CHAPTER 10AI in Lending
By Joshua Xiang1
1CTO and SVP, CreditEase
Overview
The financial services industry is one of a few highly computerized industries. IT systems have automated all aspects of financial services processes and have thereby accumulated huge amounts of data. To many, artificial intelligence is yet another IT tool to help increase efficiencies and reduce costs. But to some industry pundits, AI is more than just another technical tool. It represents a paradigm shift – a new way of solving problems with human-like intelligence.
In many cases, such as customer engagement or telemarketing, AI’s lack of emotion is probably a disadvantage. For example, lack of empathy and sympathy makes a customer service chatbot unfriendly and unpopular. But in many other cases, lack of emotion turns out to be an advantage. For example, if AI is underwriting a loan or making an investment decision, it will do so purely based on hard data, without any bias towards a particular loan applicant.
As an important vertical in financial services, lending is a massive business which directly and indirectly touches almost everyone’s life and all parts of the economy. As of May 2019, consumer debt in the United States was just over $4 trillion. Credit card debt accounts for roughly $1 trillion, student loans around $1.6 trillion, and car loans around $1.1 trillion. In addition, total value of mortgage debt is over $15.5 trillion. Lending is clearly big business.
With tens of millions of Americans ...
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