Survey illustrates how much manual errors erode bottom line at finance companies
We all make mistakes, but they can become quite costly at finance companies, boosting their interest in using artificial intelligence more often.
Informed.IQ recently commissioned an industry-wide survey of auto finance executives to identify the key areas where they are leveraging artificial intelligence into their workflows and processes, as well as the challenges they face in implementing automation.
The developer of AI-based software that verifies, streamlines and optimizes processing acknowledged that auto finance companies and other Institutions have been using AI software to make their operations “smarter,” cheaper and faster, yet there is a lot the industry can learn from the following implementation trends and insights.
This is important because according to the online survey, presented to more than 2,500 professionals during March, approximately one-third said a quarter of their deal jackets had defects in 2022.
Informed.IQ said today’s new AI-powered compliance software can spot common defects during the origination process for F&I add-ons, GAP waivers, or debt cancellation agreements.
Other key highlights from the survey:
—95% of finance companies are beginning to leverage AI tools in some aspect of their business such as credit decisioning and contract servicing
—51% of finance companies cited regulator audits as their biggest concern.
—Nearly 44% of finance companies are interested in leveraging AI to compete with providers that are also using these tools.
—29.7% of finance companies said the top metric automation has improved in the underwriting process is reduced cost.
Informed.IQ pointed out that auto finance companies can more stringently mitigate defect scenarios through the implementation of AI-powered systemic controls that help them avoid audits.
Today, Informed.IQ noted that the vast majority of finance companies do not have systemic controls in place to audit the contents of contracts and deal jackets.
However, Informed.IQ said finance companies are looking at implementing these controls either through added in-house staff, which is difficult in today’s tight labor market; relying on existing manual controls, which often are susceptible to human oversight or errors; or through external vendor partners who provide AI-based software-as-a-service solutions to automate much of the process.
According to the survey findings, nearly half of respondents — 43% to be exact — said deal jacket errors cost them approximately $1 million during 2022.
The majority of finance companies surveyed said they primarily average between eight and 12 minutes to remediate a deal jacket and then manually onboard it — precious time that adds up when considering thousands of contracts in a portfolio.
Half of finance companies surveyed also said they are most concerned about regulator audits, with another 36% saying they’re concerned with the increasing number of staff hours to scrutinize accuracy and/or rectify errors.
“Bringing AI into the auto lending process is an important way lenders can stay competitive, profitable and compliant with regulations today,” Informed.IQ CEO Justin Wickett said in a news release.
“Our lender partners rely on our advanced AI technology to simplify and automate the process of collecting and analyzing data, with the goal of helping to fund loans as quickly and efficiently as possible while lowering cost to fund, lowering the cost of processing GAP refunds for early payoffs, improving compliance, and lowering the cost of regulatory matters,” Wickett went on to say.
The entire survey can be downloaded via this website.