Impact of Artificial Intelligence and Machine Learning in Finance: Modern Loan Disbursement
Technology is gradually booming. It is slowly intervening in all and every sector. And, it is also getting implemented in the banking sector now. But, as real money is involved, the banking sector is subject to serious threats such as security compromises, system hacks, cyber frauds, and so forth.
Further, frauds and cyber crimes are increasing with moving time, and fraudsters are also advancing parallelly with technology. Due to such a scenario, the need to modernize traditional banking methods, and make them efficient with the help of technology is well versed.
One such traditional banking operation that needs to be revamped is loan disbursement. Be it for businesses, or customers’ personal needs, loans can be customers’ saviors. But, as important as the loan industry is, the anomalous processing and other associated challenges make it strenuous for the banks to disburse loans on time.
Artificial Intelligence and Machine Learning then come to the rescue.
Let’s discuss in detail how ML and AI can help in the modern loan disbursement process. But, first, understand why there emerged a need to amalgamate strong tech in the loan process.
Loan Disbursement: The Loopholes, and Anomalies
Believe it or not, a loan is one of the bank’s business operations that benefit both customers and banks. Banks get chunks of interest, and customers get financial support. But, often the process is not as easy as it seems. From basic to advanced steps, loan disbursement is a complex process.
Banks look for a range of factors, and customers arrange the documents needed, clear the verification rounds, etc., before the final loan disbursement. Here are some of the steps-
1. Filing the Loan Application
Requesting a loan from a bank can be daunting. Though banks appreciate loan-seeking customers, the process of getting the loan sanctioned, and approved is complex. The process can involve steps like credit profiling, borrower verification, and so forth. And, the decision on the loan application is often decided on these,
Let alone the process of getting the loan approved is complex, but the filing of the application is also very tedious, and confusing for customers. Arranging a range of documents, filling up lengthy online, or offline application forms, supporting information, verifications, and whatnots. Filling up a loan application can be overwhelming for customers.
Also, as not all customers are well-versed in the loan application process, this needs to be made easy, and seamless. With AI & ML in place, the loan application process can be automated.
These technologies can be leveraged to build a platform where customers can easily put up loan requests to the bank. The request can be submitted either through an online platform, through a bank helpline, or via traditional ways of visiting bank branches, and meeting officials. This can be a reliable solution for both customers and bank officials.
2. Checking Eligibility
Imagine you go through the process of applying for a loan through a bank website. Arrange documents, fill up the form, also pay the first apply fees, and then you come to know that you were not eligible for the loan you applied for. This can be disconsolate.
AI & ML can fill the gaps here.
With these technologies, a platform can be built where customers can check their eligibility for a loan, apply for a loan, and in some cases, can also get a loan of a minimal amount online. That too without a bank branch visit. Yes, technology can make it that easy!
Banks can also get help in credit profiling to validate the borrower’s identity, history, background, and other details. AI can make all these processes automated, and with encryption.
