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AI for loan companies – the six ways it can benefit your business

The MSME segment is called, quite justifiably, the growth engine of India’s economy. With over 64 million organizations, it contributes to almost 30% of the GDP. A report published by TransUnion CIBIL and SIDBI in August 2023 predicts that the sector will continue to grow at a CAGR of 2.5%.

Surprisingly, more than half of the companies in the segment have never availed of a loan from established, regulated credit sources. This represents a huge opportunity that lending businesses can’t ignore. Organizations need to understand the unique challenges faced by MSMEs and adopt appropriate strategies leveraging the latest technology.

Al applications are already revolutionizing our lives. Innovative digital techniques are empowering businesses to overcome barriers that hamper their aspirations. Today, Al tools give organizations, regardless of the industry or size, a much-needed edge in an increasingly competitive world.

Harnessing Al for loan companies’ requirements yields persuasive advantages. Intelligent automation in the mortgage industry is already transforming the sector, catalyzing growth and profitability in myriad ways. Here’s a review of the most compelling benefits business leaders can expect from Al solutions.

1. Accelerated workflows

Borrowers hate waiting. Studies indicate that a significant number of MSMEs shy away from seeking credit from established lenders because of the perceived delay in the approval process. Conventional underwriting processes, unfortunately, take days, even weeks. The manual document compilation and exchange, data extraction, and verification tasks are time-consuming, besides being heavily labor-intensive.

The challenge is compounded by the Conventional underwriting processes, unfortunately, take days, even weeks. The manual document compilation and exchange, data extraction, and verification tasks are time-consuming, besides being heavily labor-intensive. The challenge is compounded by the differences in terminology across documents, formatting variations, and the quality of the scanned images.

Al-powered financial statement analyzers turbocharge the workflow. They shorten the process cycle to mere seconds. Text extraction and data classification become effortless, regardless of the input’s nature, quality, and diversity. Automated data validation and creditworthiness computation assure faster, informed decisions.

2. Risk-free approval

Errors invariably creep in when the process entails an intricate visual inspection of documents for data collection. Given the limitations of human competency, it’s hard to achieve perfection with manual processes. Al solutions offer unmatched data accuracy even with poor-quality scanned images, ensuring consistently reliable results.

One of the crucial requirements is to strengthen the system against fraudulent activities. Humans can’t scrutinize and cross-check thousands of transactions to detect spurious or deceptive money transfers. Al- powered financial statement analyzers employ a range of techniques to flag discrepancies and shield the company against pitfalls.

While it’s important to minimize credit risks, it’s equally crucial to identify profitable lending opportunities. By maximizing data accuracy and preventing fraud, intelligent financial statement analyzers offer exceptional value in generating comprehensive creditworthiness indicators.

3. Scalable operations

The conventional loan validation workflow typically relies on trained people to analyze applicants’ bank and financial statements. As credit demands grow, these teams struggle to cope, leading to process delays and errors. Companies need to enhance their abilities to transform every potential opportunity into a source of revenue. Adding manpower is an option, but it offers little value in the long run. A larger team also comes with its own managerial challenges. Implementing a fresh set of rules or modifying the process requires extensive planning and training, which gets increasingly difficult as the team expands or business strategies change.

Modern Al-powered mortgage automation software applications are scalable by design. They can seamlessly be upgraded and reconfigured to offer the performance needed to fulfill ambitious expansion plans. A well- designed application is versatile, flexible, and, thus, future-proof.

4. Cost reduction

A large team spending weeks on repetitive, uninspiring, and error-filled tasks does not bode well for innovative companies processing loans. With Al-driven automation, organizations can benefit from superior processing accuracy and risk-free underwriting decisions. While these directly curtail operational expenses, a shorter processing cycle ensures further savings. As tasks follow a streamlined path, uncertainties and wasteful activities are eliminated. Workflows get completed with little human intervention. These can lead to a reorganization of the workforce for more productive tasks with a significant reduction in manpower- related costs. Digital processes also cut down the need for paper-based processes and associated expenses related to postage, photocopying, or storage

5. Happier customers

Customers demand better experiences even from mundane products and services. With their expectations tuned up by modern digital devices, they seek instant gratification and hassle-free interactions. Acquiring a business loan is a major decision, and borrowers naturally expect a reassuring and satisfactory experience.

Automated mortgage automation software systems ensure quicker turnaround times, fulfilling a crucial expectation of MSMEs. A paperless workflow – or one with little need for physical paper – translates into a convenient and hassle-free application process. With regular, automated communications, borrowers can track the progress of their application. Al technology also facilitates personalized offerings based on the customer’s exact needs at the right time.

6. Deeper insights

Lending organizations must constantly tweak their strategies to stay ahead of the competition. Approaches must be reviewed, calibrated with real-world data, and tuned for customer-specific and product-specific requirements.

Al-powered data analytics provides business leaders with a wealth of actionable intelligence. They can analyze customers’ bank or financial statements to unearth vital insights. Armed with such data, companies can target specific markets with optimized product variants and terms that are most suited to their needs. Lenders can identify the factors that characterize risk-prone segments and implement additional assessment techniques. Al also helps organizations obtain a 360° view of the customer’s financial stature, opening up cross-selling and upselling opportunities.

About Finuit

Finuit specializes in building innovative solutions for the global financial services industry. We empower businesses to benefit from cutting-edge AI technologies, helping them tackle real-world operational challenges. All our solutions accelerate and streamline workflows, offering outstanding accuracy, industry-leading performance, and superior reliability. Led by accomplished professionals with decades of expertise, Finuit blends technological acumen, professional practices, and a customer-first approach to create and deliver bespoke products and services for tomorrow’s business leaders.

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