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Why AI Is a Smart Choice for Commercial Lending
Matt Riggall, director of product management, Commercial Origination Solutions, FIS
June 21, 2019
In a few decades, artificial intelligence (AI) has gone from being the stuff of science fiction to an everyday reality. Just ask Alexa, or Siri. But as well as being all around us in domestic life, smart technology is making itself at home behind the scenes – such as in the business processes of commercial lending.
There’s a lot of hype about the use of AI in business; and some concerns, too – not least that the robots are coming to put regular staff out of a job. For commercial lenders, however, AI’s super powers are not only living up to expectations but also helping improve the employee experience.
So, in its automated emulation of human cognition, why does AI work so well with commercial lending? And, more to the point, what can it offer your business that mere mortals can’t? Drawing on real-life use cases, I believe that AI tools add the following six key attributes to lending processes and analytics.
Time is of the essence in commercial lending and AI works a great deal faster than any human can. Typically, you’ll need to ingest a lot of data before you can onboard a borrower. While manual processes slow staff down and frustrate the customer experience, AI will race through routine tasks and win back time for more interesting, customer-facing work.
The more data you have on a borrower, the better you can inform your lending decisions. Bank statements, for example, can provide a rich source of data on small businesses but also come in many different formats. AI tools can analyze a wide range of data types in a single action and pull the data directly into a loan application – all while keeping a keen eye out for fraud.
Commercial lenders have to spin a lot of plates – from attracting borrowers and underwriting deals to monitoring the portfolio, managing problem loans and cross-selling products. Unlike their human counterparts, AI tools can be everywhere at once, and access and integrate disparate data sources on an ongoing basis. They can therefore make connections and pick up on details a human might miss – to predict, for instance, loan deterioration or improvement.
Despite the rise of automated technology, many loan officers still input a lot of data manually, which increases opportunities for error. AI tools have a low error rate; and, just as importantly, they can fill in the cracks in automation that result from disconnected systems – and cause manual mistakes.
When you’ve worked for a while in a business like commercial lending, and have got to know a particular sector, experience may tempt you to think you always know best and should rely on your instinct. In contrast, AI always remains dispassionately focused on all the facts, which makes for more objective decision-making.
6. Continuous improvement
Just like the human brain, AI tools can learn – either from human input into their models or through machine learning: their own continual observation of the data, the operating environment and their impact on that environment. Under careful supervision, machine-learning technology essentially allows robots to develop a mind of their own and continually refine their processes and decision-making abilities.
In summary, think of AI as a robot that can make observations, connections and actionable decisions that your existing teams and systems cannot. And rest assured that, rather than stealing human jobs, robots are there to make them more rewarding.
By taking administrative clutter off their hands, AI leaves employees freer to focus on strategy, spend time with their customers and build both relationships and value. But at the same time, it takes superhuman care of the critical processes that underpin commercial lending.
Now, that’s what I call smart technology.