Meet the A.I. budgie improving debt repayments
Inicio thinks it's got a smarter way to figure out what people can repay
At a time when the rising cost of living is hitting the headlines–and our pockets–a startup focused on figuring out how much debt people can repay in a more efficient, effective, and empathetic way might have arrived at the right time.
Scroll down to read all about Inicio AI.
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Inicio’s A.I. budgie could be a smarter way to figure out debt repayments
When someone falls into debt and struggles to pay it back, the debt management industry steps in. Inicio AI is a startup looking to make the process more efficient for businesses and less stressful for consumers.
And with economic pressures around the world and a cost of living crisis in the UK, it might have arrived at just the right time.
Typically, someone struggling with debt can expect to receive a phone call to go through an ‘income and expenditure’ assessment that helps the debt managers figure out how much the person can afford to pay back each month.
Fixing a broken process
“It's quite long and complex if you do it properly,” says Leicester-based Inicio CEO and co-founder Rachel Curtis of the income and expenditure form. “The arena has not had a massive amount of investment and you've still got a lot of companies doing that over the phone with people, because they think you get more detail and you get a better completion rate.”
Curtis says there’s a belief that left to fill in the form on their own, customers will twist the truth about their spending to avoid having to pay more of their debt back.
But, says Curtis, the phone calls are hugely unpleasant for everyone involved. Staff hate trying to claw money back from people with very little free cash (she says the role has a high turnover of workers), while customers feel judged and embarrassed, and often struggle to fit in the time to do the call during normal business hours.
“We've done about 40 hours of research with customers… Customers don't like speaking to an agent to do the whole income and expenditure process. It's very personal. It's every single penny you're spending, really.
“So you've got agents already under pressure, customers don't want to speak to them anyway… It's just a really broken process.”
The budgie that digs a pony
Inicio’s solution is conversational A.I. that customers can use to guide them through the process at their own pace, at a time convenient to them, without the pressure and shame of speaking to a human.
Rather than offer a simple decision-tree based chatbot, Inicio has built an app that harnesses natural language processing to provide a less stressful, more empathetic approach to assessing a customer’s financial situation.
Working with underlying technology from Action.ai, Curtis says Inicio has trained its product on thousands of real calls in which people went through income and expenditure assessments.
She says this rich data means it has specialist knowledge of the specific context in which it is deployed. And it can tell the difference between, for example, spending “a pony on fags” (slang for spending £25 on cigarettes) and spending £25 on food for a pony.
Inicio’s intellectual property is the app itself, an avatar called Budgie (yes, a budgie who guides customers through the form), and the context-specific training data for the A.I.
Work originally began on Inicio in April 2020 but a planned partnership with a client to build and launch the product was stymied by the pandemic. Taking time to instead build the product themselves, they completed an MVP at the beginning of 2022.
Inicio conducted its first pilot programme with a client last February, and Curtis says it resulted in a 30% increase in debt repayment, while saving up to 90% of agent costs. And because the app will always classify different kinds of expenses the same way, it saves on the need to check data has been classified properly after a call with a human.
Since then, she says they have signed up a debt management platform provider as a customer. It will be rolling Inicio out to other debt management companies they work with, such as a tier-one European bank.
Curtis says a number of other pilots and projects are lined up or underway with businesses including a water company, a subprime credit provider, an online lender, a credit reference agency, open banking providers, and another debt management company.
“We had to make a strategic decision early on whether we did a broader debt service, or whether we just focused on the income and expenditure. And because we've just focused on the income and expenditure, it now means we're an underlying service provider to the broader debt companies.”
Serving an important part of the debt management process, rather than expanding their offering, should make scaling easier for Inicio - at least in the early stages of the business. To assist with this, they have already built Salesforce integration for the product.
The people behind Inicio
Curtis has a background in financial services and is a non-executive director for the Loughborough Building Society. She co-founded Inicio with Andy Smy, who is the chief product officer.
Others on the team include chairman James McGlynn (former group CIO of Virgin Money, Clydesdale, and the Yorkshire Banking Group) and board advisor Derek Usher who has held a range of senior roles at financial services and credit management companies.
Inicio is part of the current cohort of the University of Edinburgh’s A.I. Accelerator programme.
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