AI in lending: Reshaping the user experience

Loan issuance and administration are highly complex and nuanced processes that first-generation technology has struggled to automate fully. With the advent of AI, this complex asset class finally has a solution capable of tackling the challenge, and it’s changing the user experience for agents, borrowers and lenders alike.

Improving usability

Loan technology is highly specialized and often fragmented across functions and organizations, which means it's not always easy to use, especially for newer users. Before the advent of AI, lenders needed to know exactly what they were looking for and where to find it when they interacted with the various loan platforms - a difficult task given the rapidly evolving assets and systems involved.

A standard workflow required the lender to search an asset, see all the applicable contracts under that asset, review open or settled trades, understand any pending notice activity (such as a borrow or paydown), and track the principal, PIK and overall position against the amortization schedule. Rendering all this information from multiple systems has historically been a major challenge, but AI capabilities combined with data-mesh technology are finally solving it. A data mesh securely decentralizes data ownership to enable different teams or domains to access and apply the data to their specific business challenges. Paired with an AI interface, this technology makes it possible to extract meaningful insights from these vast stores of data in an intuitive way.

Users can now interact with the data using conversational prompts to get answers to questions around how a prepayment should be dealt with, including whether it is allowed and in what order the payment should apply to future interest, PIK interest and the loan principal. For example, for the cash reconciliation function in S&P Global Market Intelligence's WSO Software, which delivers portfolio insights, workflow automation, and deal administration for diversified credit portfolios, CLOs, syndicated and leveraged loans, AI is able to automatically determine issuer name resolution. Using smart, context-based search, we have simplified and streamlined user access to critical information on portfolios, positions, loans, trades and cash. 

Enhancing customer success

In addition to simplifying the way users interact with loan platforms, AI is improving the customer success (CS) function for our Lending Solutions.

We are starting to explore using AI to identify client inquiries that come in and compare them to the database of previous inquiries to determine whether we’ve already resolved a similar issue and, if so, how. This is helping us to reduce resolution time and improve customer satisfaction.

Improving coordination and visibility

AI is also capable of building intelligent, task-driven workflow engines that connect borrower tasks and agent/lender processes. S&P Global Market Intelligence's Borrower Portal enables borrowers or agents to upload credit agreements to a portal where loan reference and borrower data are extracted and verified in parallel. This data is then used to generate a list of events and tasks that are consolidated to enhance coordination and visibility across the loan management process, including onboarding, borrowing requests, rate elections, rollovers, principal and interest payments, and covenant compliance.

This AI-powered workflow reduces the time needed to complete the interaction by identifying what is required at each stage of the workflow and ensuring that the right data and documentation are assembled before progressing to the next step. It also enables all parties—agents, borrowers and lenders—to track the workflow, see the bigger picture and know exactly when the funds will be available.

Redefining the experience

The potential for transforming the user experience is limitless. AI is making the lending workflow simpler, faster and more intuitive in myriad ways, enabling our users to navigate and automate the process in ways that were inconceivable a few short years ago. Soon, the loan lifecycle will be almost unrecognizable as manual tasks and formal reporting are replaced by natural-language prompts that guide and track progress and extract on-demand, ad-hoc insights. Given the growth projections for lending, and especially private credit, these enhancements are coming at the ideal time to help the industry scale. 

Read the other installments in our AI in lending blog series:

• AI in Private Credit: Raising the Bar for STP
• AI in Private Credit: Surfacing Deeper Data Insights
• AI in private credit: Strengthening the reconciliation function