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What’s The State Of AI In Lending? 9 Experts Share Their Insights

  • 28 September 2019
  • Sam Mire

The lending industry allows everyday homebuyers the chance to fulfill their dreams. It allows entrepreneurs to turn their big ideas into realities. Lending is a critical aspect of the global economy, and AI has the potential to mold the future of lending. But first, let's take a look at what AI is doing for lending today.

These industry professionals shared their views of AI in lending from the front lines. Here's what they said:

1. Douglas Merrill, CEO and founder of ZestFinance

“Financial services have been a bit slow to implement AI solutions, but we’re now seeing an accelerating shift toward adoption. According to an October 2018 Fannie Mae survey of bank executives, nearly three-fifths (58%) of lenders expect to adopt some machine learning or artificial intelligence technology in the next two years. The bulk of AI in lending today is centered around operational efficiencies and customer experience (chatbots) but AI and machine learning for underwriting are close behind.”

2. Keren Moynihan, co-founder of Boss Insights

“Lots of lenders have AI groups starting to look at building tools. We’ve been meeting with several of these depts to see how access to data can assist with ai. Ai is only as good as the people running it and requires constant innovation to ensure its unbiased – link tech to — Today lenders are finding uses for AI in areas from fraud detection to forecasting, but it’s limited by the data available. Firms are establishing their own data engineering and data science teams but by nature, are limited to the data they have access to. We see a need for a secure way to share and learn from a broader data set.”

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

“No one is sharing exactly how they’re using AI in the lending industry right now – startups because they don’t want to give away their “secret sauce” and banks because of regulations. FICO has been the ruler of the “scoring” system for the past 40-plus years and the industry wants to reshape that, so in general the focus in terms of AI is on:

– Risk analysis – we want to replace or create a complimentary system to FICO. Lenders want to know if a person is above or below a certain threshold. With AI, we’re not just looking at cash flow; we’re looking at the level of risk a person is across a multitude of factors

– Fraud detection – AI allows online lenders to identify individuals who are trying to scam

– Automation – AI reduces human error and cost, as well as the quality of the output”

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

“AI strategy is becoming a standard for advertisers right now. According to eMarketer, 80% of marketers who aren't yet using AI, say they plan to within the next year. For those who are already using AI, early adopters are reaping the benefits of its data analysis and statistically significant insights to better connect with their audiences.”

5. Steve Comer, Director of Financial Services at Hyland

“AI is still relatively new in the lending industry, although it is growing fast. I don't say this because people are not familiar with it. Surveys have been conducted over the last year that show that most mortgage executives are familiar with the concept of AI. But it's still considered new because the adoption of AI has been slow. AI has been a buzzword for the past several years, but it will be the next 2-3 years that will define where this technology has the biggest impact on the lending business. Early adopters have helped to build the use cases and define the areas of improvident. AI will increasingly become a competitive advantage for lenders, and in the next few years, those who don't adopt it rapidly will be left behind.”

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

“Most financial services organizations are undergoing some form of digital transformation because they understand that automation and innovation is directly linked to increased productivity, costs savings, client retention and higher customer satisfaction.

They also realize that if they miss the AI train they could be putting a nail in their coffin with $98B being left on the table every
year by companies failing to provide “simple experiences.”

Machine learning is already being used in many aspects of lending from more sophisticated algorithms deciding good/bad candidates for loans, to time-saving user-friendly mobile data capture technology to improve the customer experience.”

7. Joshua Jones, CEO of StrategyWise

“AI currently has a lot of hype surrounding it, and thoughtful companies are working hard to tie business cases to each technology they consider. In general, AI is making very solid progress in customer service, marketing, expansion of wallet share, and product pricing.”

8. Anis Uzzaman, CEO of Pegasus Tech Ventures

“While it is known in the industry that many firms are pioneering new processes using AI to assist in their investments within the private and public markets, there are still not many known solutions with clear value propositions to enable broader adoption.

Each investment firm have their own due diligence processes and sources of deal flow they use to make investment decisions, and we believe it is likely that AI is still not broadly adopted in either. Yet, we know that many firms are starting to think about how AI can help to augment both of these core functions knowing it eventually will create a source of competitive advantage used in fundraising.”

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

“The use of AI is still relatively early in the lending industry, but with significant growth potential. Early adopters of AI include fintech platforms, marketplace lenders and Lending-as-a-Service providers.  These organizations leverage aspects of AI for various purposes including for the improvement of underwriting processes, document processing, fraud detection, and risk analysis.

Online lenders, in particular, use AI and machine learning to synthesize and contextualize a vast amount of borrower data.  For most, the use of AI in the lending industry is meant to lead to more incisive data for faster, smarter, decision making.  Traditional lenders, such as banks and other financial institutions, are also exploring the various ways to leverage AI and AI tools. For example, banks are beginning to use AI to improve the customer experience, but under-the-hood optimizations of operational processes are still underway.”

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.