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Roundtable: Lenders weigh up the pros and cons of automation

Leading lenders debate the future of automation in consumer and business lending

AltFi Roundtable - VASS


As the lending sector stands on the brink of a transformative era of rapid automation adoption, AltFi, VASS, and Salesforce recently convened a roundtable of industry leaders. 

This gathering delved into the intricate dance of technology and tradition, exploring the implications, looming challenges, and the uncharted future of automation in lending.

Our invited roundtable speakers included:

  • Aman Virk, Customer Transformation Senior Director, Salesforce

  • Andy Smith, Interim Chief Technology Officer, Interbridge Group

  • Chris Rae, Regional Vice President, Financial Services UKI, Salesforce

  • Jack Spiers, Sales Director UK&I (Banking), Tink

  • Krystyna Biller, Head of New Applications, iwoca

  • Lee Goodenough, Managing Director, UK and Ireland, VASS

  • Michael Hart, CEO and co-founder, Teal

  • Rachael Magowan, Chief Technology Officer, Moneyline

  • Rahul Duseja, Director of Credit, Cashplus Bank

  • Sanjeev Jeyakumar, CEO and Co-founder, Lenkie

The discussion ranged from balancing human intervention with technology against the growing demands from borrowers and challenges around data quality.

Facing the rising demand for automation among borrowers

From the outset, all the executives around the table agreed that the need and demand for automation from borrowers is ever-increasing.

“There’s a lot more thirst and drive to get that instant decision back, and people don’t understand why it sometimes takes so long,” said Lee Goodenough, managing director of the UK and Ireland at VASS

“This is obviously a challenge in the consumer lending space, but it also drives demand in the B2B sector as people are growing accustomed to instant.”

While mainstream customer expectations are increasingly shifting towards instant decisions and results, there is also a generational shift happening which will only accelerate that change.

“The next generation has never known life without the internet,” said Aman Virk, customer transformation senior director at Salesforce.

“They don’t use ATMs, they’ve never been to a bank branch and wouldn’t even know why you would go to one. Everything for them is digital, so even if we’re not ready today, it is coming, so we have to start preparing for that future.”

AltFi Roundtable - VASS

Andy Smith, Interim Chief Technology Officer, Interbridge Group (left) and Lee Goodenough, Managing Director, UK and Ireland, VASS (right)

Balancing automation and human intervention with the complexity of SME lending

One of the challenges for automation today is that it’s most valuable and becoming most widespread at lower ticket sizes, with its usage declining as the value of lending increases and where the requirement for human involvement remains.

Rahul Duseja, director of credit at Cashplus Bank, vividly illustrated the usage at lower ticket sizes for the bank’s credit card, “our onboarding process utilises automation at every stage, right from the start of application to card dispatch”.

On the other extreme for Lenkie, an SME lender offering loan sizes from £50,000 to £500,000 and up to £1m in the future. CEO and co-founder Sanjeev Jeyakumar explained that human involvement remained “significant” in its decisioning and underwriting process.

“I think it's a function of efficiency and accuracy and, given the ticket size that we're operating at, there's a lot of nuance and an awful amount of devil in the detail. So it makes sense to have a human underwriter to approve those £250,000, £500,000 or £1m decisions,” Jeyakumar said.

AltFi Roundtable - VASS

Michael Hart, CEO and co-founder, Teal (left), Sanjeev Jeyakumar, CEO and Co-founder, Lenkie (centre) and Aman Virk, Customer Transformation Senior Director, Salesforce (right)

Using technology to enhance, but not replace, human decision-making

When it comes to using automation in the credit decisioning process, several lenders advocated for automation as a tool to enhance rather than completely replace human decision-making.

Krystyna Biller, head of new applications at Iwoca, explained that while the credit decisions for over half of iwoca’s funded SME customers are now fully automated, even the non-automated decisions still harness the technology when a lending decision is being reviewed by a credit analyst.

“What we have built is more like a hybrid approach. Rather than using a human decision, we feed information gathered by the human to go along with the outcome of the automated credit decision into a system decision. By doing so we can reduce bias in our lending.”

Similarly, Andy Smith, the newly-appointed Chairman of Technology at Interbridge Group explained that the complexity of the property lending market meant automation would always be a tool to increase speed and efficiency rather than replace human decision-making.

“Our mission in the UK through our new subsidiary, Interbridge Mortgages, is to disrupt the existing second-charge mortgage market where the current market average customer onboarding time is probably 30 days,” Smith said.

“There's a lot of legal documentation, you've got solicitors involved, we have to get consent from the first charge lender. There are a lot of external processes, so we will meaningfully reduce that industry average because of the way we're going to use technology.”

AltFi Roundtable - VASS

Krystyna Biller, Head of New Applications, iwoca

Importance of customer experience, communication and empathy

The roundtable emphasised the significance of maintaining high levels of customer experience and empathy even while moving to increasingly automated systems.

“What we're hearing back constantly is that customers are time-poor,” Chris Rae, regional vice president of financial services UKI at Salesforce said.

“They want to be informed if there are going to be delays and, if there are no delays, there should be some feedback or instant gratification of what they've done and where they are in the process.”

Not only can automation and AI be used in an empathetic way, but some lenders are even using the technology to improve their communication with customers.

Lenkie, for example, is working to “deliver empathy using technology”, by ensuring that its technological processes are designed with the customer in mind.

“I think if you design your processes with empathy as a principle, you can actually use technology to recreate some of the empathy a human will provide, we try and blend the two which is a win-win for the customer and us,” said Sanjeev Jeyakumar, CEO and co-founder of Lenkie.

AltFi Roundtable - VASS

Jack Spiers, Sales Director UK&I (Banking), Tink

Data quality and availability challenges for automation and expansion to new markets

Data is obviously at the core of automation, but its quality and availability remain a challenge for lenders, especially for business lending.

Jack Spiers, sales director of UK and Ireland (Banking) at Tink explained: “In the retail banking space, with customer's consent, we can instantly verify a person’s income using secure and real-time data directly from their bank account.” 

“This income overview can be over a three, six or twelve-month period, and we can also extend it to cash deposits, pensions or benefits. But in the business banking space, it’s considerably more challenging."

Without a dramatically different approach, the lack of data may continue to present a hurdle for lenders looking to increase automation.

But there are some alternatives, and Teal is working on one such solution. The new startup is looking to unlock payroll data for lenders through partnerships with data providers.

“We don't want to wait for the regulators to come around, because we don't believe that's going to happen anytime soon,” CEO and co-founder Michael Hart said.

“If we wait here, we're still gonna be waiting in five years for all these companies to be mandated to open up their data.”

“But an employee’s income data is the cornerstone of many financial decisions. If you can get that data with a user’s consent in one click, you can address many of these problems and speed up the verification process.”

VASS and Salesforce are supporting lenders of all shapes and sizes to improve their onboarding and automation experiences, to find out more they are working with customers to streamline these processes at speed, connect with them here.

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