The Lending Singularity Isn’t Near – It’s Already Here

Before Gutenberg developed his printing press in 1436 it could take months or even years for news to spread.

Less than a century later, it was only 17 days after Martin Luther nailed his 95 Theses to the church door in Wittenberg, Germany that copies were being printed in London.

The printing press changed everything – from spreading knowledge and literacy that accelerated the Renaissance to the creation of an intercontinental banking system and enabling common people to share ideas and challenge structures of power.

Time for Our Radical Financial Revolution

And now generative AI is here to change everything for us in finance.

The power of these technologies is their ability to analyze enormous amounts of data quickly and use that knowledge to create something new so we can build on it to innovate.

In lending, generative AI is already changing how we understand consumers, how we work with them, and how – and whether – they work with us.

The opportunities aren’t limited to large companies with the resources to develop their own AI. Smaller and mid-size companies, more agile by nature, can connect with fintech partners to fly past large, slow-moving players that are reluctant to step into the future or are trying to DIY in a field they’re already running behind in.

In the same way that the printing press democratized access to ideas, generative AI is democratizing access to strategy, personalization, and communications for businesses and opening up a new era of choice for consumers.

Those opportunities can solve persistent pains and open up countless new avenues for success.

1. Reduce Friction

Right now, we think of our relationship with customers as a series of discrete transactions.

But generative AI opens up a new, fluid way of communicating.

Leveraging this technology to evaluate and summarize the disparate data points that make up a customer relationship empowers you to zero in on more meaningful conversations that can leverage anything – or everything – the customer has shared.

What can you do with that information? Head off concerns. Support them by picking up on subtle signs they’re headed toward financial trouble and offering them a chance to get back on track. Develop new products they didn’t even know they needed.

Using generative AI in lending enables you to be proactive rather than reactive and to discover new ways to support your customers. Instead of waiting for them to ask for help, you can rush to help them.

2. Lower the Cost of Doing Business

When organizations consider using generative AI in concerted ways, a conversation about how it’ll impact their workforce aren’t far behind. But anyone who works in machine learning right now will tell you that it’s not that AI will take someone’s job. It’s that someone who uses AI will.

Take the laborious and costly work of reviewing customer interactions for QA and compliance. Generative AI can cut the time and cost of that process by as much as a third while delivering better-than-human accuracy.

Better still, those employees can shift to less commoditized, more impactful oversight roles. The value they’ll generate in identifying training and development opportunities based on the results of QA evaluations goes much further to drive improvements and revenue.

The places to lower the cost of business with proven uses of generative AI are endless:

  • Automated complaints capture and prevention
  • Administering personal loans
  • Incorporating alternative data for customers who are credit invisible
  • Timely and relevant marketing offers
  • Simple self-service options

and beyond.

3. Personalize Based on Your Customers’ Preferences

Netflix can predict, with uncanny accuracy, what shows you might like, even tailoring the movie or TV show’s description and preview image to match your tastes. Amazon analyzes what you’ve bought, compares that to what other people have liked, and recommends products especially for you.

That level of hyper-personalization is available to your organization, too. With generative AI, it’s possible to leverage Amazon or Netflix-level algorithmic power to:

  • Personalize customer outreach by channel to drive engagement: Who prefers to connect via social media? Who likes chat versus phone support? Who wants to be emailed, and who only responds to texts?
  • Design solutions that match your customers’ preferences: We’ve seen in collections that settlement offers generated by machine learning to align to customers’ particular financial situations lead to more acceptances at higher repayment amounts.
  • Increase customer engagement with precisely the right message: Text and email are cheap to send, but even cheaper to delete unread. Using generative AI to hyper-personalize things like email subject line, content, and CTAs on the customer level increases the likelihood that customers will not only open and read the message, but take action – visiting the payment portal or applying for a new credit card, for instance.

4. Work with your customers in real time

Generative AI offers us the chance to engage with customers as their financial lives develop.

Take FICO scores. First introduced in 1989, they’ve been a gold standard of creditworthiness for 35 years.

You don’t have to work at the speed of FICO anymore.

What if instead of relying on information about what was happening with your borrower last year, you could adjust your relationship with them based on what was happening last week?

Why stop at understanding their financial situation three months ago when you can enrich your connection by incorporating what is happening in real time?

Your customers tell you every day what is happening in their financial lives. Job losses or promotions. Marriages and divorces. Hospitalizations and house-hunting.

That’s vital information you can use for everything from loan originations to payment plans, from cross-sells to upsells. And moving at the speed of generative AI means for the first time you can capture what your customers are sharing so you can act on it.

The AI moment is here

Incorporating generative AI into your business may feel like a big step. But it’s integrated right now into our lives with digital assistants like Siri and Alexa, smartwatches that suggest it’s time for us to stand up and walk around, and auto-complete suggestions while we’re texting, typing, or Googling.

Your competition is partnering with and seeing results from using generative AI right now. We are in the midst of a transformation with the seismic potential of the printing press or the steam engine – right now.

Our AI moment is here. It’s time for lending to meet it.

  • Shantanu Gangal

    Shantanu Gangal is the CEO and co-founder of Prodigal, the pioneer of consumer finance intelligence. Prodigal, backed by Accel, Menlo Ventures, and Y-Combinator, uses custom-trained AI to transform strategy and operations across lending and collections. Building Prodigal is the culmination of Shantanu’s experience innovating at the intersection of finance and analytics. His professional background includes associate and analyst roles at Boston Consulting Group and Blackstone, and as Head of Data Science and Analytics at Fundbox. He is a computer science gold medalist from IIT Bombay and holds an MBA from Wharton.