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Is the road to delighting borrowers paved by AI?

Date: Dec 14, 2023 @ 12:00 PM
Filed Under: Technology

Equipment Finance Applications: Learning from Past Mistakes

For most of us in this industry, the first experience our borrowers have with us is our application process. We’ve all been there, dealing with an excessively long credit application full of industry jargon, boxes to check, and sections to fill out based on what boxes you checked. Gathering the needed information and documents, such as proof of income, business licenses, or financial statements, can be overwhelming, especially when instructions on what exactly is needed are vague.

Transitioning to digital platforms has made the process both better and worse. Auto-fill features speed up application input times, but semi-editable PDFs can complicate this. Uploading documents is easy, but optical character recognition (OCR) can struggle with information-dense forms. Conveniently, online applications can be completed at any time, but they often become a source of frustration when unclear errors occur, leaving applicants confused about the issue and uncertain about where to seek help or guidance.

Could the answer to these long-standing challenges be AI? Modern borrowers seek an application experience that's as intuitive and user-friendly as their everyday digital interactions. Imagine an application process that not only meets but exceeds borrower expectations. This is not a distant dream but a near reality with the integration of AI in equipment financing. Let's explore how AI can turn a tedious process into an empowering experience.

Financing Dreams Fast

In equipment finance, I often think of the borrower. Consider a seasoned tradesman, skilled in their craft but less experienced with digital technology – trying to complete an online application that feels foreign and complex. Their expertise lies in their trade, not in deciphering intricate forms and digital processes.

Or consider a small business owner, recently arrived in America – eager to invest in their future yet facing the daunting challenge of navigating complicated forms in a new language, a task made even more stressful by the limited time they have to understand and complete them.

Or imagine a mid-career professional transitioning to entrepreneurship – knowledgeable and ambitious yet finding the labyrinth of financial jargon and detailed documentation requirements overwhelming and time-consuming, potentially deterring their entrepreneurial aspirations.

These days, everyone expects online interactions to be intuitive and efficient. Borrowers shouldn’t be required to key in personal information multiple times, see fields that aren’t relevant to them, or sign documents in person. They should be able to ask questions and feel confident their application and attachments have been submitted correctly. They should feel the experience is personalized to them, responsive to their needs, and feel a dopamine rush when they click submit.

AI-Powered Applications

AI can reduce back and forth time with the borrower by making uploading of documentation smarter. Advanced OCR technology like Azure AI Document Intelligence, or AWS Textract can be trained to process handwritten applications directly into the Loan Origination System. However, even this AI process can be handicapped by bad or unexpected information in the uploaded form that needs manual clarification. Additionally, lenders often still need to manually check uploaded supporting docs like licenses or insurance policies for appropriateness and sign off, particularly if they are uploaded as a single file.

Google’s Document AI Workbench and Ocrolus have both been focusing on extracting vital underwriting details from uploaded documents, including those combined into a single file. Ocrolus comes pre-trained for many common documents in equipment finance, and Workbench can be trained. In either case, by recognizing and extracting data from different documents and then classifying those documents appropriately, we can ensure the right types of documents are uploaded, detect mismatched or fraudulent data, and verify that all necessary information, such as expiry dates and licenses are up to date – before the application is submitted. Borrowers are then able to verify their submitted information early, leading to enhanced precision of their contract details when they e-sign. This saves time, improves the borrower's confidence, and prevents unnecessary back and forth later in the process.

An Inclusive Financing Tool

Equipment finance borrowers are the average American. They represent a diverse cross-section of our population living out their American dream. Recognizing the diversity of our borrowers, many of whom may be navigating such applications for the first time and might not have strong financial knowledge, it’s imperative that the application process be accessible and user-friendly. AI chatbots, including both 'question/answer' and 'conversational' types, play a crucial role in this. They provide customized assistance, adapting their responses based on the user's needs and position in the application process.

AI's potential to personalize the application experience is big. It can ensure that forms and help are available in the borrower's preferred language, offer real-time updates on rates, and provide tailored suggestions for loan terms. It also can provide specific, guided responses to common questions, while conversational bots can engage in more dynamic interactions, offering suggestions, connecting users to resources, and escalating issues to human support when necessary. The technology's ability to remember past interactions with returning borrowers optimizes in-process and future applications, enhancing loyalty and creating a comfortable, familiar experience. Its ability to adapt and respond based on the user's position in the application process makes them invaluable for a diverse range of borrower applicants.

The Future of Delightful Applications

As we move from traditional, cumbersome application processes, it’s clear that the borrower experience of the future will hinge on the integration of AI. When engineers created ChatGPT they likely were not thinking about lease or loan application forms for heavy machinery or warehouse robots. Luckily, the use for different AI and machine learning technologies is truly endless, and we can integrate them into a small piece of our industry and have a tremendous impact.

AI-driven technologies will change the equipment finance application process, making it not only fast and easy but also incredibly accurate and personalized to each borrower's unique needs. Our borrowers come from all walks of life, and each of them deserves the opportunity to finance their dreams. With AI, we can make this historically messy, anxiety-ridden process a delightful experience for everyone.

As you’re planning your technology roadmap, consider these pivotal questions to help shape an AI-driven borrower experience that is both intuitive and personalized:

  • Does the application process align with the borrower's need for simplicity and efficiency, while still collecting enough vital information to make a good credit decision after submission?
  • Can your application adapt to the diverse needs of borrowers, especially in terms of language and accessibility?
  • Is AI being leveraged to build a deeper connection with your borrowers, personalizing their journey and fostering loyalty through a delightful experience?

AI is not just a tool; it's a means to humanize and enhance the equipment finance application process. It’s the cornerstone to creating a borrower-centric, efficient, and empowering loan application process. By catering to the diverse educational and cultural backgrounds of borrowers, AI can transform a historically challenging process into an empowering and delightful experience for all.

Jeannette McNamara
Director of Product | Northteq
With nearly two decades of SaaS experience, Jeannette McNamara has deep experience leading cross-functional teams that bring innovative solutions to market. Her seasoned background in product leadership, sales, and solution development drives her user-centric approach to building products - focusing on creating experiences and innovations that solve workflow challenges while delighting users. Prior to Northteq, she worked in edTech, leading large product teams while managing products ranging from extensibility and security to content creation and multimedia.
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