.svg)
This is a summary of an episode of Pioneers, an educational podcast on AI led by our founder. Join 2,000+ business leaders and AI enthusiasts and be the first to know when new episodes go live. Subscribe to our newsletter here.
In this week's episode of Pioneers, host Ankur Patel sits down with Andy Mattingly, Chief Operating Officer at FORUM Credit Union, to discuss how artificial intelligence can be leveraged to revolutionize lending processes. With more than 34 years of experience in various roles at FORUM Credit Union, Mattingly shares valuable insights into the institution's journey towards AI-driven lending and important lessons learned along the way.
Dive deeper into this topic by tuning in to the full episode here:
10 Key Takeaways
Here are the 10 key takeaways from our conversation:
1. Automating Lending Decisions for Improved Efficiency
FORUM Credit Union has made significant strides in automating its lending decisions, with nearly 60% of all consumer loans now being automatically underwritten. This automation has not only improved efficiency but has also resulted in better loan performance compared to manual underwriting. Mattingly attributes this success to the credit union's focus on identifying and automating "easy decisions" that don't require human intervention.
2. The Power of Incremental Innovation
Rather than undertaking massive, multi-year transformation projects, FORUM Credit Union prioritizes incremental improvements and innovations in its processes and technology. This approach allows the credit union to remain agile and adapt to changing market conditions and regulatory requirements. By continuously making small enhancements, FORUM Credit Union has been able to steadily increase the proportion of loans that are automatically underwritten.
3. Streamlining Processes Before Automation
Mattingly emphasizes the crucial role of process design in successful automation. Before automating any part of the lending process, it's essential to first streamline and optimize the existing workflow. This involves identifying unnecessary steps that can be eliminated and ensuring that the remaining steps are as efficient as possible. Only then can automation be effectively implemented to further enhance the process.
4. Partnering with Flexible Technology Providers
FORUM Credit Union places a high value on flexible technology partners who allow for customization and integration with other systems through open APIs. Mattingly highlights the importance of being able to tailor lending systems to the credit union's unique needs and connect them with other tools such as document management and fraud detection solutions. This flexibility enables FORUM Credit Union to create a best-in-class lending ecosystem.
5. Leveraging Data for Informed Decision Making
By analyzing historical loan data, FORUM Credit Union can identify opportunities for automation and make informed decisions about which loans require manual review. This data-driven approach has allowed the credit union to continuously refine its automated decision models and expand the range of loans that can be automatically approved. Mattingly stresses the importance of regularly reviewing loan performance data to identify areas for improvement.
6. Transforming the Role of Underwriters
Automation has transformed the role of underwriters at FORUM Credit Union, allowing them to focus on more complex cases and exceptions. Rather than spending time on simple, routine decisions, underwriters can now dedicate their expertise to evaluating more nuanced situations and finding ways to help borrowers who may not fit neatly into automated approval criteria. This shift has made the work of underwriters more interesting and valuable.
7. Harnessing AI for Fraud Detection
FORUM Credit Union is actively exploring the use of generative AI to detect fraudulent loan applications by identifying anomalous patterns in data. By analyzing a wide range of data points, including IP addresses, device information, and behavioral patterns, AI-powered fraud detection tools can flag potentially fraudulent applications for further review. Mattingly sees this as a critical area of focus for the credit union in the coming years.
8. Offering Personalized Lending Solutions
Moving beyond a one-size-fits-all approach, FORUM Credit Union aims to offer personalized, deal-based pricing for loans. This involves taking into account a broad range of factors beyond just the borrower's credit tier, such as the type of vehicle being purchased, its expected depreciation, and the borrower's overall financial profile. By leveraging AI to analyze these variables, the credit union can offer more tailored lending solutions to its members.
9. Ensuring Data Quality for AI Success
While having access to more data can be beneficial, Mattingly cautions that the quality and completeness of data are critical factors in the success of AI-driven lending. He advises focusing on clean, reliable data sources first, rather than trying to incorporate every possible data point from the outset. As the AI models prove their effectiveness, additional data sources can be gradually integrated to further enhance decision making.
10. Fostering a Culture of Change and Innovation
Successful automation requires a culture that embraces change and employees who understand the benefits of automation for their roles. At FORUM Credit Union, the lending team has been actively involved in identifying opportunities for automation and has embraced the shift towards AI-driven decision making. Mattingly credits this employee buy-in as a key factor in the credit union's successful adoption of lending automation.
__
The insights shared by Andy Mattingly in this episode underscore the transformative potential of AI in the lending industry. By embracing a data-driven, incremental approach to innovation and fostering a culture of continuous improvement, FORUM Credit Union has positioned itself at the forefront of AI-driven lending. As the industry continues to evolve, the lessons learned from FORUM Credit Union's journey will undoubtedly serve as a valuable roadmap for other financial institutions looking to harness the power of AI.