Why Should Lenders be at the Forefront of This Change?
In a world where revolutionizing technology has become a priority in the working industry, whether that be sales and marketing, politics, or banking, it is important to understand the impact of new trends in the production of new tech, especially in terms of artificial technology. In the past decade alone, AI has made access to knowledge, resources, and credit readily available in a matter of seconds. One interesting field that AI has impacted is banking and the lending industry. While the field has already seen some significant changes, including almost every company in the US having some form of online banking, the industry still has more potential to grow and expand, and it will do so with newfound technological advances on the horizon. In the next few years, with the use of AI, lending companies will see changes in customer acquisition, operating costs, and credit risk.
Knowing Customer Behavior Through Predictions
For some start-up companies, customer acquisition is the most difficult part at the beginning of their business. However, with new AI technology, this becomes a much faster process, and the entire efforts of the company become more efficient in this stage. Artificial Intelligence can form an initial profile of a customer and tailor its services to that client accordingly. This, in turn, will help build an initial set of customers but also make a better assessment of who the customer really is and predict what their behavior will be like in the future, as Scorelate does with their Anomaly detection and sophisticated underwriting software.
Reduction in Operational Costs
Not only can AI improve a company’s client base, but it can also lower operational costs, creating a more efficient work environment. Through the use of automated processes, AI is able to cut the costs of labor-intensive jobs and produce a more effective and quick answer to daily problems in the workplace. Companies may see that the cost and implementation of AI technology is a steeper price, but in the long run, the ability to cut costs while still sustaining the quality of production saves companies millions down the road. Banks can automate not only credit data, but also document processing, specific decision-making processes, and document reviews.
Diminished Risky Loans
Finally, new AI technology has advanced so drastically that credit risk has dropped dramatically. Banks can now adopt more intricate screening of potential customers to analyze their risk of loans. Scorelate has been able to produce a product that makes personalized scoring available to all users. This allows companies to not only completely avoid the risk of giving out a loan to a risky client, but in turn, help make a profit off a risky investment. AI can analyze not only a customer’s credit score, but their educational background, previous job history, income, their past payment receipts, and much more, in order to analyze a new user, along with their current customers, in order to see who will be a long term client, and who will default in their payments.
Final Thoughts
Overall, it is important for banks, brokers, insurance COs, auto lenders, and mortgage lenders to understand the value that AI has on the lending industry, and get ahead of the competition before it is too late. Most companies have already started to implement AI into their company’s daily routine, but have not realized the full potential AI can have on their company. It is important to research more sophisticated methods of digitizing your company, in order to stay relevant and continue to thrive amongst competitors.