How AI is Already Changing the Way You Borrow: And How You Can Use it Too

Julian Fayad

Julian Fayad, Founder and CEO

How AI is Already Changing the Way You Borrow: And How You Can Use it Too
06 Mar 2024

AI has been having its influence everywhere, and lately, we're now seeing waves in finance.

Lenders are already using AI platforms and tools to efficiently examine their customer's data to approve or reject applications faster.

But how does this affect you as a borrower?

Faster loan approvals

What used to take days to shift through a customer's documents may sometimes take only a matter of minutes. Lenders are also better able to critically evaluate and make decisions on loans a lot sooner.

Lenflo, one AI platform for lenders, claims that it has been allowing lenders to operate 10 times faster.

Anthony Scott from another AI led business, AI consultancy firm Simplyai, told Broker News that this assistance can result in 85% of loans going 'straight through'. "One banking customer we have worked with was able to automate their mortgage loan origination process down from 23 days to under seven minutes," Anthony Scott said.

More thorough creditworthiness checks: more chance of being approved

On top of the most beneficial benefits that AI powered lenders are giving to borrowers is a more thorough approach to creditworthiness checks.

Creditworthiness, if you don't know, is a measure of how worthy someone is of being trusted with credit and paying back what they owe in a timely manner, based on a lender's assessment.

Traditionally lenders will look at these attributes when it comes to your credit score:

  • Income
  • Assets
  • Spending
  • Debts
  • Employment and employment history
  • Credit score and credit history: this is one of the most important components of a creditworthiness evaluation. It is created from the borrower's credit history, and their borrowing and repayment habits.

It's a very thorough process but sometimes it has its disadvantages towards individuals trying to get approved for loans. Such as the preference for evaluating for stability in these checks.

For example, imagine there is someone like Sandra who operates as a consultant as a freelancer who earns and earns $100,000 a year. While it's a lot of money, because she is working freelance instead of in a full-time role, Sandra can still fail to get approved for loans.

With more fast and thorough assistance with AI, we've seen some lenders starting to change their approach and consider a broader range of factors (such as rental history, online behaviour, debt to income ratio, and more) for applicants with a limited credit history.

Which means someone like Sandra can get approval, or access to better terms and lower interest rates.

AI has so much processing power in finance: so what's next?

AI holds the power to better speed, efficiency, accuracy and precision when it comes to the loan and borrowing sector.

We've witnessed how it has advanced capabilities when it comes to document processing, real-time data analysis, pattern recognition, and continuous learning. As well as assisting in making decisions with decision trees and even detecting fraudulent activity.

It allows those who are able to harness its power to predict future behaviour, match data points together, monitor creditworthiness, and get more support for early signs of distress.

It's good news for both lenders and borrowers, but it doesn't have to stop there either.

With the ability AI has to quickly process large amounts of data, borrowers are now also beginning to use and reap the benefits of AI now too: particularly when it comes to searching for and finding the right loan.

How you can use AI as a borrower to get a loan

Borrowers might not be using AI to find a home loan, but it's becoming more of a trend with personal loans.

As the first AI powered personal and asset loan broker at Loanoptions ai, we're proud to be leading this change. Our platform assists borrowers in getting together the right documents and applying in 5-7 minutes. Founder and CEO, Julian Fayad says: "Our AI auto-complete engine and our probability of approval models have helped revolutionise applying for asset finance, with it prefilling much of the client's information and data for them to review and accept right down to tailoring the most relevant and suitable products that have a high likelihood of approval. Now we have more than 25,000 people per month using our technology, resources and information which is growing exponentially."

It's also a better and more secure loan-comparison process for individuals, compared to looking through options online. Instead of churning through lots of search results online and being exposed to tracking cookies (or personal data permission pop ups) and getting increasingly targeted by advertisers, is shielding borrowers from the ads and protecting their privacy.

>Where to exercise caution with AI - risks and concerns

The power and efficiency of AI may not be without its risks in a big market. It's important to understand that not every AI or its defined workflows are created the same

Using AI in the finance sector in general can lead to more bias, depending on the data and instructions the artificial intelligence is trained on. The Australian Human Rights Commissioner Edward Santow has told the Australian Financial Review that it is very common for AI to be trained on up to 50 years of historical banking decisions and records.

The problem is that banking decisions in the past used to negatively affect women and other disadvantaged groups. This means there is a risk for AI assisted decisions regarding finance negatively impacting women, unless these algorithms have proper controls and supervision in place.

There are also others in the finance sector that are cautious of the cybersecurity concerns that come with using AI with making decisions regarding finance. As well as the ethical considerations, such as if it's taking jobs from humans.

These concerns must be addressed in government and independent bodies in future, to maintain fair and ethical services across different companies and corporations in Australia.

How we're safeguarding against AI in finance concerns

Instead of leaving things to chance, we've had a proactive approach in addressing concerns when it comes to using AI and have taken measures to put certain safeguards in place. With de-biasing data we train our model on, having human oversight over our AI and how it processes documents.

Additionally, we take steps to regularly audit our systems, encrypt customer data, and undergo regular security and penetration tests to safeguard all the information our clients trust us with. Ensuring that we're always improving our technology, and making good on the trust that we are given.

Our AI, Ailo, also hasn't been a technology that has replaced workers but added to the capabilities of our human professionals, who are equipped with a strong background in finance and experience. They ensure everything is correct and supervise the entire process to ensure that we can give borrowers an empathetic experience, making sure customers are heard and put first.