The automation of lending and debt management in the UK

By John Wayman, head of partnership relations at Aryza.

The recent launch of ChatGPT placed artificial intelligence (AI) firmly in the spotlight. Almost every industry was left wondering what the tool could be used for and how it could help the existing workforce to work smarter.  However, for the financial services sector, the automation of processes and use of AI is certainly nothing new. In fact, according to a study released last year, three-quarters of banks and credit unions had already launched a digital transformation initiative, with another 15% planning to develop a digital transformation strategy at some point in 2022.

Changing consumer demands
Until relatively recently, many were happy to book a face-to-face appointment at their local bank branch when applying for a loan or to request a change in their repayment schedule. This meeting might have taken place a week or so later, with the in-store team then assessing the application.
As well as this process being slow, gaining an accurate overview of the customer’s level of affordability was challenging – if not impossible. Banks and lenders relied on being provided with a number of different documents from the customer, from paper payslips to proof of monthly outgoings.
Once this information was collated, a decision on the best course of action could be taken. The entire process would take weeks, and there was always the risk that a person’s financial situation could have dramatically changed since the initial application was made.
This is a far cry from the service consumers have come to expect.

The Open Banking revolution
Since being introduced in the UK in 2017, Open Banking has transformed the way consumers engage with their banks when applying for a loan or making changes to an existing repayment plan.
Open Banking has enabled important information to be shared digitally, taking into account multiple different data sources such as transactional and credit bureau data. Within a matter of minutes, banks and lenders can build a complete picture of a person’s financial position.
This process is also far easier for the end-user to navigate, minimising needless stress and potentially having to wait weeks before receiving a decision on the outcome of their loan application.

Specialist systems, such as Aryza Recover, have been developed to digitally guide consumers through their money management journey, explaining their options in an easy to understand format and providing regular updates on the progress of an application. Should a person’s financial situation suddenly change, the system is automatically updated and if the monthly repayments are no longer deemed affordable, action can be taken.
Depending on what the automated affordability check calculates, a number of options might then be suggested, such as a revised repayment plan or a payment break.

Driving operational efficiencies
With many banks seeking to drive operational efficiencies, a reduction in the volume of telephone calls and in-branch appointments will be welcomed. More recently, we’ve seen banks implementing software that can enable agents to interact remotely within the same interface as the consumer, ensuring that they are still on-hand should the customer request assistance.
As the nation’s financial resilience continues to be challenged, it’s important that banks and lenders have an accurate understanding of their customers and any changes to their financial wellbeing. Those reliant on legacy technology or manual processes are increasingly finding this challenging, and may struggle to compete with those that have invested in automation, and AI-powered technology.