The lending life cycle is a complex and ever-evolving journey for financial institutions. Financial institutions need an intelligent way to manage portfolios while meeting consumer demands and compliance regulations. That’s where artificial intelligence (AI) comes in.
AI technology can enable lenders with an efficient and accurate solution that optimizes the entire loan cycle, from origination and underwriting through collection management. Here, we’ll explore how AI is changing the face of lending across all life cycle stages.
The COVID-19 pandemic ushered in an era of technological advancement, enabling individuals to hasten many activities like shopping, food delivery, and financial services with the help of online tools and mobile apps.
Accessibility to online financial services, independent of location, appearance, or lack of stellar credit history, has been spearheaded by fintech, allowing more people to get assistance.
Most banks and non-bank financial services firms are attempting to automate a range of technologies, from robotic process automation (RPA) to machine learning (ML) and artificial intelligence (AI), the latter of which integrates both AI knowledge and human reasoning. To do so, they must develop technological innovation.
Parallel to lenders and industry stakeholders emphasizing underwriting techniques that leverage automation for credit decision-making, analysts and regulators are putting forth an effort to comprehend ML and AI implementation beyond. This technology has thereby facilitated unprecedented access to credit for many customers.
How To Transition From Artificial Intelligence To Augmented Intelligence
RPA, ML, and AI – viewed as augmented intelligence – increase efficiency and effectiveness while supplying customers with a superior experience. The distinction between ML and AI centers around decision-making and learning, although they form a holistic suite of assistance for personnel and customers alike.
ML and AI can allow lenders to look beyond a credit score and see data patterns that can help establish the character and capability to repay that are the foundation of lending.
AI can be used across customer lifecycles, from loan applications to supporting users with repayment plans. Financial gains resulting from AI-aided credit decisions and product pricing should not take precedence over its potential role as a provider of proactive customer support.
ML enables organizations to foresee commonly asked customer inquiries and bridge live agents and chatbots, offering huge advantages in the insurance field due to its self-service offerings. This way, customer service representatives are free to focus on adding extra value for customers.
Connecting with credit-impaired people is integral, particularly involving a customer service representative (or an automated chatbot). Taking the time to understand their questions and needs allows increased access to these beneficial services.
Expanding Your Use Cases With A Broader Set Of Solutions
Banks increasingly leverage Artificial Intelligence (AI) to accelerate the loan application process and automate tedious functions. AI can potentially extend financial opportunities more evenly, such as to the underserved and individuals typically rejected by banks. This could be achieved through broader usage of AI throughout the customer’s lifecycle.
Crucial borrowers in the subprime and near-prime categories are often tightly confined in the borrowing process. To grant more access to them, streamlining these inhibiting hops is necessary to encourage wider participation immediately.
Inexperienced borrowers [who need a strong credit history] present a great illustration. Their credit scores may not accurately portray their chances of repaying a loan; however, scrutinizing their entire tradeline data can provide insight into whether the payments are made in good and due time and other factors.
Artificial intelligence (AI) is transforming the lending life cycle. Today’s AI tools can automate processes, improve decision quality and speed, and reduce costs throughout the customer journey. As lenders respond to changing consumer behavior and adopt new technologies, they must consider how AI can be integrated across the entire customer lifecycle to create efficiencies and deliver superior experiences.