TrueAccord - Debt Collection, Solved
- Rona Yaniv
- May 26, 2024
- 7 min read
TrueAccord is a fintech company that uses modern technology to make debt collection easier and friendlier. It works with big companies to help people pay their debts more comfortably, such as with flexible payment plans. Its digital and personalized approach makes the debt recovery process less stressful.
Fintech is the fusion of two of the economy's largest sectors: finance and technology. This has emerged a highly valuable class of companies. One of these is TrueAccord, which this paper elaborates on.
TrueAccord is a third-party debt collection company established to help consumers achieve financial health. It is a full-service, digital-first recovery and collections platform powered by machine learning and a consumer-friendly digital experience.
TrueAccord changes the mindset of debt collection by creating better relationships and faster recoveries.
Introduction:
The company was founded by Ohad Samet in Lenexa, Kansas, in 2013. Samet's former work experience includes several positions in financial fraud prevention and risk assessment, as well as a BSc in Biology and Philosophy from Tel Aviv University. Samet was the company's CEO until 2018, when he became the CEO of One True Holding Company, TrueAccord's parent company.
TrueAccord's headquarters is in Lenexa, and it also has offices in San Fransisco. The company has about 150 employees and is privately owned. The current CEO is Mark Ravanesi, who has been with the company since 2019 and has held several different positions. Ravanesi has outstanding experience in finance, collections, and project management.
Funding Rounds:
Since it was founded, TrueAccord has raised more than $153M across 13 funding rounds, the last of which occurred in 2022. The company is currently in the equity / C round stage.
TrueAccord has 21 investors, including venture capital funds, angel investors, and private equity firms.
The list of investing VCs includes Viola FinTech, Khosla Ventures, Felicis, Homebrew, TenOneTen Ventures, Arbor Ventures, Assurant Ventures, CreditEase, Caffeinated Capital, American Express Ventures, Nyca Partners, Flat Capital AB, Experian Ventures - Investing in the Global Credit Economy, and Vintage Investment Partners.
Structure and Vision:
TrueAccord is part of the One True Holding Company family. It is a technology company providing business and consumer solutions in the consumer debt space. Subsidiaries include TrueAccord and TrueML. As mentioned, TrueAccord offers a machine learning-based, digital-and-mobile-first service for debt in collections and recoveries. TrueML provides a SaaS platform that consumers can use to contact collectors and creditors digitally.
TrueAccord's vision is to restore hope and financial stability for those who lost them.
In 2013, TrueAccord's founder, Ohad Samet, was harassed by collectors for a small amount on a store credit card that he forgot to pay. After this unpleasant experience, he was determined to change the debt collection process.
He felt like the entire process was wrong: the focus on just phone calls, the tacked-on "convenience" fees, the authoritative voice on the other side of the line, and most of all, the lack of empathy for the consumer. TrueAccord's mission is to change the mindset around debt collections into one of recovery and reconciliation.
TrueAccord is a third-party debt-collecting agency, but what does that mean?
Debt collector agencies are independent entities that recover debts on behalf of creditors. They play a crucial role in recovering outstanding debts, often taking charge when creditors' initial attempts to secure payment prove unsuccessful. Using debt collectors also offers businesses a more financially practical approach, saving them valuable time and resources that can be redirected to core operations.
As businesses expand globally, the need for agencies that can navigate legal and cultural differences becomes increasingly important. However, debt collection operates within strict legal boundaries, and compliance with state and federal regulations is crucial to avoid penalties and reputational damage.
Market Environment:
The Debt Collection Agencies market is on a growth trajectory. It reached a value of USD 32.6 billion in 2023 and is anticipated to climb to USD 41.8 billion by 2032 at a CAGR of 2.8%. In 2023, North America dominates the market, accounting for about 39.1% of the total revenue for the global debt collection agencies market. This stronghold indicates the region's significant reliance on debt collection services.
The fintech industry is evaluated at USD 295 billion and is expected to continue disrupting traditional finance. The fintech market is experiencing hypergrowth, growing at a CAGR of 18.5% from 2024 to 2030, and its projected value is USD 851 billion by 2030. This growth is fueled by the adoption of advanced technologies like AI, digitalization, and APIs that are revolutionizing traditional financial services.
TrueAccord Position:
TrueAccord operates in this combined market, using its technology to benefit both businesses and consumers, better adapt to the changing environment, and perform a more efficient debt-collection process.
TrueAccord works with top financial institutions, enterprise companies, and businesses to recover billions in lost revenue. Over the years, it has reached more than 20 million consumers. Due to privacy regulations, the complete list of TrueAccord's customers is unavailable - however, TrueAccord partners with various institutions such as banks, lenders, and credit card companies.
TrueAccord focuses on making debt collection empathetic and customer-focused. It achieves higher liquidation through engagement and empathetic commitment, using machine learning, digital user experience, behavioral analytics, and an omnichannel collection approach. Its technology personalizes outreach to each customer, continuously optimizing for performance and managing to deliver the right payment option at the right time and through the right (digital) channel. By focusing on the consumer experience, TrueAccord empowers consumers to regain control of their financial health and achieve a better financial future.
TrueAccord offers scalable end-to-end personalized collection solutions, emphasizing flexible and self-service digital experiences for consumers. Its platform is powered by TrueAccord's machine-learning algorithm with a real-time decision engine that analyzes consumer behavior. Their services serve various needs, from early-stage overdue payments to charge-offs, and are suitable for people who owe money and those who are owed.
The company’s service focuses on four main components: flexibility, scalability, information security, and collections compliance:
Flexibility gives consumers the power to pay with a flexible, self-serve digital platform.
Scalability is the infrastructure that can scale efficiently to any collection or recovery volume.
Information security is data security and IT policies that are built to satisfy the requirements of the most security-sensitive financial institutions and provide the highest level of protection for the customer's private data.
Collections compliance is ensuring complete compliance control and real-time updates for changing regulations.
TrueAccord's digital collections process is controlled by code, ensuring all regulatory requirements are met while being flexible enough to adjust quickly to new rules and case law.
Product Overview:
HeartBeat is TrueAccord's main product; it is a patented machine-learning platform (one of TrueAccord's three registered patents) that automatically improves and optimizes engagement over time.
Heartbeat has two main components: first, it has interacted with millions of customers and has a massive database of customers' behavior. Second, it learns from all these interactions and dynamically evolves to use the best patterns, approaches, and practices.
Heartbeat notes all customers' actions and predicts the best next step to engage each one. Each action passes through TrueAccord's compliance checker system to ensure the requested communication meets federal, state, and local laws and regulations requirements.
Competitive landscape:
TrueAccord platform enables three crucial competitive elements. First, the infrastructure is built to allow scalability and flexibility. TrueAccord's platform can efficiently scale to any collection volume and adapt to needed changes or instructions. Second, it is consumer-focus, using AI to ensure empathetic communication and tailor consumer journeys. Above all, it's a friendly, intuitive digital platform that anyone can use. It replaces the need for human agents, making the process less costly, less prone to mistakes, and more personalized to the individual's needs.
TrueAccord is distinguished from its competitors in various aspects:
First, it's not just a debt-collecting agency but a fintech company. TrueAccord's data-driven debt collection platform is disrupting the collection industry by helping businesses collect more debt online rather than in traditional methods. That allows the entire process to become more efficient, which in turn makes the whole process more profitable for the agency.
Second, it uses intelligence throughout the entire journey. HeartBeat doesn't just optimize for engagement and commitment; it leverages engagement signals to identify consumers at risk of breaking plans and automatically adapts to keep them successful until resolution.
TrueAccord leads in consumer experience. Not only does It offer a self-serve digital-first service, but it also changes the mindset of debt collecting, shifting it from something to avoid to something a consumer would like to engage in.
Risks & Challenges:
As TrueAccord becomes a more prominent force in the fintech world, it's vital to forecast TrueAccord's future better in this sector. The fintech sector is thriving, but it faces several challenges.
The biggest challenge is regulation. Fintech companies are required to meet strict regulatory criteria, which vary between states and times. TrueAccord's digital services enable it to adapt quickly to changes in regulations. Moreover, the company prioritizes compliance, ensuring it has the most precise and updated knowledge about the legal requirements.
Another hurdle is building trust. Many people distrust the combination of private data and sensitive topics (for example, debt collections). By emphasizing transparency and a customer-centric approach, TrueAccord builds trust between itself and the debtors and between the businesses and the debtors.
Another crucial challenge is information security. TrueAccord invests a lot of effort in protecting both its digital and physical properties and meets all of the most strict requirements regarding data protection. This allows TrueAccord to work with the most sensitive financial institutions.
By addressing these challenges, TrueAccord positions itself as a leader in the fintech industry, specifically within the debt collection space.