Six Major Trends in Lending for Financial Marketers this Year
The forecast for most forms of consumer credit is good. Lending volume, growth in balances, and overall performance look upbeat for the year ahead. Banks and credit unions will try new marketing strategies, explore new products, and experiment with new technologies. Over the next six-weeks, we’ll review major trends in consumer lending that financial marketers should watch closely.
#1 AI Powered Consumer Lending
Fintech lenders are making inroads into banking markets by harnessing advanced analytics and non-traditional data as they automate and fine-tune underwriting processes. There’s no reason traditional lenders can’t follow suit, using artificial intelligence and data analytics to find prospects, evaluate creditworthiness, and monitor and manage the loan portfolio.
While trying not to interfere with marketplace forces bringing evolution of financial services, regulators have concerns as AI assumes a larger role. Regulators will be expecting to see the appropriate controls in place to be sure that AI doesn’t produce unintended consequences for lenders or borrowers.
AI has the potential to expand the availability of consumer credit by evaluating factors that go beyond traditional credit metrics. AI also has the potential to allow creditors to more accurately model and price risk, and to bring greater speed to decisions.
AI approaches are not free of bias simply because they are automated and rely less on direct human intervention. Algorithms and models reflect the goals and perspectives of those who develop them as well as the data that trains them and, as a result, AI tools can adopt the biases of the society in which they were created.
Financial marketers can help avoid such problems through the insights they have on their institutions’ markets and outreach.