How Automation and AI are Changing the Lending Industry

Automation and Artificial Intelligence (AI) will transform lending, from the customer experience through decisioning and how loans are marketed. LendKey’s founder and CEO, talked with Bank Automation News’ “The Buzz” podcast about using automation at LendKey, opening the platform to non-bank lenders, and what excites him about the future of lending. Listen to the podcast here and read some of Vince’s best insights below.

How LendKey automates lending

We have a fully digitized lending as a service platform for banks and credit unions, including decisioning, origination, servicing and marketing to consumers. Automation is integrated into our platform to provide a customer experience that is familiar and easy, allowing borrowers to get an instant decision in 10 seconds all the way to electronically signing the loan document. We also have automation internally to monitor funds movement and ensure that loans are originated properly as we are responsible for the assets. Lenders don’t have to do a lot of work because of this turnkey process. They can go live in a week, and they’ll see loans start to show up on their balance sheet. 

Using AI to decision loans

We’re starting to use newer technologies in our call center that convert voice to text for telephone calls so that we can create AI-based training and compliance modules based on the cadence and word usage within the calls. This is a great way to take a process that requires people and improve it by using conditioned AI. We offer a white glove treatment for consumers who don’t want to go through the digital loan process alone. We can use AI to determine which ones are most likely to complete the loan and then actively reach out to them to offer to help them finish the process. We’re also starting to look at AI on the decisioning side. We have partners that can take the data we have—over a decade’s worth—and condition some of that: How consumers pay, their credit applications, and how they were approved, to help us decision loans.

The rise of virtual assistants

In the future, consumers want to wake up in the morning and say, ‘Siri, I need an auto loan.’ And Siri will be able to pick the best one for them, based on the rate and what they’re willing to pay. We’re getting very close to that today, and I think it will change the way we interact with money. Today, consumers wake up in the morning and say, ‘I need to go buy a new home, or ‘I need to buy a new car.’ The financial part of it is a byproduct of having to do it. So the ability is to make sure that the right product is there for the customer when they’re ready to do it. 

I think virtual assistants will become that interface for lending. Today, marketers monitor what people are doing on the web, based on what things we look at. In the future, the decision of what loan you pick can be made by a piece of AI that’s acting on your behalf—without you touching a browser or a keyboard. That’s going to create a very interesting marketing issue for us. The lending experience will probably be voice enabled, and we won’t have that presence to market like we do today.

The next evolution of loan sales and participations

One of the things that happened as a result of the pandemic and the following recession was that community banks and credit unions saw this inflow of deposits, partially through flight to quality and partially due to stimulus payments. They now have excess assets that need to be deployed and a voracious appetite for loans. We saw this previously in 2009 during the Great Recession. 

In February of 2021, we opened our platform to let clients buy and sell loans from each other that were originated on our platform as well as those that were indirectly originated, in any asset class. Everything from personal unsecured loans to solar loans can come through our platform in a product we call ALIRO, which enables a non-bank lender or fintech to partner with a bank or credit union and originate a loan directly on their books, and then, on a monthly basis, sell those loans in a private deal network in a forward flow to other banks and credit unions. 

This is a wonderful way for non-bank originators to reach the balance sheets of banks and credit unions. And buyers get easy access to loan production, while sellers can manage liquidity and grow their non-interest income. ALIRO can really change the way our clients and future clients manage their balance sheets.

What’s exciting now in emerging technology

I’ve been in the industry for over 30 years, and this is probably the most exciting time I’ve had because of the velocity of change. I’ve lived through the dot-com phase, the Great Recession, and now this most recent pandemic and recession. This time, we’ve all had to adopt digital technologies to interact with the world. It’s not just the Gen Xs and the Gen Zs. It’s the Baby Boomers. My dad is 90 years old and he uses FaceTime now. There are no longer any digital deniers, and it’s not going to roll back. Companies like Bank of America, as well as some of the hottest startups, are all moving at a pace of change that I’ve never seen before, to provide the kind of digital experiences that consumers are now going to expect on an ongoing basis. It really is all about the right automation and creating really unique customer experiences.