Artificial intelligence is already making waves in the financial services industry, It’s already being used to assess risk for loans, and it will be used in every corner of the industry moving forward.
It has a number of advantages over traditional methods that financial services professionals currently use to assess risk and make decisions.
One significant advantage is that it can sift through more data than a human would be able to process in a short amount of time. Imagine you have 10 years’ worth of credit card transactions, a decade-worth of social media posts, and 10 years’ worth of emails to go through.
AI also helps to reduce biases that may occur with humans making judgments about certain types of people or certain types of transactions, one area where this is helpful is in loan applications from people who don’t have long credit histories or come from ethnic backgrounds that lenders tend to overlook.
An AI-powered underwriting system would be better at recognizing these cases and granting appropriate approvals or denials based on the person’s credit history rather than their ethnicity or background.
AI will also help create new products for consumers and businesses alike by examining customer behavior patterns and predicting ways they’ll behave in the future based on what they’ve done historically.
The advent of AI means we’re approaching an era where technologies are no longer replacing jobs, but instead helping humans work smarter and
AI Underwriting: What You Can Expect
AI is already being used in the financial services industry, and it is only going to become more prevalent, financial institutions are already using Underwriting to help assess risk for loans and other financial transactions, this includes risk assessment, fraud prevention, and other investments.
The use of AI underwriting is expected to grow exponentially in the next few years because of how successful it has been thus far, a study by PwC found that four out of five executives believe that it will have a significant impact on their industry within the next decade and in some cases, those effects are already being seen today:
- Experian estimates that 40 percent of all credit decisions will be made through machine learning by 2020;
- The world’s 10 largest banks have been using machine-learning algorithms for a decade to predict customer spending patterns;
- The latest research from Oxford University found that machine intelligence can detect credit card fraud with 99 percent accuracy.
AI underwriting automates the underwriting process, which is done manually by financial services professionals, in theory, this should speed up the process, eliminating human error and reducing the possibility of bias in underwriting decisions.
It’s not a perfect system, but it has the potential to provide more accurate and transparent underwriting, if you are interested in investing in a business that’s at the forefront of technological innovation, it may be worth a close look.