Financial institutions are dipping their toes into automated lending to address the shrinking number of underwriters and increasing demand for digital banking from more borrowers.

“Customers are used to buying goods from Amazon or ordering food with Uber Eats and are used to having experiences on their phone,” Adam Hughes, chief executive of automated lending fintech Amount, told Bank Automation News.  

“Banks have really woken up to the reality that the game has changed from a digital expectation for consumers, and they’re playing a tremendous amount of catch-up.” 

FIs are looking to digitalize major touch points to create a seamless customer experience, Hughes said, adding that priorities for this are: onboarding, credit card applications, personal loans, and small and medium-sized business loans. 

Changing market 

A demographic shift among employees is also pushing FIs to move more operations, including lending to automated systems, Carey Ransom, managing director at BankTech Ventures, told BAN. 

“Younger employees don’t want to do mundane tasks like underwriting, documentation and other office administration tasks,” Ransom said. “FIs are reacting to this change by deploying automation within their operations,” and lending is a big part of it. 

No FI will move to 100% automated lending; there will always be a human in the loop for better risk controls, Ransom said. FIs want to process more loans while maintaining good credit standards through AI. 

AI-driven underwriting is helping FIs better manage risk, keeping delinquencies low and freeing underwriters to handle more complex tasks, Hughes said.  

One-day tech onboarding 

Amount’s AI policy optimizer tool helps FIs meet organization-specific goals and standards like “credit policy, their pricing, their fraud prevention” strategies when underwriting loans, Hughes said. “Loans will have the same scrutiny as a manual underwriter, but the process will be dramatically sped up.” 

Chicago-based Amount has 30 banking clients, including: 

• $1.9 trillion TD Bank; 

• $212 billion Fifth Third; and 

• Mastercard. 

Amount delivers its solutions to clients via the cloud, Hughes said. The fintech is cloud-agnostic but has majority of its operations on Amazon Web Services. 

“Onboard a bank on the platform, we can do that in a day,” Hughes said. “From a contracting and administrative point of view it can take a few days to a week, but from a technological point of view, it can take a few hours to a day or two.” 

The fintech is rolling out its HELOC and auto lending solution, this year as it sees continued rising demand for its services, Hughes said. 

Recent transactions 

Recent automated lending transactions include: 

• OneUnited Bank teamed up with fintech Esusu to improve underwriting for mortgages on April 9; 

• First Commonwealth Federal Credit Union selected fintech Upstart for automated lending decisioning for personal loans on April 18; 

• Fintech ValidiFi tapped Amount for onboarding and origination services on April 9; and 

• CrossCountry Mortgage selected fintech Blend for automated lending solutions on April 21. 

Visit the Bank Automation News interactive Transactions Dashboard.