Informed.IQ Reveals New Trends Regarding Auto Lenders’ Use of Artificial Intelligence; Survey Also Illustrates How Much Manual Errors Are Eroding the Bottom Line

Nearly half of executives said deal jacket errors cost them approximately $1 million during 2022

SAN FRANCISCO – (April 4, 2023) – Informed.IQ, a developer of AI-based software that verifies, streamlines and optimizes loan processing, announced today it recently commissioned an industry-wide survey of auto finance executives to identify the key areas where they are leveraging Artificial Intelligence (AI) into their workflows and processes, as well as the challenges they face in implementing automation.

Financial Institutions and auto lenders have been using AI software to make their operations “smarter,” cheaper and faster, yet there is a lot the industry can learn from the following implementation trends and insights. This is important because according to the online survey, presented to more than 2,500 professionals during March, approximately one-third said a quarter of their deal jackets had defects in 2022. Today’s new AI-powered compliance software spots common defects during the loan origination process for F&I add-ons, GAP waivers, or debt cancellation agreements.

You can read the survey here.

Additional Key Highlights from the Survey:

• 95% of lenders are beginning to leverage AI tools in some aspect of their business (i.e. credit decisioning, loan servicing).
• 51% of lenders cited regulator audits as their biggest concern.
• Nearly 44% of lenders are interested in leveraging AI to compete with lenders who are also using these tools.
• 29.7% of lenders said the top metric automation has improved in the lending process is reduced cost.

Auto lenders can more stringently mitigate defect scenarios through the implementation of AI-powered systemic controls that help them avoid audits. Today, the vast majority of lenders do not have systemic controls in place to audit the contents of contracts and deal jackets. However, lenders are looking at implementing these controls either through added in-house staff, which is difficult in today’s tight labor market; relying on existing manual controls, which often are susceptible to human oversight or errors; or through external vendor partners who provide AI-based software-as-a-service solutions to automate much of the process.

According to the survey findings, nearly half of respondents (43%) said deal jacket errors cost them approximately $1 million during 2022.

“Bringing AI into the auto lending process is an important way lenders can stay competitive, profitable and compliant with regulations today,” said Justin Wickett, CEO of Informed.IQ. “Our lender partners rely on our advanced AI technology to simplify and automate the process of collecting and analyzing data, with the goal of helping to fund loans as quickly and efficiently as possible while lowering cost to fund, lowering the cost of processing GAP refunds for early payoffs, improving compliance, and lowering the cost of regulatory matters.

The majority of lenders surveyed said they primarily average between eight and twelve minutes to remediate a deal jacket and then manually onboard it – precious time that adds up when considering thousands of loans in a portfolio. Half of lenders surveyed said they are most concerned about regulator audits, with another 36% saying they’re concerned with the increasing number of staff hours to scrutinize accuracy and/or rectify errors.