As the global economy moves to recover from a devastating pandemic-dominated 2020, we are seeing an increase in government borrowing. The last months of 2020 showed an increase in volume of borrowing both for secured and unsecured debt and in the cost of lending. Time to lend has also increased significantly putting huge pressure on origination teams to digitise and improve lending efficiency.
Income and expense verification (IEV) is one of the most manual and time consuming components of loan origination, and the rise of AI technology and digital data feeds presents a tremendous opportunity to leverage intelligent digital to improve the efficiency and accuracy of IEV.
IEV tends to be highly manual and relatively non-standard across the industry, as the ability to recognise and predict different components of income and expenditure for borrower and product segments drives competitive differentiation of lenders.
One of the biggest challenges is that income information tends to be embedded within documents such as bank statements, payslips, company financials and tax documents. The data needs to be manually extracted and entered into calculators which is extremely time-consuming and error prone. AI technology, such as those offered by Digilytics Revel, now reliably extracts data from a variety of documents, interprets and validates the data and allows seamless entry into calculation engines.
Although there is an increase in the amount of income data available from electronic data sources such as open banking feeds, accounting platforms and governmental agencies, interpretation and validation of the data requires deep appreciation of the context and deep learning models such as those offered by Digilytics Revel.
Another significant challenge that contributes to time delays, rework and frustrating borrower experience is the lack of ability to accurately predict the information required to complete IEV. This is especially true in cases where affordability is borderline and the lender has to ask for additional information to underwrite an application. AI allows lenders to deploy predictive models, such as those available in Digilytics Revel, which predict and request all relevant IEV information at the time of application submission to enable first-time-right applications.
On the expenditure front, most lenders rely on a combination of broad national statistical averages and borrower stated information. Intelligent digital tools leveraging AI technology can further improve the ability to harness authenticated third-party data and improve expenditure analysis.
Intelligent digital tools, such as virtual assistants available in Digilytics Revel, also allow faster and simpler scenario analysis thereby increasing efficiency and reducing stress of underwriters. One lender which has deployed Digilytics Revel, has reported a 50% increase in average loan values.
Intelligent digital IEV has a number of significant benefits. The largest tangible benefits include increased loan approval rates and values and enhanced efficiency savings in loan origination.
Significant productivity and efficiency benefits can be achieved leveraging Digilytics™ RevEl a first of its kind, ground-breaking AI-enabled product to revolutionize IEV. It delivers significant productivity improvement and efficiency benefits using cutting edge AI technology- combining Computer Vision, Natural Language Processing and Deep Learning. Additionally, it seamlessly integrates with providers of authenticated data providers such as Accountscore for open banking data to deliver rapid, accurate automated IEV.
Lenders are already reporting increase in loan value and approval rates from leveraging intelligent IEV.
Intangible benefits from intelligent digital IEV are significant in improving the borrower, broker, and colleague experience, principally from first-time-right application and reduced manual activity.
Lastly, intelligent digital IEV solutions, such as Digilytics Revel, are learning solutions and the accuracy of the solution increases as their use increases within origination operations.
So, what does the future hold for intelligent digital IEV ? We have already seen the use of AI jump from 4% to 15% within commercial organisations in 2020. Within lenders, we expect use of intelligent digital IEV to rapidly grow to levels of 50% and higher.
As AI technology further matures and the availability of authenticated third-party data improves, accuracy levels of intelligent digital IEV will significantly improve, further reducing manual oversight and intervention.
We also predict that intelligent digital IEV will be able to augment manual origination activity in an increasing variety of specialist lending scenarios.
While you are here, other top articles you might be interested in 1. Tech Enablers in the Mortgage Industry 2. The Future of Computer Vision, Machine Learning and Artificial Intelligence in Mortgage Industry 3. How industry 4.0 principles can work in the favor of mortgage origination? 4. Top 5 Real Challenges in Building Predictive Models in Mortgages 5. 5 Ways in which Mortgage Lenders can Leverage Digital Lending for Good 6. The Power of Intelligent Digital in the Mortgage Industry by Digilytics AI 7. Whitepaper on Data Lakes: A new approach to managing data 8. Applying industry 4.0 principles to mortgages