The Future of Credit Management

Marieke Saeij, CTO, Onguard

 

Thanks to the introduction of AI, Robotic Process Automation (RPA) and Blockchain technology, credit management as we know it today looks set to undergo a revolution. In the coming years, the impact of these developments is expected to be far-reaching, not only changing the day to day processes, but also the role of credit managers and the future of the industry.

 

AI and Robotics

The ability to automate tasks, driven by the use of RPA, will significantly impact the sector, allowing for the automation of the more simple, repetitive and often mundane tasks, such as invoicing, processing mortgage applications and bank mutations and compiling reports. With this development will come several major benefits as tasks will be performed as accurately as by a human user, but faster and without errors.

With RPA proven to have greater accuracy than people, its use could lead to increased quality and lower costs and financial professionals will find that they have more free time which they can spend on bigger tasks.

In addition to this, AI’s capabilities will allow for tasks that have already been automated to be taken one step further and will also be introduced to new areas, such as improving the assessment of a customer’s credit worthiness. AI can now be introduced to make new connections to assess grey areas – making it easier for informed decisions to be made on credit risks.

These technologies also make it possible to achieve much more with data that is being collected by finance departments, such as performing reliable predictions based on the past to determine whether to approve credit. This is likely to increase cash flow as finance teams have an increased awareness of which customers should or shouldn’t have their credit approved.

With so many day to day processes open to automation, the role of credit managers is likely to be completely overhauled, allowing them to focus more closely on making a difference to their organisation and customers, rather than on the smaller but time-consuming tasks.

While some may be concerned about job security once this technology has been implemented, in the immediate future it presents the financial sector more benefits than it does risks. AI isn’t about replacing workers but about aiding them to do their jobs better.

 

Blockchain

Blockchain technology hovers above today’s banking and financial services industry and yet, few have the insight to know exactly when it will make its impact or what it will be used for. In fact, our own research revealed that 36% of CFOs have admitted that they do not understand enough about the technology to act just yet.

For the larger banks and financial institutions, Blockchain is painted as a risk rather than a potential opportunity. This is buoyed by the fear that the arrival of this new technology will render banks obsolete in the facilitation of secure document transfers. Instead, they will be left looking for new revenue streams to offset this loss of income.

In spite of this, there is evidence that some of the larger banks are collaborating on Blockchain applications, this is because of how closely tied Blockchain is to various cryptocurrencies. However, on the whole, the development of Blockchain is very much a watch and wait to see what happens.

Regardless of the uncertainty around the technology, we are confident that Blockchain will be a very important development – particularly in relation to Bitcoin, smart contracts and predictive analysis. It may even have efficiency benefits, such as fewer errors and reduced administration costs and the potential for removing the transactional element of a deal in favour of a simple exchange across distributed general ledgers has great promise.

There are still several obstacles to overcome in the immediate future, however, Blockchain, AI and RPA will happen and bring benefits. Those businesses that are properly prepared and willing to make changes will reap most of the rewards.

 

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