted to create its own in-house budgeting software, they would use Python along with Selenium and Beautiful Soup. Selenium is a web scraper that scrapes transactions from online bank accounts, while Beautiful Soup is a Python package for parsing HTML files. These technologies are appropriate because they provide for the ability to scrape data from one website and use it on another, meaning a TrueAccount user could log-in to their bank account through the TrueAccount platform and instantly be able to sort their expenses.
- https://www.trueaccord.com/
- https://www.builtinsf.com/company/trueaccord
- https://medium.com/bank-on-it/episode-336-remotely-recorded-nadav-samet-from-trueaccord-d6b81dd65312
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- https://www.crunchbase.com/organization/trueaccord
- https://www.debt.org/faqs/americans-in-debt/#:~:text=Total%20U.S.%20consumer%20debt%20is,credit%20cards%20and%20student%20loans.
- https://www.marketsandmarkets.com/Market-Reports/debt-collection-software-market-211244709.html#:~:text=How%20fast%20is%20the%20market,9.6%25%20during%20the%20forecast%20period.
- https://www.owler.com/company/trueaccord
- https://stackshare.io/trueaccord/trueaccord
- https://www.trueaccord.com/national-debt-collection-agency/ohio/boardman/
- https://medium.com/@nadavsamet/trueaccord-my-social-impact-journey-91d84bf19105
- https://callminer.com/blog/state-debt-collection-2018-industry-statistics-trends-collection-practices/
- https://blog.trueaccord.com/2020/06/how-fintech-startups-changing-debt-collection/
- https://www.trueaccordengage.com/
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- https://towardsdatascience.com/how-i-diyd-my-budget-using-python-for-selenium-and-beautiful-soup-4d2edc5c519