Artificial intelligence dates back to the ancient era when people thought of developing machines to help people complete complex tasks within no time. Artificial Intelligence has become an integral part of our life aiming at a solution to our problems. In fact, we do not realize how much we are dependent on machine intelligence for our daily operations.
How AI is Changing the Loan Business
Artificial Intelligence has revolutionized every industry such as travel, transportation, IT, retail and lending. In each industry, it has a different role. In the transportation industry, Artificial Intelligence has accounted for the development of autonomous vehicles self-driving cars, a self-parking system and control features to make driving easier and faster. Likewise, Artificial Intelligence in the traveling industry aims to prevent fraudulent transactions and provide suitable suggestions for dates, routes, costs, and travel packages.
The embrace of Artificial Intelligence by the lending industry has proved how quickly it has overcome the flaws and complications of traditional lending methods. The lending industry will have saved over $1 trillion by 2030, according to prognostication of analysts. Here is how Artificial Intelligence is helping loan companies like British Lenders UK.
Personalised customer services with chatbots
Of course, direct lenders have thousands of customers and it is not feasible to solve queries of everyone by using manual methods. It is natural that they will look forward to accepting the automation of customer services, which has resulted in using chatbots.
While lenders are using Artificial Intelligence to enhance customer satisfaction, there is always a fear of reduced loyalty because of a lack of personal contact. Yet, lenders are making the most of Artificial Intelligence. With chatbots, it has become possible for lenders to provide round the clock services.
Clients can obtain financial guidance anytime through either voice or text messages. Lenders can save money in hiring financial counsellors who will solve borrowers’ queries day and night. A chatbot also ensures immediate responding to queries of customers as opposing to an advisor who will consult an expert in case of immediate response.
It is important for direct lenders to understand the preferences of borrowers to improve their experience. Personalized solutions can be provided only when lenders know what borrowers want. Artificial Intelligence helps lenders know borrowers’ behavior and preference by tracking data sources.
AI helps in fraud detection
Frauds are very common in the financial industry. Loan companies have to take certain steps beforehand to avoid fraudulent borrowing. A loan mainly aims at helping people during an emergency. It is important for a lender to be certain that the borrower is not going to use the money for illegal activity. Artificial Intelligence helps direct lenders in detecting fraudulent moves. Now detecting fraud is a task of a couple of minutes because AI engineers use efficient tools to compare data.
Direct lenders also report several cases of identity theft. Credit reference agencies use Artificial Intelligence to compare data to resolve the issues of identity theft. Of course, when data of millions of users you have, fraud detection with manual methods is not feasible. In fact, banks and direct lenders who work at very large scale use Artificial Intelligence to monitor potential threats and prevent criminal activities.
AI has promoted automated processing
Robotic process automation (RPA) is one of the keys that help banks and direct lenders review thousands of applications in just a couple of minutes. This processing without automation may take several months. The lending process has become speedy because of RPA. Experts are figuring our more effective ways to quickly lend to and collect from borrowers.
Direct lenders use Intelligent Character Recognition System (ICR system) that recognises important information mentioned on applications and quickly shortlist them. Hundreds of applications are shortlisted without further ado. This work requires countless hours that you can get it done within a split of a second with the help of Artificial Intelligence. These tools can drastically whittle down the time spent on perusing clients’ information. You can utilise those hours in brainstorming revenue-generating methods.
AI helps in risk assessment
It is yet to determine the impact of Artificial Intelligence on risk assessment in the lending industry. However, it has the potential to handle a vast amount of data together and analyse it within seconds. Cognitive computing helps manage both structured and unstructured data to assess any risk lurking.
Artificial intelligence helps in identifying the early signs of potential future issues by analysing the history of risk. On the basis of different factors, it can make a detailed prognosis as accurate as possible risk assessment is very important for any kind of business and a loan company is no exception.
AI helps with credit decisions
To make a lending decision, a loan company has to analyse the repayment potential of a borrower as accurately as possible. Artificial intelligence makes a faster assessment of loan applications. Artificial Intelligence uses more sophisticated rules than traditional lenders to determine the creditworthiness of borrowers. Artificial Intelligence uses more sorted approach to distinguish between applicants with high default and borrowers with good credit standing. One of the significant reason to rely on algorithms for making lending decision is they are not likely to be biased.
The bottom line
Artificial Intelligence has drastically improved the lending industry. From making a decision of lending to collecting funds, lenders are dependent on machine learning for everything. Artificial Intelligence has automated the collection procedure by sending texts, emails and notifications to borrowers as the payment becomes overdue. Artificial Intelligence has taken the burden off lenders’ shoulders and made the business easier and smoother. To leverage complex algorithms, direct lenders need to have a clear plan of collecting and managing data across all branches. It is very difficult to make the most of Artificial Intelligence without a clear plan.