With digital automation and changing customer demands, banks and other financial institutions are experiencing a pragmatic shift in their working patterns accelerating financial inclusion, especially in the lending industry. Accommodating the new generation in legacy systems can be quite challenging, as most customers prefer digital-first platforms nowadays. Hence banks and other lending institutions seek help from disruptive technologies like artificial intelligence (AI) to grow their loan book and acquire more customers. By adopting AI-based solutions, lenders get a substantial competitive advantage to cope with the changing industry landscape.
AI-based solutions can help lenders boost their revenues by offering personalized services to their customers. These solutions allow banks and other lending institutions to lower down the costs through the efficiencies generated by higher automation, reduced error rates, and assist them with better resource utilization. To fulfil borrowers’ expectations and improve loan origination efficiency, lenders must keep an eye on these changing trends.
Here are some of the top AI use cases in the lending industry that lenders must know:
Better risk management by analyzing fraudulent applications
If anything, this COVID-19 pandemic has taught is about uncertainty. AI helps lending institutions in loan assessment. These smart solutions help lenders analyze a loan application by scanning through piles of data, including the borrower’s credit score. Such software helps a lender quickly decide whether to approve or reject the loan application by assessing the borrower’s history, saving lenders from potential fraud.
AI-based solutions work on mathematical algorithms based on data collected from multiple sources, eliminating the chances of human errors. With AI, the whole lending process can be automated, minimizing the risk involved, especially in online loan applications.
Increased efficiency by reducing lending cycle time
Digital automation has made the entire lending process quite easy for customers as they can now apply for loans online. Applying for loans using the traditional approach may take days and, sometimes, even a month to get a result. However, with the introduction of smart AI-driven services, the entire lending process becomes easy, increasing the efficiency of lending companies’ operations. As a standard process, a lot of documentation happens during the initial stages of loan processing, which is highly time-consuming. Using AI-based solutions, reports can be auto-generated by analyzing the historical data. Lenders rely on these reports for the efficient allocation of funds and expedite the loan approval process.
Make better decisions by analyzing the latest market trends
AI helps lending institutions analyze the latest financial trends, customer demands, their existing data and then produce reliable and efficient results for making better decisions. Market analysis also helps lenders watch out for their competitors and keep a track of their actions.
Also, many lending institutions provide financial advisory services to their customers, including credit counseling, credit repair, and debt management, etc. AI software collects data by analyzing market behavior, allowing lenders to give the best advice to clients based on their credit history.
Provide differentiated customer experience using chatbots
AI-based chatbots are of great help to customers as they are available even after working hours. These chatbots are highly competent to provide a plethora of services, including automated portfolio management and personalized product recommendations with a little to no human supervision.
Also known as robo-advisers, chatbots collect all the related information, like financial situation and goals, to help customers plan for their loans. Customers can know about the various types of loans, interest rates, eligibility criteria, and a lot more with the help of these chatbots. Chatbots save both time and cost by allowing lenders to resolve customers’ queries sooner offering a delighted customer experience.
With digitization, technologies like AI are helping lending institutions automate their business processes and be effective in their operations. Using AI-based solutions, the loan application process is simplified, reducing the risks involved. Now customers can apply for loans in just a few clicks, and with advanced software, lenders can process their application in a lesser time.
Lending institutions which are looking for such advanced software, can consider Arttha. Arttha Loan Lifecycle Management platform is designed to digitize and automate loan lifecycle end-to-end and gives lenders a competitive edge in this digital era. From allowing customers to check their eligibility to processing the loan after credit verification, Arttha does it all in a completely paperless manner. To know more about how Arttha Loan Lifecycle Management platform works, connect with our team today.
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