Prodigal Provides the Surprising Reasons Behind Consumer Delinquencies and Missed Payments: Stories From More than 250 Million Consumer Finance Interactions
MOUNTAIN VIEW, Calif., May 31, 2023 /PRNewswire/ -- The buzz about a potential recession has been overpowered lately by talk about a related warning signal - delinquent payments. TransUnion predicts that over the course of 2023, serious credit card delinquencies will rise by 24% to levels not seen since 2010.
Common wisdom has it that today's delinquencies are due to inflation.
The Motley Fool warned consumers are using credit to cover "higher living costs." USA Today's analysis of the most recent New York Federal Reserve Bank Quarterly Report on Household Debt said, "But as prices remain stubbornly high, [Americans are] also having trouble making payments on time."
Is that it? Is inflation really the cause of increased delinquent payments? Or could it be something else?
Prodigal is the pioneer of consumer finance intelligence, using AI to support borrowing and lending organizations in improving processes and customer experience. Rising consumer complaints, and banking and lending's inability to capture and manage them effectively, tell us the system needs reinvention.
Having analyzed over 250 million consumer fiance calls, Prodigal has a unique ability to deliver insight about individual borrowing and repayment, and in the case of consumer delinquencies, that insight upends traditional thinking.
A random sample of calls from two of Prodigal's largest customers offers surprising insight into the reasons consumers become delinquent.
Here were the top five reasons borrowers gave for late and missed payments:
Of those top five delinquency reasons, the only one that can directly be attributed to inflation would be "other payment obligations."
The other four are much more interesting - and complicated - stories. Bankruptcy is not a single event, but a series of problems leading someone to file for relief.
Unemployment, especially in this labor market, is also complex - there's no lack of jobs, after all. But someone could be fired, become delinquent on their car payment, lose the car, and then be unable to find a new job because of a lack of transportation.
And divorce and medical issues are similarly human stories. Is divorce a cause of financial pressures, or a result? Are medical conditions a reason for delinquency, or are they the cause of unemployment and bankruptcy?
What Prodigal's data reveals is that while inflation can be a contributing factor to late or missed payments, it's not the only - or even the most prominent - one on people's minds at the moment.
And without that insight, lenders looking for repayment will miss out on useful intelligence that can help their customer service representatives support customers in finding the best options to repay their debt and achieve financial stability.
Prodigal is the pioneer of consumer finance intelligence. We use artificial intelligence to illuminate conversations in loan servicing, collections, auto finance, banking, healthcare RCM, and more. Our solutions turn analysis into action with real-time agent assistance, automated notes, and quality assurance. Nearly one in five U.S. borrowers has engaged with Prodigal over 250 million conversations, and we won't rest until every player in the loan lifecycle experiences the relief of better communication, context, and clarity.
Headquartered in Mountain View, California, Prodigal's global team is on a mission to build the intelligence layer that powers consumer finance. With the backing of domain experts, technology leaders, and top investors, including Accel, Menlo Ventures, and Y-Combinator, Prodigal is poised to become the next iconic vertical SaaS company. To learn more, visit ProdigalTech.com.
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