Case Study: Artificial Intelligence in loan

assessment: How does it work

Introduction

 Did you know that JPMorgan, Bank of America, and Morgan Stanley have heavily
invested in machine learning to develop automated investment advisors?  
 It doesn’t stop there. Artificial Intelligence (AI) and Machine language (ML) are being
extensively used in the banking sector for financial monitoring, risk management,
marketing, retention, data management, process automation, algorithmic trading, and
whatnot. 
 In this case we will further discuss Role of Artificial Intelligence in loan assessment

The need of AI in banking sector

 50% of first-time loan applicants have to face rejection from financial institutions due to
traditional lending systems have relied solely on credit scores, legacy processes and
tedious paperwork
 And about 80% of Indian population don’t have a credit score
 This problem leaves many deserving borrowers out of the credit net while lenders lose a
big chunk of business. 

How AI ML can help?

 AI and ML have enough potential to make task easier for both lender and borrower by
building a more reliable credit score through predictive analytics, digital footprints and
other complex algorithms and data points
 Financial service providers now can rely on the digital presence of a loan applicant, by
assessing online shopping habits, utility and telephone bill payment history or even
social media profiles for determining creditworthiness.
 Artificial intelligence and machine learning are going to be a critical part of the future of
finance. They will help banks to analyze data, predict customer behavior, and customize
financial services. 

The benefits of AI for banks

 Ensuring faster approval and processing of loans.

 Helping create a credit profile for first-time loan applicants.
 Helping banks bring more borrowers to the lending ambit and ensure business growth.
 Bringing down servicing costs for banks.