Like internet revolution, Artificial Intelligence is probably the major technological shift of the century. Artificial Intelligence (AI) has become sought-after knowledge as businesses are apt to learn in the growing kingdom of automation, machine learning, robotics, analytics and more. Banks and financial institutions are among the early adopters of this disruptive technology. Lending firms are making efforts to adopt AI for mundane task automation, consistent customer services, deep-dive behaviour analysis, as well as efficient fraud finding.
Read in detail >
- What is Artificial Intelligence and why it matters?
- AI, the next wave in digital lending
- What benefits lending firms getting from AI
- Key challenges in AI implementation and ways to overcome
- How effectively can you adopt AI in your lending firm?
- Conclusion
What is Artificial Intelligence and how it matters?
Artificial intelligence (AI) makes it possible for machines to learn from experience, adjust to new inputs and perform human-like tasks. AI rely heavily on deep learning and natural language processing. Using these technologies, computers can be trained to accomplish specific tasks by processing large amounts of data and recognizing patterns in the data. AI works by combining large amounts of data with fast, iterative processing and intelligent algorithms, allowing the software to learn automatically from patterns or features in the data.
AI AUTOMATES REPETITIVE LEARNING AND DISCOVERY THROUGH DATA • AI ADDS INTELLIGENCE TO EXISTING PRODUCTS • AI ADAPTS THROUGH PROGRESSIVE LEARNING ALGORITHMS • AI ANALYSES MORE AND DEEPER DATA USING NEURAL NETWORKS THAT HAVE MANY HIDDEN LAYERS • AI ACHIEVES INCREDIBLE ACCURACY THOUGH DEEP NEURAL NETWORKS – WHICH WAS PREVIOUSLY IMPOSSIBLE • AI GETS THE MOST OUT OF DATA
AI offers tremendous benefits across organizations
It can influence sales. 3 in 4 organizations implementing AI increase sales of new products and services by more than 10%
Increase operational efficiency. 78% of organizations implementing AI increase operational efficiency by more than 10%
Better customer engagement. 75% of organizations using AI enhance customer satisfaction by more than 10% Generating Insights. 79% of organizations implementing AI generate new insights and better analysis
IN SUMMARY, THE GOAL OF AI IS TO PROVIDE SOFTWARE THAT CAN REASON ON INPUT AND EXPLAIN ON OUTPUT. AI WILL PROVIDE HUMAN-LIKE INTERACTIONS WITH SOFTWARE AND OFFER DECISION SUPPORT FOR SPECIFIC TASKS, BUT IT’S NOT A REPLACEMENT FOR HUMANS – AND WON’T BE ANYTIME SOON.
AI, the next wave in digital lending
As digital lending continues to grow, firms are looking for ways to make their services more efficient and profitable to both lenders and borrowers. Process automation is the first step. The second step is when even the decision making is handled by machines, using advanced machine learning and artificial intelligence to make real time, 24x7, zero error operations possible.
AI goes much beyond the binary world of lend-don’t lend decisions. It can improve customer personalization, identify patterns and connections that humans can't, and answer questions in real-time. Today, AI has come to play an integral role in many phases of the lending arena, from approving loans, to managing assets, to assessing risks. By 2020 at least five percent of all economic transactions will be handled by autonomous software.
AI offers tremendous opportunities to revolutionize operations in the lending sector. Machine learning can process terabytes of data in seconds, which humans could not process in a lifetime. This sheer power of modern computing will lead to faster loan origination, fewer compliance problems, and more inclusive lending overall.
Artificial Intelligence also brings with it, the ability to capture and exploit patterns that are unique to the loan portfolios of different lenders. Different lenders have different client acquisition channels, loan underwriting models and collections processes. These differences result in loan repayment patterns that are idiosyncratic to them - patterns that traditional underwriting models do not account for.
Historically, lenders used to make go-no go loan decisions based on a loan applicant’s credit score. Digital lending platforms believe that this kind of information does not paint a complete picture of a loan applicant’s creditworthiness. Firms can use artificial intelligence which is based on the premise that machines can learn and adapt from experience, rather than rely exclusively on pre-programmed logic.
How lending firms benefits from AI
Data driven AI applications will speed up online lending. Online brokers, lenders and credit bureaus can use algorithms to assess eligibility for credit. On the flip side, AI can also match business owners with the right lender. AI analyses and authenticates users' transactional data, and income verification and spend analysis helps highlight risk factors used for a richer credit scoring experience. This will reduce the risk of default and increase borrowers' financial profiling. It can also help automate parts—and maybe all—of the process.
Benefits of AI
- Influence sales
- Boost Operations
- Reduce operational costs
- Identify potential defaulters
- Speed up the process
- Better customer engagement
- Generate powerful Insights
- Better decision-making
- Simplify lending process
Major challenges in AI implementation and ways to overcome
Though the advantages are immense, if we look beyond the technology segment, AI adoption is still at a very early level. Why isn’t everyone not jumping into AI? Here we have identified 3 major challenges in AI implementation
- Cost factor: supporting not only the initial outlays for software and costs for cloud support but the on-going costs for training employees and continued training of the AI system when business processes change.
- Many technology options: so, it is hard to narrow down the potential choices and select the best implementation path.
- Inability to precisely predict ROI especially at the start of the project will be a source of friction.
To overcome the challenges:
- Start with a few small, quick to implement projects. Leverage this to build support within the organization on the AI initiative by demonstrating early successes.
- Engage key stakeholders early and often. Keep everyone informed on objectives, timelines, progress to goals.
- Bring on an efficient implementation partner
How effectively can you adopt AI in your firm?
Although the significance is clear, dipping your toes into AI can be a daunting task. It requires a combination of data, technology, infrastructure, talent and vision. Here are 5 easy steps to integrate Machine Learning and AI in to your existing services.
- Get familiar with AI: The very first thing you must do is to understand whether you need AI in the first place. Familiarize yourselves with the basic concepts of AI. Learn and understand how this technology can help solve your business problems in an easy and scalable way. Research other businesses already using AI and Machine Learning to determine parallels.
- Identify the problems to be solved by AI: Once you have a fair idea about AI, next step is to think about how you can add AI capabilities to your services. Identify specific use cases in which AI could solve business problems. It’s vital to set forth a defined goal of what you’re hoping to attain by using AI.
- Choose a platform: Choose the right platform that best suits your requirement and budget. Microsoft Azure Machine Learning, Google Cloud Prediction API, TensorFlow, Infosys Nia are some of the top AI platforms.
- Have the right team in place: Set up a team with excellent data science and technical skills to handle AI technology. This you can do either through training internal staff or hiring an external AI vendor.
- Implementation and action: After the above steps are taken, an AI solution can then be regularly implemented.
AI offers the ability to transform your organization, improve operational efficiencies, generate higher profit margins, and provide the insights to create positive customer relationships. The journey to implementation can be complicated and frustrating but, in the end, it can be highly profitable. Those that successfully complete the journey can create a sustainable competitive advantage founded on a highly profitable business model with a very loyal customer base.
Insight Consultants specializes in digitizing the lending ecosystem. From general to specialized, prime to sub-prime, we have helped organization evaluate data structures and availability, free up information from siloed systems, and identify the richest areas for machine-fueled insight and improvement. We can help you provide actionable advice to begin an AI initiative with the right approach and perspective.
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Insight Consultants