New Data Sources and Innovative AI Are Redefining the Business of Lending

The business of lending money is rapidly changing. Innovative technology, fueled by expanding data and artificial intelligence (AI), is redefining borrowing. Traditional lenders, as well as alternative sources such as nonbank and "buy now, pay later" (BNPL) providers, are reimagining how people and businesses obtain credit.

Intuitive online interaction and rapid delivery are becoming increasingly common across a range of services. Consumers have grown accustomed to the ease and efficiency of ecommerce, which in turn has changed the way they think about the customer experience in a variety of other business interactions, both personal and professional.

Lending decisions, meanwhile, have been made in much the same way for decades, leveraging labor-intensive, meticulously built risk scoring models based largely on traditional data. This limited data is then combined with relatively blunt rules and binary decision points that can needlessly leave borrowers without access to funds and lenders without access to customers.