What Benefits Could AI Bring To Lending? 10 Experts Share Their Insights

  • 30 September 2019
  • Sam Mire

Could, would, should. These are three terms we often use when discussing the potential benefits of AI, and we use them because there are serious caveats to AI's relative success, particularly in lending. But we try to assume the best, so let's consider what AI could, would, and should do for lenders and borrowers once it sees more widespread adoption.

These industry insiders have as good a look as most into what those benefits could be. Here's what they said:

1. Douglas Merrill, CEO and founder of ZestFinance

“Banks make more money by making smarter lending decisions and deserving consumers get improved access to credit. AI helps banks better price for risk and approve more borrowers with thin credit files or no credit history, a status that’s disproportionately made up of underprivileged communities, millennials and immigrants. AI in lending also has the potential to spot and remove hidden bias in lending models. Age-old loan scoring methods are based on only a dozen or so backward-looking measures that end up perpetuating racial and class biases of the past. People assume current scoring techniques are objective–but they’re not.”

2. Steve Comer, Director of Financial Services at Hyland

“The biggest benefit that AI brings to the lending process is the reduction of the time it takes to complete the loan process. The cost of loan production has been on a steady incline for many years. This increase is largely due to the number of human minutes and/or hours it takes to ensure that the process checks all the boxes from a regulatory standpoint. Lenders today are employing a large number of people to do thousands of simple repetitive tasks to ensure they stay in compliance. AI brings the ability to reduce the number of human touch points and allows these repetitive tasks to be automated, which has a direct impact on the time it takes to complete the process.”

3. R.J. Talyor, founder and CEO of Pattern89

“AI brings advertisers insights that humans have never been able to uncover before. It analyzes billions of data points every day, so it can discover statistically significant trends on how consumers behave and what strategies will be most effective.

In the past, an advertiser would never be able to read through all this data within their lifetime. With the wealth of data online retail, social media and digital footprints offer, AI is the first technology to truly have the ability to understand it all.”

4. Keren Moynihan, co-founder of Boss Insights

“It gives lenders an information edge. Being able to process vast amounts of information and reason with it in real-time enables a level playing field. Funding decisions are no longer subject to an individual manager’s whims and biases. AI often lowers the cost of doing business, which enables firms to expand the reach of potential customers they can work with.”

5. Dr. Marlene Wolfgruber, Director of Product Marketing at ABBYY

“It costs six times more to acquire a new customer than it does to retain an existing one, and a great customer experience has the potential to double business revenue in 36 months. As mobile becomes the preferred channel of engagement for customers seeking financial services, lenders have to redefine their digital onboarding experience in order to meet their requirements.

An intuitive and frictionless mobile experience enabled by AI technologies throughout the whole onboarding phase and beyond can help to build a healthy customer relationship from the very beginning, so it is easy to see how this will positively affect an enterprises profitability.

Additionally, new web-based mobile data capture brings significant benefits when you consider that mobile websites get 2.2 times more monthly unique visitors on average (15.7million) compared to mobile apps (7 million).”

6. Jeff Silberman, Counsel in Reed Smith’s Financial Industry Group

“I think one of the main benefits that AI brings to lending is process efficiency.  Effective use of AI allow lenders to underwrite more loans instead of performing manual tasks.  In particular, AI and machine learning can now eliminate document review entirely.

Automating all stages of document review – data classification, extraction of data points, data validation, and analysis – enables companies to reinvest their human capital and review more loans.   AI has also enabled lenders to perform broader analytics on a larger pool of data.”

7. Joshua Jones, CEO of StrategyWise

“Lending survives and thrives based on an institutions ability to accurately assess (and price) risk. AI allows a scale and force multiplication as we’ve never seen before. This will drive higher levels of accuracy and thus reduce defaults while boosting profits – both on the products themselves and from a leaner workforce.”

8. Dan Raviv, CTO and co-founder of Lendbuzz

“With AI, we can serve more people with better terms because we have a better understanding of the “true” risk so the level of comfortability with providing a loan is increased. And, the output is much easier. Internally, for a company, using AI and machine learning allows it to reduce cost because you’re using fewer resources.”

9. Anis Uzzaman, CEO of Pegasus Tech Ventures

“The #1 benefit AI brings to the entire investment community is still the ability to find the right contextual data based on the search query. While there are various machine learning solutions that can help with pattern recognition in various markets to identify trends, it still does not outweigh the machine learning behind the Google search engine.

Investors need to be able to search for vast amounts of information besides market trends such as IP applications, team profiles, private and public competitors, funding activity, and exit potential to help with decision making. Therefore, while in the future there are specific AI technologies that could provide an outsized impact on a part of the process, machine learning in search will likely remain dominant in general.”

10. Alexandra Zelenko, Marketing and Technical Writer at DDI Development

“With AI capabilities, it is very easy to process small loans much faster than it would be if the whole process relied fully on humans. By processing huge amount of data from an individual’s banking transactions, information from social accounts, earning and spending patterns, friends and family history and churning it through an AI-powered system, it is possible to create a very comprehensive credit profile and can now make credit decisions at speed and accuracy.”

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About Sam Mire

Sam is a Market Research Analyst at Disruptor Daily. He's a trained journalist with experience in the field of disruptive technology. He’s versed in the impact that blockchain technology is having on industries of today, from healthcare to cannabis. He’s written extensively on the individuals and companies shaping the future of tech, working directly with many of them to advance their vision. Sam is known for writing work that brings value to industry professionals and the generally curious – as well as an occasional smile to the face.