Lenders and brokers are tapping into AI and chatbots to streamline underwriting and customer support – while keeping in mind the human element of the financial services relationship. Lorenzo Migliorato writes.
The technological promise of a financial services quasi-utopia, where the entire borrowing process is automated and algorithm-assessed – what the Financial Conduct Authority (FCA) termed the “algogracy” – may neither be realistic nor desirable.
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That is not stopping players in the consumer credit space from tapping into technologies such as robotic advisors and machine learning, and experimenting with how far automation can go within the limits of fair treatment and compliance.
While the wealth of transactional data at the disposal of retail banks make simple products such as personal loans the area most ripe for automation, more specialised, nonbank-backed actors have not been sitting idle.
In car finance, brokers and lenders are looking into how to tailor technologies such as artificial intelligence (AI) to their customer base – and they are not automating for automation’s sake. “The driver isn’t so much the technology,” says Adrian Dally, motor finance head at the Finance and Leasing Association.
“The driver is the accuracy of the information you have about customers.” The UK is one of the most fertile grounds for AI research globally, and lenders have been approaching leaner and younger companies to tap into the technology.
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By GlobalDataIn the UK, Toyota Financial Services partnered with startup Aire to manage delinquencies, and Hitachi Capital brought on board Jaywing’s AI software, Archetype, to improve credit assessment. Some companies decided to take another route and build their own in-house systems.
That is the case for brokerage Autorama, parent of brokerage businesses Vanarama and Motorama, which is exploring how technology can help in the initial ontake of customers and funnel more business to the underwriters.
“We wanted to have full control over what the software does exactly. We did not use an off-the-shelf product or rely on third parties who did not understand the full end-toend journey,” says Jamie Buchanan, chief technology officer at Vanarama. The broker’s website sports a live price engine and softsearch credit quotes.
AUTOMATED JOURNEY
It is perfectly possible for a Vanarama customer to go through an entirely automated buying journey – which means the business is not restricted to working hours. “Some customers are very comfortable with the self-service journey. They are very sure of what vehicle they want, of the finance deal that they want,” says Buchanan.
“Those customers – that’s where our platform really works well. It can be 10 o’clock on a Sunday night – if they know what they want they can go ahead and order the vehicle.” The spearhead of customer engagement on Vanarama’s website are its two 24/7 chatbots, aptly named iVan and iCarli. It is another tool that Vanarama uses to keep engaging with customers in after-work hours – the time of the day when, as Buchanan points out, most people will be able to actually sit down and research their purchase online.
Chatbot systems are one area where Vanarama is looking to implement AI and machine-learning technology. That said, delegating customer-facing functions to a machine – something that may raise some eyebrows at the FCA at a time when the watchdog has repeatedly emphasised the importance of clearly explaining contract terms – is not a way of doing more with less.
“One of the great things about the chatbot is that it’s a conversational interface, and that it can be designed to include any information that we want or that is required by the FCA,” says Buchanan.
“It forces you to break down quite complex information into plain English,” he adds, potentially giving the broker a chance to assess the adequacy of its customer approach.
He adds that the chatbots also give Vanarama an insight into the kind of question customers are likely to ask. In any case, for all automated processes – from online applications to chatbots – there is always a human fallback to pick up the process when algorithms cannot go any further.
Not only has Vanarama kept the phone call route for customer enquiries – the chat’s interface was designed to make it clear that the customer is talking to a bot, not a human underwriter.
“Some customers want the ease and speed of using something like a chatbot. But obviously, it has to be compliant and it has to be fair,” says Buchanan. “The FCA is very clear on what the requirements are, and all the technology we build is built with that in mind.”
