Financial institutions plan to increase their spend on automations and collections management solutions for their loan processes.

Fresh results on consumer lending practice from research and advisory firm Aite Group indicate lenders plan to invest more heavily in their collections processes, said Leslie Parrish, senior analyst for the Aite Group’s consumer lending practice.

Parrish shared the results of the recent survey during the April Bank Automation News Premium Plus webinar. Parrish surveyed executives at 22 banks, credit unions and fintechs, more than half of which had at least $30 billion in assets, and included additional interviews with 10 of the respondents. It found that 44% of those surveyed intend to invest in collections management software to automate. Leading collections management software includes such offerings as CGI 360 Collections, Experian Powercurve Collections and FICO Debt Manager, Parrish said. In a similar finding, 30% of financial institutions said they planned to apply artificial intelligence (AI) to collections.

“For collections, lenders mentioned using AI to better segment customers in certain communication and treatment strategies, trying to keep them out of that collections process, if at all possible,” Parrish said, adding that banks are also looking to better analyze data to predict outcomes and predict trends in the collections process.

The survey also found:

• 35% will invest in digital account opening and loan origination systems;
• 22% will invest in loan management software; and
• 20% will invest in borrower-facing point-of-sales solutions.

One reason so many lenders may be interested in collections software is that so few have invested in it compared to other software tools. Twenty-two percent of banks reported they had previously invested in collections management software compared to the 75% reporting that they had already invested in digital account opening.

Forty-five percent of banks have also invested in borrower-facing point of service and loan origination systems, and 44%have invested in loan management solutions.

Financial institutions also plan to increase their use of AI in the loan cycle, with 40% saying they will leverage it for originations. Potential use cases for AI in originations are primarily related to modeling the outcome of the origination to determine whether a loan will be paid, as well as the likelihood of delinquencies, Parrish said. Another use case would be to dynamically streamline data fields on digital loan applications so that the automated system only requests relevant information based on what the borrowers have submitted on a previous screen, she added.

When it comes to AI investments, the Aite survey found that 55% of the responding banks are already using AI for both marketing and fraud detection.