2. The role of artificial intelligence
In recent years, and even more rapidly since the launch of ChatGPT in 2022, AI and GenAI have been game-changers across various industries, and lending is no exception. The main lending activities involve assessing the creditworthiness of borrowers, issuing loans, and managing repayment and default risks. AI can help lenders in several ways.
In the area of risk assessment, AI can help analyze large volumes of data to predict the likelihood of reimbursement. This contributes to more informed lending decision-making, reduced default risk and increased efficiency of lending processes.
In credit scoring, AI can play an important role by analyzing credit data to quickly assess creditworthiness, determine appropriate credit limits, and set loan rates based on customer risk profiles. This can reduce the time and resources required for manual underwriting, allowing lenders to process more applications in shorter time frames. AI improves borrower assessment by including multiple sources such as transaction history, alternative financial data, and social media (via large language models). Business plans can even be integrated into these systems to enable more informed decision-making when it comes to small business loans, as well as to provide a transparent argument if a loan application is declined.
AI can help improve the customer experience by evaluating a borrower’s spending behavior and credit history, in order to provide personalized offers best suited to the customer’s personal needs via, for example, digital assistants . Customers demand a seamless, end-to-end and consistent lending experience that enables rapid decisions and immediate availability of funds. AI can increase customer satisfaction and loyalty, as well as attract new customers and segments, for example by proactively identifying cross-selling or upselling opportunities in the customer portfolio.
AI systems play a crucial role in supporting innovation and driving inclusion by introducing new and alternative lending products and channels. Examples include peer-to-peer lending, crowdfunding and instant lending where AI can improve the identification of counterparty risks. This can expand access and affordability to credit, particularly for underserved and unbanked populations. Additionally, such use of AI can promote financial literacy and education.
Finally, AI systems can be used to monitor and detect fraud, as well as to comply with regulatory and ethical requirements, such as AI law. This can enhance the security and reliability of loans, while minimizing legal and reputational risks.
For banks to fully realize the benefits of AI in lending, they need flexible, open, real-time, and easily integrated solutions that make it easy to use external data sources to streamline lending activities. front, middle and back office. Banks should explore different configurations such as multi-cloud infrastructure and enable scaling for maximum experimentation opportunities, while enhancing their data assets.
It is imperative to use AI systems that are not only accurate, but also explainable to the end user, and capable of avoiding bias and discrimination in credit decision-making. This approach ensures accountability and responsibility on the part of AI providers and users. To protect the rights and interests of customers, employees and society, it is essential to maintain fair and ethical AI systems that respect EU and country-specific values and standards. Finally, maintaining agility is essential to navigate a rapidly changing environment and capitalize on opportunities while confronting the threats presented by AI technology.
Leveraging the Benefits of Integrated Lending and AI
As we navigate the dynamic landscape of the Belgian credit sector, it becomes clear that change is not only inevitable: it holds incredible potential. The industry is witnessing a wave of transformation driven by changing customer dynamics and the regulatory landscape, offering both unprecedented challenges and opportunities.
Integrated lending and AI are emerging as the vanguards of this transformation, propelling the industry into a new era of efficiency and customer centricity.
The doors to innovation and strategic growth are wide open. Integrate seamlessly integrated lending into your services, harness the power of AI for more informed lending decisions… EY, with extensive experience in lending and AI, has the expertise to become your trusted partner to navigate an evolving landscape and seize the opportunities ahead.
