fintech growth talk

How Upstart Is Making Credit More Accessible

Let’s face it:  The lending process for most personal loans is often arduous and burdensome. Traditional financial institutions are often extremely risk averse, resulting high denial rates for most Americans. In fact, Upstart found that while 80 percent of Americans have never defaulted on a loan, less than half have access to prime credit. 

But where some see these rejections as part and parcel of the traditional credit and lending system, others see opportunity.  

This is the view that this week’s guest on the Fintech Growth Talk podcast takes. Jeff Keltner is the Senior Vice President of Business Development at Upstart, a leading artificial intelligence lending platform whose mission is to make credit more accessible and affordable. Keltner also has his own Fintech podcast called Leaders in Lending

For Keltner and his fellow cofounders, many who are ex-Google employees, Upstart began with the realization that many Americans simply can’t access traditional financing. Additionally, the founders felt that the user experience of the lending process is both painful and cumbersome for most borrowers. These two quintessential problems in the credit industry were both solvable with modern technology, says Keltner.

Interestingly, as Upstart began offering unsecured loans powered by an AI-driven process, they realized that not only are under/unbanked customers hurt by the traditional loan process, but that borrowing is also made more expensive for those who can access those services; they are essentially paying to cover the bank’s risks.

In fact, Upstart sees plenty of opportunity on the horizon to use AI to enhance the lending process for consumers, but also for banks. Keltner sees this applying across four different aspects of that process.

First, Keltner believes AI can help make loan marketing more effective using better targeting, messaging, and screening. In other words, using AI to find the right customer at the right time, delivering to them the right message through the right channel.

Second, AI can potentially improve approval rates without increasing loss rates. That is, with better targeting as mentioned above, lenders can get deliver more loans to more customers by better identifying and marketing to lower risk borrowers.

Third, AI can dramatically streamline the entire lending process. Once a customer qualifies for and agrees to a loan at a particular rate, they often have to go through a burdensome process that often includes appraisals, physical inspections, etc. AI can dramatically reduce the friction that traditionally happens at this stage, and Upstart has already applied AI to its unsecured lending options, with only 30 percent of loans requiring a manual review.

Lastly, Keltner says AI can help with monitoring loans and identifying which borrowers might be at risk of becoming delinquent. By identifying these borrowers earlier in the process, lenders can do a better job of reaching out to the customer to address the situation before they become delinquent, which in turn can lower both defaults and overall risk.

Ultimately, Keltner believes Upstart is in the right place at the right time, as their model and technology can help reduce risk amid the uncertainty the global economy has faced over the past few years.

Follow Jeff on LinkedIn

Listen to our full interview with Jeff Keltner


Christina Trampota
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