AI’s pioneering influence on fintech
Jennifer Fuller, US Financial Services Lead at PA Consulting, explains how AI tools are reshaping the fintech landscape for financial inclusivity in a CMSWire article.
The article notes that the rapid advancement of technology is driving major transformations in various sectors, and finance is no exception. Fintech companies are leveraging artificial intelligence to analyze large amounts of financial data and provide insights, recommendations and forecasts to customers, enabling them to optimize their financial performance and goals. AI is also helping financial service providers protect themselves in terms of risk.
Below are examples of how AI is being used to improve advice to customers while ensuring that the financial service providers optimize their own goals as well.
AI ushers in a new era of precise and inclusive underwriting
According to Jennifer, AI is proving to be especially valuable in credit decisioning.
Jennifer explains: “Smarter underwriting practices using AI has not only led to more accurate assessments but also opened the door to some borrowers who were in the past declined.”
She pointed to California-based Zest AI, which conducts underwriting specialized for consumers with little or no risk. The Zest AI platform searches out thousands of data points — more than the typical underwriting solution — to help assess a borrower’s risk.
Jennifer said: This wouldn’t have been possible pre-AI. “This has added a new avenue of borrowing for some, but equally impressive they have also stated that companies using their platform have seen a reduction in risk and losses of almost 25% versus traditional underwriting practice. A win-win all round it seems.”
The advent of AI in underwriting is not just enabling more precise risk assessment but is also fostering financial inclusivity by extending credit opportunities to previously underserved individuals, all while significantly reducing risk and losses for companies.