How FIs Are Leveraging AI to Drive Efficiency in 2024

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The future of digital lending is undergoing a radical transformation driven by the power of artificial intelligence.

Today, banks and credit unions are making significant investments in AI-driven solutions that enhance customer experiences, optimize operating costs, and improve employee productivity.

According to a recent marketing analysis conducted by IDC, global spending on AI software and hardware is poised to reach a remarkable $301 billion by 2026, with a significant proportion of this allocation originating from the financial sector.

As the industry begins embracing new technology at an increased rate, many institutions are looking to artificial intelligence to create unique competitive advantages in the business loan origination process.

Why AI?

Before we explore the impact of AI in loan origination, let’s understand why it has become a critical focus for financial institutions.

Drive growth without increasing Headcount

Amid the prevalent hiring challenges faced by the banking industry, there is an increased need to ensure that existing employees can operate at peak efficiency. AI is now emerging as a strategic solution to fill the talent gap. By automating time-consuming, manual tasks like underwriting, AI allows employees to concentrate on strategic, value-adding activities.

With the power of artificial intelligence, institutions can empower their current workforce to achieve unprecedented levels of performance, regardless of external hiring challenges. AI ensures that financial institutions can drive growth without the necessity of increasing headcount, safeguarding their ability to thrive in a competitive landscape.

Faster, More Accurate Decisions

Expanding beyond the traditional branch footprint is a top priority for many institutions in 2024. This goal demands the ability to process a higher volume of loans quickly and efficiently, without sacrificing accuracy. As banks seek to seize growth opportunities in the new year, those operating on manual, legacy processes will encounter a critical challenge.

Manual loan processing presents significant bottlenecks in the underwriting process for business loans. The volume of paperwork and data analysis required to underwrite loans is incredibly time-consuming.

With the need for a high level of efficiency, AI-driven automation becomes not just an option but a necessity. Leveraging AI in the underwriting process for business loans translates to faster and more accurate decisions, allowing banks to reach and exceed growth goals. Beyond the back-office benefits, these efficiency gains also enhance the customer experience by offering a faster time to close for business borrowers

Empowering Staff and Increasing Efficiency

Satisfied employees are the backbone of any successful institution. AI empowers staff by equipping them with the tools and insights necessary to perform their roles more efficiently.

In a recent study conducted by NN group, it was found that strategic integration of AI within businesses has resulted in an impressive 66% boost in employee productivity, leading to enhancement in overall performance. Additionally, with the newfound efficiency gains, employees will now have extra time to focus on advancing their careers by learning new and valuable skills.

Bringing AI to Business Loan Origination

Manual business loan origination is a complex, time-consuming process, especially when it comes to underwriting. Due to the tedious nature of underwriting, lenders that are processing business loans manually can experience significant bottlenecks including longer waits for borrowers, back-and-forth communication, and heightened processing costs.

With artificial intelligence, lenders can now expedite and streamline the underwriting process by automating various tasks. This includes the extraction and validation of data from loan applications and supporting documents, effectively eliminating the need for error-prone manual entry. Furthermore, AI helps in evaluating the creditworthiness of borrowers by analyzing their credit history, financial statements, and other relevant documents, enabling more informed decision-making.

These benefits translate into reduced workloads, faster decision-making, and ultimately, improved customer satisfaction. The combination of AI and a sleek User Interface is the key to ensuring 100% accuracy in the underwriting process