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In the past year, there has been so much talk about the capabilities and consequences of artificial intelligence. Oftentimes, the discussion about how AI will affect the business landscape has been centered on the potential elimination of some roles. While this is a sound concern, many AI and business experts alike believe that the more impactful consequence will be a boosted quality of life for the next generation of workers.

In fact, Jamie Dimon, the CEO of JPMorgan, recently said in an interview with Bloomberg that he believes that AI will eventually reduce the average workweek to just three and a half days. In the interview, he highlights how AI can be a “co-pilot” for workers, helping them operate more efficiently in a wide variety of tasks, allowing a week’s worth of work to be completed in just three and a half days and offering workers the benefit of more leisure time. Dimon specifically highlighted how AI can impact the financial industry, affecting all aspects of the workflow. He stated that AI could be applied to “every single process, so, errors trading, hedging, research, every app every database”.

Here at AIO Logic, we know very well how AI and automation can improve efficiency throughout the loan lifecycle, leading to timesaving for employees and success for their firms. In this blog, we dive into the specific ways in which AI can improve efficiency for lenders and how AXIS by AIO Logic enables these improvements.

Revolutionizing Loan Origination

The initial stages of loan origination involve evaluating borrower eligibility, determining loan amounts, setting interest rates, and establishing terms and conditions. AI can significantly enhance this process in various ways:

1. Automated Application Assessment:

AI algorithms can swiftly analyze loan applications, extracting essential information and validating the accuracy of provided data. By automating this process, AI reduces the time spent on manual data entry, allowing lenders to process applications more efficiently. As the only AI-powered platform for commercial lending and structured finance, AXIS by AIO Logic is unique in its ability to automate the application assessment process.

2. Risk Assessment and Mitigation:

Utilizing AI for risk assessment, lenders can analyze a plethora of data points including credit history, income levels, and debt ratios. In fact, AXIS by AIO Logic offers robust financial spreading and analytics functionality which is used during underwriting to analyze borrower financial health and identify risks. This allows lenders to make informed decisions regarding approvals, interest rates, and terms.

3. Analytics and Customization:

By using automation to perform financial analysis, AXIS by AIO Logic gives lenders a broader array of data about the borrower’s financial situation. Once financials are spread into AXIS, the platform automatically performs vertical, horizontal, and trend analysis to calculate 42 financial ratios and score the borrower’s financial health. This saves the lending firm a great deal of time, eliminating the need to perform these analyses manually. It also enables the lender to tailor the loan offering based on the situation, which enhances borrower satisfaction and loan repayment likelihood.

Streamlining Loan Servicing

Once a loan is approved, efficient servicing is crucial to ensure smooth operations and customer satisfaction throughout the loan term. AI can play a pivotal role in this phase:

1. Automated Payments and Alerts:

AI can automate loan repayment processes, sending reminders for timely payments and facilitating transactions. This automation reduces delays and enhances the repayment process. A great example of this is the automated invoices and monthly statement features in AXIS, which automatically generates and emails invoices and statements to desired recipients. Additionally, AXIS automatically calculates and tracks repayment schedules based on loan parameters, updating the record on each payment date.

2. Customer Engagement and Transparency:

Loan servicing automation features in AXIS can also help enhance customer engagement and transparency by providing borrowers with up-to-date and easily accessible information regarding their loans. A daily balance record is generated daily for each active loan, showing the balance and activity related to that loan. Automated reporting is also available, showing important metrics such as total accrued interest, total paid interest, total interest due, total principal paid, and outstanding principal balance. This level of transparency keeps borrowers engaged with the status of their loan, reducing the likelihood of missed payments.

3. Predictive Analysis for Delinquencies:

AI can predict trends in repayment behavior based on historical data, allowing lenders to proactively address potential repayment issues. In AXIS, if the financial health monitoring features detect any deteriorating financial trends (e.g., decreasing profit, decreasing liquidity, etc.), an alert is triggered to warn the lender, so they can take proactive measures. This not only saves the firm time in terms of analyzing potential delinquencies, but it also increases profits by reducing the number of delinquencies.

Enhancing Loan Management

Efficient loan management is key to ensuring the repayment process is smooth and favorable for both borrowers and lenders. AI provides valuable tools and insights for this aspect of the loan lifecycle:

1. Real-time Monitoring and Reporting:

AI enables real-time monitoring of loan portfolios, offering valuable insights into trends and performance. At any time, lenders can login to their AXIS broker portal and view real-time data and reports relating to their lending portfolio or specific loans. In fact, AXIS offers over 60 standard reports as well as operational dashboards called Cockpits. This allows lenders to make informed decisions promptly and optimize their management strategies.

2. Portfolio Optimization:

Building upon the AXIS by AIO Logic reporting features we just mentioned, AI can help lenders optimize their portfolios by allowing them to see current and predictive data relating to each loan in their portfolio. Lenders can then use this information to make adjustments as needed to their portfolio based on risk tolerance, market conditions, and regulatory requirements. This can help ensure a balanced and profitable loan portfolio, with just a fraction of the manual tasks that would be required without the use of AI.

3. Compliance and Covenant Tracking:

AI and automation features within AXIS can also enhance the efficiency and effectiveness of compliance and covenant tracking. When loan parameters are set, AXIS automatically creates a compliance calendar and requirements (with due dates) for each covenant. These requirements are then automatically added to the broker and borrower portal, ensuring that both parties know exactly where they stand relating to compliance. This saves the lender time and reduces the risks associated with non-compliance.

The Future of Lending with AI

As Jamie Dimon said in his recent interview, AI is set to transform the way businesses operate, saving employees vast amounts of time and reducing their workloads. Likewise, AI’s integration into the loan lifecycle – from origination to servicing and management – is poised to revolutionize the financial landscape. By enhancing efficiency, providing predictive insights, and ensuring compliance, AI promises a future where financial services are more accessible, efficient, and customer centric.

Financial institutions embracing AI responsibly will be at the forefront of this transformation, delivering better services to customers, reducing operational costs, and ultimately fostering a more robust and responsive financial ecosystem. The AI revolution is underway, and it’s set to reshape the world of finance for the better. If your firm is ready to join the revolution and start adding AI to your lending operations, we invite you to contact us today to see how AXIS by AIO Logic can help save your company time and money!