How AI is Revolutionizing Lending Processes in Credit Unions

Ankur’s note: Hey there, and welcome back to Pioneers.

In continuation of our mini-series about how AI is specifically impacting the banking sector, we sat down with Andy Mattingly, Chief Operating Officer at Forum Credit Union, to discuss how artificial intelligence can be leveraged to revolutionize lending processes.

If you want to maximize your learnings in this area, listen to the full episode where Mattingly shares his insights into towards AI-driven lending and important lessons learned along the way:

Read on for the 10 key takeaways from our conversation:

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 not only improved efficiency but has also resulted in better loan performance compared to manual underwriting. Mattingly attributes this success to the credit union's focus on identifying and automating "easy decisions" that don't require human intervention.

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 enhancements, FORUM Credit Union has been able to steadily increase the proportion of loans that are automatically underwritten.

3. Streamlining Processes Before Automation

Mattingly emphasizes the crucial role of 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 that the remaining steps are as efficient as possible. Only then can automation be effectively implemented to further enhance the process.

4. Partnering with Flexible Technology Providers

FORUM Credit Union places a high value on flexible technology partners who allow for customization and integration with other systems through open APIs. Mattingly highlights the importance of being able to tailor lending 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 about 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.

5 Things Stopping Insurance Companies From Using Gen AI

My company (Multimodal) attended InsurTech in March. We talked to many insurance companies and learned first-hand what’s stopping them from implementing Generative AI.

Here’s a brief rundown of our key insights:

• Most insurance companies are still in very early stages of exploring Gen AI options.

• Integrating new technologies is often difficult, as it usually requires changing existing workflows and SOPs.

• Having a good estimate of potential ROI is key. Calculating it, however, can be extremely challenging.

• Automated decision-making is risky, especially in highly-regulated industries like this one.

• Insurers are also concerned about data privacy and the lack of in-house expertise.

The good news? We help insurance companies tackle and overcome each and every one of these challenges.

Discover how we do it on our blog.