Navigating the Scoring Landscape: AI is NOT One-Size-Fits-All

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AI and automated credit scoring has the potential to offer you a substantial boost in your lending business. However, incorrectly implemented AI could be ineffective, or worse, destroy the carefully-structured processes that drive your business forward.

In credit scoring, AI is widely known to deliver strong benefits, highlighted by an immediate gain in lift and thus a generally strong return on investment. For that exact reason,

AI has become table stakes for alternative credit scoring systems. With this potential, however, comes the risk of misaligned systems and failed integrations. 

There is a common misconception that AI-driven decision management systems are a one-size-fits-all solution. From business differences to technological differences, the reality is that each company is different in nuanced ways, and that each of these nuances can play a substantial role in ensuring that the implementation of an AI lending system is as successful as it can be. Credit scores and other AI-derived answers do not exist in a vacuum:  they have to be operationalized in real-world workflows and combined with real-world strategy imperatives and business rules.

As a lender, there is a complex tapestry of regulators, partners, and strategies in place, all within an equally complex business process and workflow. Without due regard for these processes, an off-the-shelf AI solution can very quickly make things worse (e.g. erroneous decisioning, unnecessary backlog, failure to communicate across systems, and, ultimately, a collapse of your entire workflow.) 

So, what should lenders look for when choosing an automated scoring solution?

  1. Distinct Specialty in Credit Scoring and the Lending Industry

    AI is an incredibly broad blanket term that covers everything from chess engines to medicine to lending solutions. With the remarkable degree of regulation and complexity in the lending industry, it is not enough to simply be an "expert in AI that does credit scoring". Look for "experts in credit scoring that run on AI", who will make sure that their solutions are calibrated for this unique industry and will help guide you through integrating all of the complex processes and stakeholders. 
  2. Platform Built on AI

    By the same token, AI can just as easily be used as a buzzword by lending specialists. To truly reap the benefits of an AI solution, make sure that it is a true AI solution you are buying by ensuring that the platform has been built on AI and with AI in mind, not with AI as a flashy afterthought.
  3. Sector Experience

    As unique as lending is, its numerous sectors and subsectors each come with a unique playing field. Looking for solutions with experience in your sector is a significant step towards finding a successful integration. Check into what integration partnerships your potential lending solution has for LMS/LOS systems, or take a look to see what subsectors they may have clients in or claim expertise in. The closer the fit between what an AI decision management system has done and what you need that system to do, the closer you will be to finding success.