Artificial intelligence (AI) has gained popularity in the years of its launch, worldwide. Several industries, sectors, and businesses are adopting AI to minimise efforts and profit in business operations. Some of the salient features of AI that include quantum computing, data processing, human cognition, facial recognition, automation, improved customer service, and handling other repetitive tasks smoothly.
AI in the Financial Sector!
AI has advanced human capabilities, and become a must-have integration tool for several industries, including the finance sector. A giant leap has been seen in the BFSI (Banking, Financial Services, and Insurance) industry. Every financial process has been digitalised, offering users quick finance services, from everyday transactions to borrowing money.
AI has primarily reduced the manual effort required to process online personal loan applications, automation, and managing dashboards, resulting in lowered operational costs, lower interest rates, and simplified processes. The aggressive integration of AI has resulted in a 49 percent increase in disbursement of Rs 1.46 lakh crore in the financial year 2023. This article reflects on the role and impact of AI integration in applying for a digital personal loan. Let’s know more about it!
Role of AI in Digital Lending
Faster Customer onboarding
The first milestone in every digital loan application process is onboarding a customer through the registration process. From registering personal information to checking customer's eligibility, AI does its work without manual input. Additionally, the e-KYC process quickly verifies the customer's identity without manual input. This has simplified the onboarding process, eliminating chances of human error. In short, it helps a lender and customer save time and money by providing a cost-effective solution.
Customer Experience Enhancement
Customer experience is the heart of any and every service. The way an institute manages customer relationships has a significant impact on customer satisfaction and, indirectly, on the growth of the business. The traditional approach to handle customers has exhausted and, at times, is time-consuming. With a 100% paperless loan application process with AI integration, customers can now avail the loan without leaving their homes. With the help of AI, the chatbot system can provide genuine customer assistance in real time that solves queries at light speed.
Fraud Detection
The ability of artificial intelligence to identify and stop fraud is among the important benefits. AI can more precisely evaluate risks using sophisticated data analytics, shielding lenders and customers from dishonest behaviour. Artificial intelligence (AI) systems are particularly good at sifting enormous data to find trends and behaviours that can point to fraud. AI is constantly learning and adapting, making it very good at identifying patterns and people.
Credit Risk Assessment
By leveraging AI into loan applications, it offers credit assessment for businesses, small firms, MSMEs, retail, or customers approaching lenders for personal loans. The continuous learning and growing model of AI incorporates a great way of credit analysis that is a complex task to do manually. Additionally, it helps assess risk and offers personalised solutions based on customers' profiles.
Challenges considered while using AI
Undoubtedly, AI is a well-trained and technologically equipped integration in the finance sector, bringing many benefits in front, making the application process even smoother. Sensitive customer information collected via online applications requires robust security measures and a strong privacy policy to protect against potential fraud and unauthorized access.
Another big challenge that potentially lies in AI algorithms. While AI is highly beneficial in reducing human efforts and modifying human errors, it perpetuates the existing biases if not properly managed. Proper regulations and professional practice can maintain fairness and transparency in AI, disregarding ethical lending practices.
Future Trends and Scope of Development
Definitely, AI promises a brighter future in digital personal loans. AI advancements in machine learning and big data have completely changed the scenario of digital lending. By introducing AI in finance, lenders have optimised their lending process with smart applications and a smooth user experience. Using AI, lenders have become more nimble, transparent, customer-centric, and dynamic digital personal loan providers.
Lenders must keep AI trained according to the regulations and protocols that bind it to ethical behaviour during user interaction and the digital loan application process.
Conclusion
In essence, AI has significantly played a significant role in reshaping its users' digital personal loan experience. With its up-to-date algorithms backed by technologies, AI has uplifted the entire digital lending ecosystem. While offering customers a cost-effective, seamless, and 100% paperless instant personal loan experience, AI has also provided major benefits to lenders. It has now become an inseparable part of today’s business dynamics. The greats of AI have yet to come and shock the world, and the world of finances will not be left out of its impact.
What do you think about this partnership between AI and the finance sector? Stay tuned for more informative blogs at Lenditt!