In the past, banks have used manual underwriting methods to determine a potential borrower's creditworthiness. This process usually took weeks or even months and was extremely time consuming. Fintech has introduced new ways of assessing loans by using AI and other innovative ideas, which have made it possible for the underwriting process to be much faster than before. This is beneficial because borrowers can get approved more quickly without having to wait weeks or even months in some cases.
What are the benefits of an AI-driven underwriting process?
Faster approval process for borrowers
Reduce human intervention in the process, which can lead to errors and inconsistencies
Lower borrowing costs as banks have more accurate data about risks
Today's fintech companies use algorithms and AI to develop their own credit rating mechanism that is based on scientific data like social media posts, online purchase inquiries or transactions, browsing history etc., rather than relying on just manual assessment of risk factors. Not only does this significantly reduce the time taken for the underwriting process but also allows them to make more accurate decisions about lending money.
The benefits of AI-driven underwriting processes are clear.
An AI process can approve a borrower in as little as 24 hours, while manual methods may take weeks or even months to make the same decision and have human error built into them that is sometimes hard to detect. Faster approvals mean more borrowers get access to capital earlier which cuts borrowing costs for everyone involved too!
By implementing an intelligent algorithm into a traditional system like financial services, they are able to significantly reduce human intervention - leading both greater accuracy as well as consistency among credit decisions.
Additionally, with lower borrowing costs due largely thanks to automation's ability to save time (and therefore money), Fintechs provide financial institutions with tools that allow them pursue their goals while keeping up-to-date on innovation trends within the industry.