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This is a summary of an episode of Pioneers, an educational podcast on AI led by our founder. Join 2,000+ business leaders and AI enthusiasts and be the first to know when new episodes go live. Subscribe to our newsletter here.
TDLR:
- FORUM Credit Union automates 60% of consumer loans, boosting efficiency and loan performance by focusing on simple, automatable decisions.
- Prioritizing continuous small improvements over massive projects helps financial institutions stay agile and adapt to changes effectively.
- Emphasizing efficient process design before automation ensures streamlined workflows.
- Leveraging historical loan data for informed decision-making and refining automated models enhances the range of automatically approved loans.
- Generative AI can detect fraudulent activities by analyzing data patterns to mark critical activities.
Dive deeper into this topic by tuning in to the full episode here:
Meet Andy Mattingly - AI Lending Expert
In this week's episode of Pioneers, our founder, Ankur Patel, sits down with Andy Mattingly, Chief Operating Officer at FORUM Credit Union, to discuss how artificial intelligence can revolutionize lending processes.
With over 34 years of experience in various roles at FORUM Credit Union, Mattingly shares valuable insights into the institution's journey towards AI lending and important lessons learned along the way.
Andy’s been working on data analytics, business intelligence growth, and new product growth for the past 10 to 15 years. Touching almost every aspect of crediting, Andy has also been involved in AI implementation at FORUM Credit Union, which helped the company achieve amazing results, which he talks about in this episode.
10 Key Takeaways
Here are the 10 key takeaways from this podcast:
1. Automating Lending Decisions for Improved Efficiency
FORUM Credit Union has made significant strides in automating its lending decisions, with nearly 60% of all consumer loans now being automatically underwritten.
This automation has improved efficiency and resulted in better loan performance than manual underwriting.
Mattingly attributes this success to the Credit Union's focus on identifying and automating "easy decisions" that don't require human intervention.
“There’s a lot of easy decisions, I mean there are so many easy decisions that we don’t need to have a human look at it…” — Andy Mattingly
2. The Power of Incremental Innovation
Rather than undertaking massive, multi-year transformation projects, FORUM Credit Union prioritizes incremental improvements and innovations in its processes and technology.
This approach allows the credit union to remain agile and adapt to changing market conditions and regulatory requirements. By continuously making small improvements, FORUM Credit Union has steadily increased the proportion of loans that are automatically underwritten.
Both Ankur and Matt have seen financial institutions make massive efforts at digital transformation or “rip-and-replace” systems to implement AI. This occasionally works, but in most cases, it doesn’t and it just creates more problems.
Matt and Ankur agree that the right approach should focus on incremental innovation rather than taking on too much at once.
3. Streamlining Processes Before Automation
Mattingly emphasizes the crucial role of lending process design in successful automation. Before automating any part of the lending process, it's essential to first streamline and optimize the existing workflow.
This involves identifying unnecessary steps that can be eliminated and ensuring the remaining steps are as efficient as possible. Only then can automation be effectively implemented to enhance the lending process further.
4. Partnering with Flexible Technology Providers
FORUM Credit Union values flexible technology partners that allow customization and integration with other AI systems through open APIs.
Mattingly highlights the importance of being able to tailor lending AI systems to the credit union's unique needs and connect them with other tools such as document management and fraud detection solutions. This flexibility enables FORUM Credit Union to create a best-in-class lending ecosystem.
5. Leveraging Data for Informed Decision-Making
By analyzing historical loan data, FORUM Credit Union can identify opportunities for automation and make informed decisions on which loans require manual review.
This data-driven approach has allowed the credit union to continuously refine its automated decision models and expand the range of loans that can be automatically approved.
Mattingly stresses the importance of regularly reviewing loan performance data to identify areas for improvement. Also, he shares his thoughts on how beneficial AI-driven decision-making is for both the clients and the company.
6. Transforming the Role of Underwriters
Automation has transformed the role of underwriters at FORUM Credit Union, allowing them to focus on more complex cases and exceptions.
Rather than spending time on simple and routine decisions, underwriters can now dedicate their expertise to evaluating more nuanced situations. This helps the company find ways to help borrowers who may not fit neatly into automated approval criteria.
Such a shift has made the work of underwriters more interesting and valuable.
7. Harnessing Artificial Intelligence in Lending for Fraud Detection
FORUM Credit Union is actively exploring the use of generative AI to detect fraudulent loan applications by identifying irregular patterns in data.
By analyzing a wide range of data points, including IP addresses, device information, and behavioral patterns, AI-powered fraud detection tools can flag fraudulent applications for further review.
Mattingly sees this as a critical area of focus for the Credit Union in the coming years.
“One of the big pieces right now is detecting fraud and we’re using some tools that are generative AI to help us detect fraud, you know, just looking at things that we may not be able to see running in the background.” — Andy Mattingly
8. Offering Personalized Artificial Intelligence Lending Solutions
Moving beyond a one-size-fits-all approach, FORUM Credit Union aims to offer personalized, deal-based pricing for loans.
This involves taking into account a broad range of factors beyond just the borrower's credit tier, such as:
- The type of vehicle being purchased
- Vehicle’s expected depreciation
- The borrower's overall financial profile
By leveraging AI to analyze these variables, the cedit union can offer more tailored lending solutions to its members.
9. Ensuring Data Quality for AI Success
While having access to more data can be beneficial, Mattingly cautions that the quality and completeness of data are critical factors in the success of AI-driven lending.
He advises focusing on clean and reliable data sources first rather than trying to incorporate every possible data point and unstructured data from the outset. As the AI models prove their effectiveness, additional data sources can be gradually integrated to further enhance decision-making.
Ankur agrees with this by simply phrasing it: more data is better, but quality data is paramount.
10. Fostering a Culture of Change and Innovation
Successful automation requires a culture that embraces change and employees who understand the benefits of automation for their roles.
At FORUM Credit Union, the lending team has been actively involved in identifying opportunities for automation and has embraced the shift toward AI-driven decision-making.
Mattingly credits this employee buy-in as a key factor in the Credit Union's successful adoption of lending automation.
The Power of AI in Lending
The insights shared by Andy Mattingly in this episode underscore the transformative potential of AI in the lending industry.
By embracing a data-driven, incremental approach to innovation and fostering a culture of continuous improvement, FORUM Credit Union has positioned itself at the forefront of AI-driven lending.
As the lending industry continues to evolve, the lessons learned from FORUM Credit Union's journey will undoubtedly serve as a valuable roadmap. Such advice is suitable for the lending industry and other financial institutions looking to harness the power of AI to provide better credit access with optimized lending processes.
