bankingciooutlook

Loan Management's New Transition under AI's Mastery

By Banking CIO Outlook | Tuesday, January 21, 2020

The incorporation of AI into lending management will boost revenues for banks by encouraging data-driven decisions.

FREMONT, CA: Lending management is a key element of the banking sector that requires the utmost concentration when it comes to decision-making. While a decision granting a loan to a wrong party can result in bad loans, a decision rejecting a loan to a diligent client with an impressive track record can impact a bank’s business as well as reputation. Considering the amount of data and processing requirements, banks are eyeing artificial intelligence (AI) for assistance in lending management. AI can enhance the quality and speed of service, especially while analyzing the creditworthiness of the client. Further, AI can also add value to the existing lending processes in banks. Here are the ways in which AI can empower lending management. 

Determination of the Creditworthiness of Borrowers

The creditworthiness of borrowers provides an insight into the likeliness of the money to return to the bank along with interest. As simple as it may sound, determining creditworthiness is a daunting task when approached manually. Alternatively, AI enables a lender to verify a borrower’s digital footprint through a banking app installed on the borrower’s phone. Based on the data, lenders will be in a better position to determine if the loan can be approved for borrowing or not.

Streamlining the Existing Loan Process

Large lenders leverage AI to minimize underwriting delays and overheads, which boosts profits per loan. Various financial institutions are using AI to automate their entire loan process. Such banks are of the opinion that AI reduces human bias involved with loan management resulting in better decision-making and improved revenues. 

Predicting Loan Performances

As mentioned before, banks are deploying AI across their loan process in order to collect a vast set of data that can impact lending management in the near future. For instance, a possible economic slowdown can increase the number of bad loans. Thus, in the above scenario, lenders can be more careful while lending than when the economy is on a roll. 

AI can significantly impact lending management with a positive impact on revenues. Thus, the incorporation of AI into lending management will see a surge in the time to come.

See Also: Top Lending Management Solution Companies

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