I want it now: 5 ways AI is changing the lending game
As technology advances, so do our expectations. We crave speed, immediate gratification, and instant everything (hello, video on-demand!) This new normal of instantaneous not only satisfies our inner Veruca Salt of Willy Wonka fame — “I want it now!” — but, in the lending world, also saves lenders valuable time and resources. However, the definition of “instant” has evolved over time. With digitalization becoming the norm, financial institutions are constantly seeking innovative ways to streamline operations, enhance user experiences, mitigate risks, and empower employees. The progression of artificial intelligence (AI) and machine learning has revolutionized loan decisioning, making it faster, more accurate, and overall, significantly improved.
AI is empowering lenders to offer fast, confidently-backed loans to borrowers seeking personal loans, credit cards, auto loans, and small business loans. Besides providing instant decisions and reducing risks, AI enables the leverage of more data for faster, more accurate decision-making, predicts borrower payment behavior through smarter risk assessment, and grows loan portfolios.
How is AI credit decisioning benefiting financial institutions? Let’s find out!
- Increased accuracy and risk assessment
AI leverages advanced algorithms to analyze and interpret complex data patterns, providing deeper insights into borrower profiles, historical trends, and market dynamics. This leads to more accurate risk assessment and reduces the chances of human errors or biases influencing credit decisions. AI systems continuously learn and adapt, ensuring ongoing improvements and staying current with evolving risks and market trends.
- Real-time results
Traditional credit decisioning processes involve manual tasks that are time-consuming and prone to errors, leading to inefficiencies and delays. AI-powered credit decisioning automates these processes, allowing for instant analysis of credit scores, financial statements, transaction history, and customer behavior in real-time. This enables fast credit evaluations and decisions.
- Fraud detection
Financial institutions battle fraudsters regularly, which can result in substantial financial losses. AI-powered credit decisioning can act as a defense against fraudulent activities by analyzing large amounts of data in real-time to detect suspicious patterns and anomalies. This proactive approach can mitigate risks and protect the institution and its borrowers.
- Enhanced borrower experience
AI-powered credit decisioning not only benefits financial institutions but also improves the borrower experience. AI algorithms can identify individual preferences, behaviors, and credit requirements, enabling institutions to offer personalized loan products, terms, and rates tailored to each customer’s needs. This results in faster loan approvals, instant access to credit, improved convenience, and better customer satisfaction and loyalty.
- Empower your people
Empowering your people may seem backwards when talking about AI and machine learning, because isn’t it supposed to take over our jobs and run everything? The short answer here is — NO! AI is actually powering and empowering employees to weed out the tedious tasks of their day so they can focus on bigger, more demanding projects that not benefit the institution and its members, but engage and fulfill the employee more as well.
Embracing AI and machine learning is just the beginning of technological enhancements that can reduce risks and errors, improve efficiencies, increase portfolios, and enhance customer service. Adopting AI now will not only modernize processes but also pave the way for future innovations in the field.
About Allied Solutions
Allied Solutions is one of the largest providers of insurance, lending, risk management, and data-driven solutions to financial institutions in the US. Allied Solutions uses technology-based solutions customized to meet the needs of 4,000 banks and credit unions, along with a portfolio of innovative products and services from a wide variety of providers. Allied Solutions is headquartered in Carmel, Indiana and maintains several offices strategically located across the country. Allied Solutions is a wholly owned and independently operated subsidiary of Securian Financial Group.
