{"id":3370,"date":"2018-10-31T18:07:09","date_gmt":"2018-10-31T16:07:09","guid":{"rendered":"https:\/\/www.lending-express.com\/blog\/?p=3370"},"modified":"2019-02-06T11:36:36","modified_gmt":"2019-02-06T09:36:36","slug":"the-increasing-role-of-artificial-intelligence-ai-in-financial-services","status":"publish","type":"post","link":"https:\/\/www.become.co\/blog\/the-increasing-role-of-artificial-intelligence-ai-in-financial-services\/","title":{"rendered":"The Increasing Role of Artificial Intelligence (AI) in Financial Services"},"content":{"rendered":"

A brief history of lending<\/span><\/h2>\n

 <\/p>\n

The earliest evidence of lending dates back a solid 4,000 years ago to ancient Mesopotamia where grains and cows were used as the form of repayment, so it\u2019s safe to say that we\u2019ve come a long way since then – a very long way indeed!<\/span>
\n<\/span>
\n<\/span>The Greeks introduced payday loans but it wasn\u2019t until the industrial revolution that international finance was really born. The <\/span>history of lending<\/span><\/a> has seen many changes but fast forward to the last 50 years, and we\u2019ve seen the birth of online lending and even more recently, alternative online lending which has totally eliminated the need for towering paperwork and lengthy waiting times. Nowadays, getting financing for your business has never been easier, you could apply from your sofa and have your funds the very same day. <\/span><\/p>\n

 <\/p>\n

The question on everyone\u2019s mind is: where is the future of lending taking us and how will artificial intelligence in finance take us to new heights? Buckle up.<\/span><\/p>\n

How will AI disrupt the lending industry?<\/span><\/h2>\n

 <\/p>\n

A new technological era is upon us revolutionizing the lending market space, but before your skeptical mind jumps to conclusions, let\u2019s delve a little deeper to understand the real problem in lending and how or if AI can solve it. <\/span><\/p>\n

 <\/p>\n

The problem:<\/span><\/h3>\n

 <\/p>\n

1. Bad loans:<\/b>
\n<\/b>Banks and financial institutions often struggle with \u2018bad loans\u2019, something we can currently see in India as <\/span>2018 saw bad loans rise<\/span><\/a> to 15% of gross advances! And something that we also saw back in the US in 2008 where the financial crisis saw more than 8,000 US banks registered a <\/span>149% increase in troubled assets<\/span><\/a>.<\/span>
\n<\/span>
\n<\/span>2. More data, same old system<\/b>
\n<\/span>The second problem is that there are more data and more credit, but the same old underwriting techniques are being used. The amount of data that lenders and banks can find out about potential borrowers has risen through the roof. This drastically increased the ability for lenders to estimate credit-worthiness of borrowers, however, credit score isn\u2019t EVERYTHING. <\/span>
\n<\/span>
\n<\/span>Credit score doesn\u2019t take into account some of the rich data available in new-age platforms such as those offered at Become that can help to improve the ability to predict loan defaults.<\/span><\/p>\n

 <\/p>\n

The solution:<\/span><\/h3>\n

 <\/p>\n

AI finance technology has been uniquely designed to tackle the problems facing the lending market and is disrupting the loan-underwriting process and hence the lending industry as we know it. AI finance technology has the ability to capture complex patterns in customer\u2019s data analyzing many aspects including personal and business financials, revenue, credit score and more to find borrowers that are more likely to default. This also opens more opportunity for others; for example, with AI, one borrower deemed risky on credit score alone, may not be so risky once all factors are combined – this is something our own technology does at <\/span>Become<\/span><\/a>. <\/span><\/p>\n

 <\/p>\n

Artificial intelligence in financial services also opens the door for the ability to utilize patterns that may be unique to the loan portfolios of different lenders. At Become, we work with over 35 lending partners, each offering unique loan products, services and with different factors that will change which business borrowers they will and won\u2019t take on. <\/span><\/p>\n

 <\/p>\n

Different lenders have unique:<\/b><\/p>\n