The coronavirus crisis has escalated the need for financial institutions to digitise their processes. The digitalisation of a financial institution’s lending process is no longer an option, but a requirement in this current economic climate. Firms must consider the compelling benefits of artificial intelligence (AI) when digitalising their credit process to overcome the COVID-19 economic crisis and stay ahead of competition.
Covid-19 impact and how to emerge stronger when digitizing lending processes
Lending is one of the areas that has significantly been affected by the pandemic. In response to the pandemic, businesses must focus on digitalization.
Using new data and AI to improve business: Companies need to incorporate new data and create new models to enable real-time decision- making. Accelerate process automation
Refocus digital efforts towards customer expectation: Align the organization to new digital priorities. Launch new digital offering channels.
Selectively modernize technology capabilities: Begin strengthening technology talent bench. Set up a cloud-based data platform and automate the software delivery pipeline.
Upskill organization for accelerated digital efforts: Deploy new models leveraging agile and remote.
Lend more and smarter using ML & AI
Digital transformation was never just about technology. With digitization, businesses can drastically lower the operational costs, increase efficiency and speed of decisions. Automating the processes can reduce risks by employing advanced scoring techniques to supplement the traditional approaches and data sources.
Using AI in lending shows up in several productivity-enhancing aspects, including
Forecast cash-flow: Cash flow is likely to continue to be a serious concern for smaller businesses as revenue streams dry up. Multiple AI and Machine Learning algorithms can process datasets including inflows/outflows, sales orders/customers invoices, purchase orders/vendor invoices and expense reimbursements for comprehensive as well as accurate cash flow forecasts.
Predict future losses: COVID-19 has brought about a stressed financial environment that affected credit quality and credit losses. An AI dashboard uses various criteria points that can help in predicting and preparing for these losses by highlighting patterns and trends—right down to the loan type, region, branch location, etc.
Sales prioritization: With AI, the algorithm can compile historical information about a client, along with social media postings and the salesperson’s customer interaction history (e.g., emails sent, voicemails left, text messages sent, etc.) and rank the opportunities or leads in the pipeline according to their chances of closing successfully.
Agile risk management: AI can complement the internal controls and early warning systems already in place around loan approvals, disbursement, and monitoring. A strong AI dashboard can also provide regular insights on the overall health and status of your loan portfolio in real-time, allowing you to make more accurate risk assessments and pivot as necessary.
Enhanced decision-making: In a post-COVID-19 world, lenders will likely exercise greater caution when it comes to credit risk. AI can help flag potential problems and potential biases at the loan authorization stage. It can provide managers with greater visibility and access to data, to make decisions that align with the organization’s risk appetite and policies.
Back office tasks: AI-powered cognitive assistants can perform a company’s back-office tasks effectively
AI- an evolving technology
Artificial Intelligence is the future. Sure enough, the technology is young and has its drawbacks. It requires high costs, and its implementation is both time and effort consuming. But unrealistic expectations that used to generate fuss around these technologies have turned into real business scenarios. It is especially noticeable in the field of finance. Embracing Digital Transformation driven by digital technologies can help lenders grow their loan book and acquire more customers.
Specifically, under the larger umbrella of digital technologies, Artificial Intelligence (AI) is the differentiator. AI can unearth and learn customer-behaviour patterns that help lenders differentiate themselves from the competition. Let’s look at a couple of high-impact areas that AI can influence significantly in terms of transformation, and help lenders improve their loan books.
If you, are you looking for ways to harness the power of machine learning and AI for your business, or would just like to know more, Contact Us.
