The automotive and asset finance industry is undergoing a profound transformation, driven by the integration of artificial intelligence (AI) into underwriting, contract management and customer engagement. While AI delivers speed, accuracy and predictive capabilities, human intelligence (HI) remains essential for strategic oversight, ethical decision-making and complex problem-solving.
Together, they form a powerful synergy that enhances efficiency, compliance and customer experience, ensuring financial institutions remain competitive in a rapidly evolving digital landscape.
The bedrock
At the core of this technological revolution lies an undeniable truth: human intelligence is the bedrock for all artificial intelligence. Without the ingenuity, creativity and complex problem-solving abilities of the human mind, AI would simply not exist. It is human intelligence that conceives, designs and implements AI systems, imbuing them with the ability to process vast amounts of data and make decisions based on predefined parameters.
AI and HI: who’s in charge?
Traditionally reliant on human expertise and judgment, the automotive and asset finance industry is now at the forefront of this AI revolution. However, it’s crucial to understand that AI is not replacing human intelligence but augmenting it – creating powerful synergies that transform every aspect of the finance lifecycle.
In underwriting, for instance, AI algorithms can analyse thousands of data points in seconds, assessing risk factors that might take human underwriters hours or even days to process. Trained on historical data and continuously updated with new information, AI systems can identify patterns and correlations that might escape even the most experienced human analysts. However, it’s the human touch that provides the nuanced understanding of unique circumstances, economic trends and regulatory changes that AI alone cannot fully grasp.
The proposal-to-acceptance process has been streamlined through AI-powered systems that can provide near-instantaneous loan approvals. These systems analyse credit scores, income data and other relevant factors to make quick, accurate decisions. Yet, it’s human intelligence that sets the parameters for these systems, ensuring they align with the company’s appetite for risk and regulatory requirements. Moreover, in cases where AI flags an application as borderline, it’s human judgment that makes the final call, balancing factors that may not be easily quantifiable.
Contract management has also been revolutionised by AI-driven document processing and verification systems. These tools can quickly scan and analyse customer income verification proofs as well as complex legal documents, flagging potential issues and ensuring compliance with regulatory standards. Again, the interpretation of contractual nuances and the negotiation of terms still relies heavily on human expertise. The combination of AI efficiency and human insight leads to more robust, fair and mutually beneficial contracts.
Customer still comes first
The power of AI’s predictive analytics comes to the fore when predicting the optimum moment to reconnect with a customer to promote repurchase. AI can analyse market trends, vehicle condition data, historical sales and finance information at lightning speed. Furthermore, the model can be fed with additional disparate data sets such as spot vehicle market prices, as well as being able to calculate future residual values, thus optimising remarketing strategies.
However, fundamentally it’s human intelligence that sanity checks the AI output by interpreting these predictions in the context of broader economic factors. Used judiciously, AI allows financiers in collaboration with their brand partners to better structure and position their customer renewal activities, thus ensuring that early renewals, as well as mid-term and end-of-term contact strategies, are data-driven and strategically sound.
The engine room
In collections, AI has proved invaluable in the early detection of potential defaults and personalising communication strategies for delinquent accounts. Machine-learning algorithms can identify subtle indicators of vulnerability and financial distress long before traditional methods would raise red flags. However, the sensitive nature of collections requires a human touch. Empathy, negotiation skills and the ability to craft personalised repayment plans are uniquely human traits that AI cannot yet replicate.
A blended solution
A blended solution provides a win-win for all stakeholders across every touchpoint. The benefits of this AI–HI synergy extend to all stakeholders in the automotive finance ecosystem. Lenders benefit from improved risk assessment and operational efficiency, leading to better portfolio performance.
Dealers can offer faster approvals and more competitive financing options, enhancing their customer service. Customers enjoy quicker processes, hyper-personalised offerings and potentially better terms due to more accurate risk assessment. And to cap it all, regulators benefit from enhanced compliance monitoring and fraud-detection capabilities.
As we embrace the power of AI in automotive finance, we must not lose sight of the critical role that human intelligence plays in driving innovation and providing ethical oversight. No matter how advanced, AI systems are ultimately tools created by and for humans. They cannot generate truly original thoughts or adapt to entirely novel situations without human intervention.
The ongoing importance of human intelligence in this AI-driven landscape cannot be overstated. Critical thinking, ethical decision-making and the ability to navigate complex, unprecedented scenarios remain uniquely human domains. As AI systems become more sophisticated, the role of the human expert evolves; focusing more on strategic oversight, continuous improvement of AI models and handling the most complex cases that require nuanced judgment.
Looking to the future, the automotive finance industry stands on the cusp of even greater technological advancements. Emerging technologies like blockchain for secure transactions and the Internet of Things (IoT) for real-time vehicle data collection promise to continue the evolution of the auto-lending landscape.
Paul Bennett, Senior Partner at Madox Square LLP (MSQ)
