Informed.IQ, a developer of AI-based software that verifies, streamlines and optimizes loan processing, recently commissioned an industry-wide survey of auto finance executives to identify the key areas where they are leveraging Artificial Intelligence (AI) and automation into their workflows and processes. It focused on different areas where compliance issues are affecting them most, as well as the overall challenges they face in implementing automation.

The online survey was presented to more than 2,500 auto finance leaders during January, and the majority of respondents said GAP refunds (25.3%), regulatory compliance (22%), delinquencies (21%) and fair lending (21%) were the topics most concerning to them entering 2024. Nearly half of the respondents (44%) said they haven’t incorporated AI into their lending because their C-Suite still hasn’t fully bought into the idea, and another 30% said they still aren’t operating in a fully digital environment.

Key trends in deal jackets and loan defects

• The majority of respondents (31%) said they want to improve dealer satisfaction as a reason to adopt more automation or AI tools for deal jackets. 26% of respondents said they want to compete more aggressively with other lenders.
• Employer mismatch (26.3%), income mismatch (24.2%) and missing signatures (23.2%) represent the biggest challenges when it comes to documentation defects today.
• The majority of respondents (44%) said that less than 10% of their deal jackets had defects in 2023. Roughly a quarter of respondents said 30% of their deal jackets had defects in 2023.
• Another 44% said errors in their deal jackets in 2023 cost them an estimated $1 million in 2023. Nearly a third or respondents (30%) said deal jacket errors cost them between $1 million to $5 million in 2023.
• When it comes to the accuracy of deal jackets, 46% of respondents said they are most concerned about increasing the number of staff hours to scrutinize accuracy and/or rectify errors.

Building more automation into the lending process   

Lenders understand it is imperative to seek ways to build more efficiencies that streamline the lending processes. Automation is not just a convenience. It’s a strategic imperative in today’s fast-paced environment. By incorporating advanced automation into lending procedures, lenders can make more informed and timely decisions, reduce operational costs, and provide an unparalleled experience for their customers.

Key trends in automation for lenders

• The majority of respondents (21%) said automation has reduced fraud in their lending process followed by 19% who said it increased speed.
• Regarding the measurement of success of automation, most respondents (32%) said it has improved customer satisfaction followed by 30% saying it reduced turnaround time.
• 42% said they plan to upgrade existing automation systems in their future plans. 31% said they would integrate with other systems.
• While 41% indicated budget concerns, another 35% said they are concerned about the lack of knowledge or expertise in making additional implementations.

“This survey and study shows that we’re making progress in the industry, educating lenders on the opportunity and promise of everything AI and automation can do for workflows, deal jacket accuracy and customer improvements,” said Justin Wickett, CEO of Informed. “The future of lending is rooted in data, accuracy and customer satisfaction, and AI and automation are keys to unlocking that future. It’s not just about embracing innovation. It’s about leading the charge toward a more agile and responsive financial ecosystem.”

Click here to see the complete report.