Financial institutions are bolstering their credit offerings to capitalize on lower interest rates. 

Card-issuing platform Marqeta is developing new solutions for its banking clients and businesses to enable them to offer credit services to clients as the demand for credit increases and debit issuance spaces are becoming saturated, Chief Revenue Officer Todd Pollak told Bank Automation News.

“Commercial businesses and banks alike are looking to expand credit offering as it is more profitable,” Pollak said. “Easy underwriting, quicker onboarding and providing multiple options to customers increases stickiness and higher sales conversion rates.” 

The Oakland, Calif.-based Marqueta launched a buy-now, pay-later solution in October that allows consumers to pick the service provider — like Klarna or Affirm — to use at checkout, Pollak said. 

The offering uses AI and APIs to share data safely for faster underwriting, Pollak said, adding that AI can help in providing faster decisions and accurate underwriting. 

Use of AI in credit lending

AI allows FIs to do more with less, which includes preliminary use of AI for underwriting with a human in the loop, Colin Walsh, founder and chief executive of fintech Varo Bank, told BAN. 

The $486 million Varo Bank is using AI to look beyond FICO scores to understand customers’r real credit worthiness by analyzing their transactions and cash flow, Walsh said. 

Similarly, the $5.9 billion First International Banking and Trust is looking to bolster its credit offerings through better credit cards and personal and business loan products, Chief Payments Officer Trent Sorbe told BAN. 

Expanding credit offerings can help in boosting the bank’s deposit base and drag consumers deeper into its ecosystem, Sorbe said, adding that the bank aims to revamp and launch AI-driven credit solutions in 2025. 

Fintech Finastra, too, launched an AI-driven solution that helps mortgage originators to scan through information like historical financial documents for faster and efficient underwriting, Mary Kay Theriault, director of product management of mortgage, told BAN. 

AI helps Finastra in automating workflows like scanning documents and answering agents’ questions through a knowledge database that makes the process efficient, Theriault said. 

Theriault declined to disclose the names of the FIs using the solution but said that the largest banks in the U.S. are using the technology. 

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