Facing increasing competition, heightened borrower expectations and tumultuous economics brought on by the pandemic, lenders are under unprecedented pressure to maintain margins. Industry analyst firm Aite Group looks at how Mastercard’s Brighterion AI technology offers the ideal solution for lenders looking to better manage the current challenging credit risk environment, develop more informed strategies and optimize customer retention.

With the ability to emulate human cognition and learning but with far greater speed, scope, scale, accuracy and objectivity, AI offers undeniable promise for managing many obstacles lenders face today. Still, many financial institutions (FIs) struggle to deploy the technology effectively. They often misunderstand what AI truly entails and how it can help to manage challenging credit risk.

Aite Group recently took a closer look at what separates true AI from all the hype, focusing on the uniquely compelling solution to common lending challenges. In particular, analysts examined how Brighterion’s AI technology builds custom AI models that address specific, high-priority problems in as little as six to eight weeks.

Brighterion has developed a solution that allows lenders to effectively manage their credit risk using AI to predict borrower outcomes, develop informed strategies, and take actions that ultimately benefit their customers. The ability to detect which accounts may become delinquent or who may find it difficult to make payments on credit taken allows the FI additional time to intervene and take appropriate actions to mitigate losses,” Aite reported.

Continuous model improvement

Aite Group noted that with Brighterion AI, lenders can better identify borrowers who are likely to default. This not only reduces the risk of taking action on the wrong accounts, it gives lenders opportunities to offer additional credit and other products or services to borrowers. Once the model is established, real-time, adaptive learning continuously improves model performance, and can be re-run to ensure FIs have a real-time view of their borrowers.

“Lending – be it to consumers or businesses – presents a fertile environment for deployments of AI that can generate benefits to an FI’s bottom line,” wrote Aite analysts. “Characteristics of lending environments that are conducive to success with AI are large data sets from which the AI can learn, demand for high transaction throughput at peak-human speeds, and high transaction volumes that make it [otherwise] hard to achieve scalability.”

To learn more about how Brighterion AI can help lenders offer a wide range of credit products, including how the technology can be used for credit decisioning, providing borrowers with flexible and personalized payments options, and identifying cross-sell opportunities, download From better predictions to strategic actions: AI and credit risk management.