How technology is changing the credit underwriting industry
There's a lot of talk about technology in the credit underwriting industry. But what exactly is it? And how has it changed over time? To answer these questions, we've compiled a list of some of the biggest trends in technological advancement within this field.
Artificial intelligence (AI) and machine learning
Artificial intelligence (AI) and machine learning are two terms that describe the same thing. Machine learning is a subset of AI, although some prefer to use the term "deep learning" for this purpose.
Big data analytics
It's a way to look for patterns and correlations in data, which can help you make better decisions. Big data analytics is also used to predict future events based on historical trends and forecast demand and supply by analyzing past trends.
For instance, if you want to know how many people will visit your website next month or what they'll be interested in buying when they get there—you could do this by looking at all the purchases made during a particular year. You would then compare those numbers with historical sales information from previous years.
Mobile computing is a huge part of how technology changes the credit underwriting industry. In case you're not familiar with what "mobile" means in this context, here are some examples from our own lives:
- I can use my phone to check email and pay bills online;
- I can use my phone to read news articles and make restaurant reservations;
- My car has an app that lets me monitor fuel consumption and maintenance costs remotely (and allows me to find nearby gas stations).
The technology of credit underwriting is evolving rapidly to incorporate more advanced tools.
Artificial intelligence and machine learning are significant factors in credit underwriting, like big data analytics and mobile computing. Cloud-based software solutions are also changing how banks collect, analyze and interpret information from their systems; in some cases, they use machine learning algorithms to automate specific processes that otherwise require human intervention.
And then there's IoT (the Internet of Things), which will allow banks to monitor customers' spending habits across multiple devices simultaneously—allowing them, for the first time get truly accurate insight into what people do with their money (and why).
These tools have the potential to transform credit underwriting in many ways. The most noticeable changes will affect how lenders evaluate and make decisions on consumer loans. Still, they could also impact other aspects of financial services, such as income verification or fraud prevention.
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