Mexico's debt collectors turn to AI as Gen Z defaults rise in digital lending boom

Mexico’s debt collection industry is facing new challenges as digital lending grows and younger borrowers struggle with repayments. Collection agencies are now turning to artificial intelligence and stricter communication rules to recover debts more effectively. The shift comes as Generation Z, in particular, proves harder to reach through traditional methods. The Association of Credit Portfolio Companies (APCOB), representing 68 firms, oversees around 80% of Mexico’s outsourced debt recovery. Each year, these agencies collect between 40 billion and 96 billion pesos for the financial system. But rising defaults, driven by relaxed credit checks in digital lending, have forced the industry to adapt.

Young adults, especially those in Generation Z (born between 1997 and 2012), are the toughest group to recover debts from. Many lack experience with financial products and struggle to manage credit responsibly. Unlike older generations, they prefer digital communication—particularly WhatsApp—over phone calls, pushing agencies to update their outreach methods. To comply with regulations, collectors can only contact debtors between 8:00 AM and 9:00 PM on weekdays, until 5:00 PM on Saturdays, and never on Sundays. They are also banned from pursuing payments from unrelated third parties or seniors, ensuring borrowers’ rights remain protected. In response, agencies are adopting AI tools, voicebots, and chatbots to improve engagement and pinpoint the best times to reach debtors. The aim is to move toward preventive, data-driven strategies that help individuals in financial difficulty find workable payment solutions.

The debt collection sector is evolving to meet the demands of digital lending and younger borrowers. With stricter rules on communication and a focus on technology, agencies are working to balance recovery efforts with fair treatment. The shift reflects broader changes in how credit is managed in Mexico’s financial landscape.