How Artificial Intelligence is Transforming The Landscape of Lending

artificial intelligence in lending industry

Why does a loan application take weeks, sometimes months to get approval? In today’s digital world, customers are using their mobile phones to book a ride, order for food, make money transfer anywhere in the world and are expecting the same speed when applying for a loan. Hence, lending agencies have to harness Artificial Intelligence (AI) to speed up response, reduce the time for a loan application, and keep a watch on fraud to guard both lender and borrower.

AI Will Expedite the Lending Process

In the past, the borrowers were only concerned about the best product at the best price from a lending company. For example, someone looking to get CCJ loans with no guarantor from a direct lender used to be concerned about the best terms and condition only. The speed was not much important for them. Today, due to advancement in technology, millennial’s are expecting a fast lending process.

Banks and other lending agencies must address the concern of today’s generation by including AI-powered RPA to accelerate all lending activities to meet the customer’s need. Due to the complex nature of the lending process, getting a loan can take some time. Many lending agencies rely on manual processing of multiple documents. Lending companies must take information from these documents manually and feed them into a database to be processed further.

Can Technology Make the Loan Process Quicker?

Implementing an AI and RPA system doesn’t mean creating mayhem. In fact, a system that is well designed sees well-defined rules and ensures safety for an organization. With AI and automation, lending agencies can solve specific processing issues and increase productivity which will, in turn, free up employees to make good relationship with customers.

Artificial Intelligence is Transforming The Landscape of Lending

To process a loan application, lending companies today use complex and old systems, different databases, and spreadsheets which include lots of physical documents. This is where AI combined with RPA comes handy in making banking more efficient in offering loans for eligible customers. Using RPA loan application verification can speed up based on pre-defined criteria.

Can Banks Avoid the Potential Risk?

We live in a world which is full of risks and should be monitored very wisely. Lending needs a regular risk assessment and compliance lapse. Automation will make the process smooth and ensure the security measures are in place to monitor and report any error. Automation will reduce all manual errors. Risk monitoring and reporting also become easier with automation. The advantage of Robotic Process Automation is as follows:

  • Streamlining Operations: Cost of servicing is at an all-time high these days. With the help of AI technologies, lenders can reduce the loan defect, which is responsible for increasing the cost. Artificial Intelligence can also speed up the loan application to enhance the customer’s experience. AI has an ability to scan and move data at a much faster rate for processing.
  • Will Reduce Fraud and Defaults: Frauds are on the rise in the lending industry. According to a recent report, one in every 100 loan applications is assumed to have fraudulent claims. Due to a huge number of applications, it becomes really difficult to detect any potential fraud. Hence, in this situation, if human works in tandem with AI then it will be easier to detect any fraud.

We can use RPA with AI in this area to reduce the number of incidents of fraud. Lending companies can use old data to create a model which can predict the chance of fraud or can warn if a particular loan application has a probability of becoming a fraud.

AI and deep learning are very helpful in performing real-time data analysis to throw out a high-risk application based on the created model.

  • Delighting Your Customer with an Excellent Service: The full process of lending is very intricate. It consists of accumulating application details, credit verification, sanctioning and finally collecting monthly repayments. Building a hassle-free experience for the customer requires you to approach your process from the customer’s point of view and meet their need for speed and service.

Hence, the increases in the number of digital consumers are getting lenders to implement a completely robust system, from loan qualification to closing. Leaders in the lending industry, who are making use of AI and RPA, are making their customer’s experience delightful, faster, and more accurate. It helps in building brand value and loyalty for retaining their trusted customers for a lifetime. Automating manual processes is helping human workforce in many ways.