Credit & Risk

Adapting to Lending's 'New Normal' with Speed and Agility

Ken Garcia

October 8, 2020

On October 1st, the labor department reported 837,000 more Americans filed for unemployment. This week, the economy is bracing for a second wave of layoffs from major corporations as the latest coronavirus relief package appears stalled. COVID-induced economic uncertainty is here to stay, and companies, especially financial institutions will need to tap into greater speed and agility to keep up with market volatility.

From furloughs to layoffs, banks and credit unions are helping applicants through a variety of emergency loans, fee waivers, payment deferrals, and other relief services - all while navigating shifting guidelines, relief programs, and government requirements. Serving people while minimizing risk in the most uncertain of times is prompting lenders to get more resourceful, more nimble, and ask the utmost of their teams.

Agility is especially critical for success in lending at the moment and innovative lenders are coming up with new ways to make better and faster lending decisions amidst a risky environment. This was the subject of a recent American Financial Services Association discussion featuring Jose Valentin, VP of Corporate Development at Zest AI.

Framework for Speed and Agility

Jose laid out operating principles for lenders to identify gaps and use as a guide for their approach. In Jose’s experience, speed and agility are byproducts of a strong synergy between people, tools, and processes. If you have the right processes and tools but not the right people, you end up with a disengaged team. And if you have the right people and processes, but not the right tools, you end up with an inefficient team that can’t be responsive. As lenders go through his exercise, they’ll find that it’s the intersection across all three areas that allow teams to be agile and responsive to change.

Pandemic Era Demands New Tools and Capabilities

Given the current environment and challenges with assessing borrower risk, the conversation focused on the impact of tools, specifically AI and machine learning. With traditional credit scores scrambled and the coming wave of defaults, how do you brace for the impact and continue to lend? Once the realization that you have to update your models more often and factor in more variables sets in, how do you get there?

Enter AI and machine learning models, which provide the ability to consider more data points so lenders get a clearer and more reliable picture of applicant risk and make it easier to iterate on models faster - all while remaining compliant. And you also get the automation benefits AI is known to deliver and better math, enabling your organization to play more offense instead of just defense. So, yes—you can achieve more growth—even in a pandemic.

The addition of machine learning amplifies the impact teams and processes can make, unleashing the speed and agility required to keep lenders staying ahead of the game. In the on-demand webinar, Jose illustrates how a major international bank weathered a financial crisis using AI so that they were able to detect changes in the environment sooner, assess information in real-time, and adjust policies so that they weren’t stuck waiting for defaults. With AI, you not only can adapt more quickly to our current “new normal” but be prepared to adapt to the next one.

Watch the On-Demand Webinar


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