Australian FinTech Beforepay has launched a commercial version of its risk management and lending platform.
Dubbed Carrington Labs, the new offering gives enterprise clients access to the technology and artificial intelligence (AI) tools powering Beforepay’s lending products, the company said in a Monday (March 4) press release.
“Carrington Labs will offer two products,” the release said. “The first is a decision engine that brings together the company’s AI-powered risk-management modules, using alternative data to make quick, accurate lending decisions in a fully-automated, low-cost manner.”
The second is an end-to-end loan origination and servicing platform, the next iteration of the FinTech’s existing lending platform, which can originate an average of 35,000 loans each week with a team of fewer than 40 employees and outsourced offshore customer-support staff.
“This end-to-end solution will aim to support an entirely digital lending journey, expected to enable customers to go from account creation to funds received in as little as 5 minutes, done entirely through a smartphone app (or optional web interface),” Beforepay said.
“It will seek to combine origination, loan management, and an optional front-end experience in an integrated and efficient way.”
As PYMNTS wrote earlier this year, AI is poised to transform the landscape of small and medium-sized business (SMB) lending.
“Traditionally, the banks and credit unions that extended loans to local SMBs based their lending decisions on the five C’s of a business owner’s character, capacity, conditions, capital and collateral,” that report said.
“‘Character’ originally referred to the relationship between the individual banker and the individual borrower, and character-based lending was a cornerstone of business banking — in the 19th and 20th centuries, at least.”
Today, however, lenders are more concerned with credit scores than characters. But with AI-powered loan decisioning becoming more normal, the way working capital and financing are offered to SMBs is changing.
“AI has introduced a data-driven paradigm into the lending landscape, replacing subjective evaluations with objective analyses of vast amounts of information,” PYMNTS wrote.
Machine learning algorithms now consider a variety of factors, including financial history, credit scores and business performance metrics, when making lending decisions, thus transforming character-based lending into a dying practice.
“It’s not simple for small businesses to get a loan, even if it’s a small loan,” Galileo Financial Technologies Chief Product Officer David Feuer told PYMNTS in an interview posted in October.
“Banks are becoming increasingly sophisticated in their use of data and their use of AI to make intelligent decisions about who to make their offers to,” he said.
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