ARTIFICIAL intelligence (AI) could provide peer-to-peer lenders with greater lending security and less chance of defaults, a technology consultancy claims.
Nick Parham, technical pre-sales consultant at NashTech, said there is much P2P platforms can learn about AI from traditional lenders.
“The traditional lending market offers us a powerful insight into the potential for AI in P2P lending,” he said.
“To me, the biggest and most immediate opportunity lies in enhanced underwriting.
“Lenders are already using sophisticated AI software to better predict how people’s debt ratios and down payments impact their ability to make credit card and mortgage repayments.
“AI has the ability to analyse swathes of data from multiple sources, meaning previously ‘unforeseen’ issues are now measurable.
“Applying this technology to P2P lending should translate into greater lender security, with less chance of default. This in turn will only strengthen the P2P market as trust is built.”
It comes as the government set out a commitment to AI technology.
Business secretary Greg Clark and digital secretary Matt Hancock unveiled £300m of new funding for AI research to make the UK a global leader in the technology.
The government has also pledged £21m of funding to create Tech Nation, a new UK-wide organisation working across the country to create a high-growth tech network for ambitious entrepreneurs. One of Tech Nation’s new goals will be to establish an internationally-respected programme for mid-stage AI companies to help bring them to scale.
Ministers also unveiled plans for a Centre for Data Ethics and Innovation that will advise on the measures needed to enable and ensure safe, ethical and innovative uses of data-driven technologies, while helping protect consumers.
Read more: Government unveils first fintech strategy
“Artificial intelligence provides limitless opportunities to develop new, efficient and accessible products and services which transform the way we live and work,” Clark said.
“This deal with industry will ensure we have the right investment, infrastructure and highly-skilled workforce to establish the UK as a driving force in the development and commercial use of artificial intelligence technologies.
“As with all innovation there is also the potential for misuse which puts the whole sector under scrutiny and undermines public confidence. That is why we are establishing a new world-leading body, to ensure the ethical use of data in AI applications for the benefit of all.”
Speaking at the LendIt conference last year, Funding Circle co-founder Samir Desai said P2P lenders were better geared than banks to make use of emerging technologies such as AI.