How AI generates more lending opportunities

InformedIQ helps lenders find opportunities in today’s challenging environment while others pull back. The main difference is who embraces AI.

Co-founder and CEO Justin Wickett saw how technology could help lenders provide fair credit access while lowering operating costs. With partners, they built a company with a mission to reduce the cost of credit using AI for real-time transparency, greater financial inclusivity, and improved compliance.

His early career helped shape InformedIQ. While running passenger acquisition and engagement for Lyft, Wickett saw many potential drivers turned away because they were deemed unqualified for an auto loan. They lost an income opportunity.

Wickett’s next stop was at Credit Karma, where he worked in auto lending. He met many consumer lenders wanting to invest in their brand and deepen customer relationships. There was an opportunity for a software company to provide better transparency and a real-time experience throughout the loan origination journey.

How AI brings efficiency through document review

InformedIQ’s technology processes 8% of American auto loans. While some companies focus on underwriting automation, InformedIQ prioritizes the automation of closing document reviews for compliance and verification.

AI helps lenders lower their operating costs to become more competitive as interest rates rise. That increased efficiency lets them pick up loans others cannot. It also brings more confidence in their ability to mitigate charge-offs and control future delinquencies. Such companies can free staff to perform higher-value tasks like customer experience and loss mitigation.

“Being able to free staff up so that they can focus on these higher-order functions is the heart of what we do,” Wickett said. “And the way that it manifests itself is in the development of AI solutions to process large loan jackets on behalf of lenders, to automate the checks that were otherwise having to be done manually and compare it against the vast knowledge graph that we stored on behalf of the industry.”

Using AI-based workflow optimization to deliver more loans, faster payments

InformedIQ built a database of more than 200 supported document types as it has processed millions of documents over seven years. But they’re far from finished, as most documents have many variations, including at the state level.

Sans technology, this is a headache lenders can be forgiven for not wanting to tackle. But they must embrace those technologies if they want to find new customers and offer broader credit access.

InformedIQ helps lenders find opportunities in today’s challenging environment while others pull back. The main difference is who embraces AI.InformedIQ helps lenders find opportunities in today’s challenging environment while others pull back. The main difference is who embraces AI.
InformedIQ’s Justin Wickett says AI delivers unique benefits to lenders.

Wickett said InformedIQ’s technology optimizes the workflow process so lenders provide real-time transparency to borrowers and partners like car dealers to show them what is happening at a bank.

It helps everyone. More borrowers are approved, and dealers get paid much faster. More manual financing processes see contact with multiple lenders and extensive document reviews. The borrower receives their car the same day, but the dealer might wait weeks.

“Car dealers just want transparency,” Wickett said. “They want the confidence that they’re going to get paid. Financial institutions want the confidence that the loan was manufactured in accordance with state laws.”

InformedIQ uses AI to verify (at 99% accuracy) that information on documents complies with a lender’s policies. The process takes as little as 90 seconds.

Knowledge graphs as a fraud-fighting tool

Wickett said knowledge graphs are a crucial fraud-fighting tool. They are part of InformedIQ’s vertical AI strategy that loan officers use as a support tool to detect fraud. That can be a borrower lying about their annual salary. It can also be a dealer fudging the numbers to make a sale. Over time, it helps the loan officer become proficient in spotting fake pay stubs, for example.

Delivering valuable new knowledge points

AI helps financial institutions as they seek new data points that can point them to new customers. A bank statement might suggest that someone earns a low salary, but it doesn’t show they’re investing in their 401K. Better savers often make better customers.

“We’re seeing lenders want to get alpha,” Wickett said. “They want to get a competitive edge by providing more competitive rates to consumers. By leveraging AI, they can analyze pay stubs and other income documents more efficiently, becoming less focused on bank statements. They want a more holistic understanding of the consumer’s whole story.”

Lenders can also leverage AI to glean more insights from their balance sheets. Unsupervised machine learning clusters data so lenders can compare performance between dealers and across regions. It can improve partner management.

“Using unsupervised machine learning techniques, we can, at scale, have the AI go through millions of these loan documents to identify clusters of loan documents that deviate from the norm,” Wickett explained. We use other large language models to summarize what is in these documents. We feed that back to our financial institutions, whereby they can see they have a unique cluster of documents. 

“This is what the software is saying. They… should check on this and determine if there’s an opportunity for more dealer training or changes in their policies and procedures.”

Also read:

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