Consumer trends are shifting in banking services. A report by i-Scoop found that around 90 percent of consumers prefer online banking as opposed to going to the bank. This cut across measures of age and income.
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As part of the push towards digital banking services, some major banks are exploring the use of artificial intelligence. For example, JPMorgan Chase has invested in technology and recently introduced a Contract Intelligence (COiN) platform designed to “analyze legal documents and extract important data points and clauses.”
Also following a similar path, the Bank of America Corporation recently made a move into artificial intelligence technology with the debut of an intelligent virtual assistant named ‘Erica’.
AI loans
Another area where artificial intelligence is being reviewed is as part of the process for agreeing (or refusing) loan requests and, when loans are approved, for assessing the value of that loan. While consumers are readily opening bank accounts on-line, progress with lending via digital means has been slow, although there are signs that it is about to take off. Just how this might work has been reviewed by Jim Marous, who publishes The Financial Brand.
The implementation of such an AI agenct requires more than simply having a digital application for a customer to use to make a loan request. Behind this, the financial organization needs to define what is desired by the customer and what will meet operational efficiency. Steps also need to be taken to build the digital lending strategy as a series of organizational competencies.
The right information at the right time
While there are a number of steps to follow, perhaps the most important involves what Marous calls “data-driven decision making.” Included in this toolbox is the process required to make the right information available at the right time, to the right stakeholders, in the right format. This decision making process will require artificial intelligence and machine learning. Algorithms can decide whether a loan is granted; should approval be given, then a machine can match the customer requirements with a suitable product. Product in this case is the loan repayment period and interest rate.
The initial focus of AI loan agents will be on consumer loans, such as student loans, personal loans, home loans and auto loans. After this mortgages and business loans should follow. The consideration by banks for the use of artificial intelligence to decide bank loans is also picked up by auditing company PwC in their analysis of the sector, as something that’s likely to take off as technology develops. So, next time you apply for a loan, it could be a machine that decides on your eligibility.
