Three ways that AI adds value to commercial lending
Dale Glajchen | VP Product Management, Lending, FIS
March 17, 2022
With margins under pressure, credit quality deteriorating and customers demanding fast, digital services, it’s never been more important to squeeze more value from commercial lending. Technology has already made significant headway by automating, integrating and consolidating historically costly complex processes. Now, how can artificial intelligence (AI) take the digitization of commercial lending to the next level?
The short answer is that AI can make far better and faster use of data than other technologies or human beings.
On one hand, data is critical to both the analysis and the efficiency of the commercial lending life cycle. But on the other, the sheer volume, variety and complexity of commercial lending data can make it difficult to access and apply to core lending processes – whether you’re sifting through structured data in financial statements and covenants, unstructured data in credit memos, newsfeeds and sentiment analysis or ESG indicators in market reports.
AI algorithms get to the heart of this dilemma by bringing unprecedented speed, accuracy, breadth, depth and scale to data analytics. Powerful, transparent and auditable machine-learning models can now integrate with hundreds of data sources to make millions of predictions a day for commercial lenders.
To take full advantage of the latest innovations and advance our own commercial lending solutions, FIS has teamed up with enterprise AI provider C3 AI. Together, we’ve developed FIS Smart Lending with C3 AI, a solution that delivers three key business benefits to commercial lenders and their customers.
1. Increased speed and efficiency
Smart Lending’s AI-powered machine-learning models can automatically identify which commercial credit applications are most likely to be approved, which are least likely and which need more time and (human) thought. So, with the bulk of applications usually for straightforward loan renewals, you could end up reducing the time it takes to approve a loan by as much as 85% by turning data into valuable information for the banker.
The models’ ability to rapidly separate approvals from rejections – with 98% precision – will certainly accelerate time to “yes” for approved applicants and reduce wasted effort on applications that will ultimately be declined. But it also allows credit officers and relationship managers to focus on the more complex cases that could ultimately drive growth and increase revenue – without adding risk to the portfolio.
2. Customer delight
Thanks to the complexity of the commercial lending life cycle, customers can spend 90% of the time it takes to process a loan just waiting for the next stage to happen. With automated workflow keeping the approval process moving and streamlined documentation reducing the burden of proof for borrowers, Smart Lending reduces average loan processing times by up to 30%.
As well as lowering the cost to serve, more efficient processes and speedier responses significantly improve customer satisfaction and retention. And because the AI models are so fast at recommending approval (or rejection), relationship managers can provide feedback almost instantly to customers on the likelihood of approval or request additional information. That puts an end to the drawn-out uncertainties that can plague the lending process.
3. Better credit risk management
With data ingested and consolidated from multiple structured and unstructured data sources, and alerts to potential covenant breaches and defaults, Smart Lending considerably improves the visibility and accuracy of risk monitoring processes. Using AI score breakdowns and easy-to-interpret recommendations, credit officers can identify risk drivers for each customer and simulate how changes to terms of credit will influence the risk profile of the borrower.
A 360-degree view of customers also allows you to perform powerful peer comparison analysis and incorporate the results into underwriting processes. Plus, you can automatically compare renewal applications with previous applications.
Add value to your own business with AI
With its AI models providing concrete business benefits, Smart Lending adds a new layer of economic value to FIS Commercial Lending Suite. The solution will also integrate seamlessly with other lending applications and processes.
So, what are you waiting for? Find out how AI could work for your commercial lending business now by emailing firstname.lastname@example.org.