Financial institutions are identifying AI uses within their operations for coding, documentation and underwriting.

Chase Auto National Credit Director Anne Alburo discussed use cases and their implications for AI and automation in underwriting at Auto Finance Summit 2023 in Las Vegas on Monday.

The technology “will definitely speed things up, make things more efficient, but there’s really no replacing a human interaction,” she said before listing three areas of underwriting that can benefit from automation and AI.

1. Speed. “Everybody knows the longer an application sits, the less likely it’s going to cash,” Alburo said. Automation increases the efficiency of the approval process.

“In that same vein, auto decline applications that fall outside of your risk appetite, so that you can provide capacity for your underwriters to look at those gray area applications that need more analysis and then get the decision back out as quickly as possible,” she said.

2. Fraud and compliance. Implementing AI and automation in underwriting requires that “fraud and compliance [are] sitting at the table to make sure that you stay within [unfair, deceptive or abusive acts or practices] regulations,” she said.

In addition, including a fair lending expert to monitor automation ensures that there is no bias, she said.

3. AI for recommendations. “I can definitely foresee a future where AI can make a recommendation, but I really believe that there still needs to be some human interaction,” Alburo said.

While automation can speed the approval process and monitor fraud, it still cannot replace an experienced underwriter, she said.

“An experienced underwriter can quickly identify any errors that will happen in your model. And that will definitely benefit the team,” Alburo said.

“At the end of the day, it’s the human interaction that starts our relationship with our dealers. And it’s that same connection that deepens that relationship.”