New AI banking solution rolled out to accelerate SME finance

Switzerland-based banking software company Temenos has announced the international launch of a new artificial intelligence program, which aims to help banks and credit unions in “rapidly” offering loans to small and medium-sized enterprises (SMEs). The products come following increasing concerns about the speed at which distressed businesses are able to access cash flow finance – such as bridging loans.

Temenos’ new Explainable AI (XAI) models will reportedly allow banks to accelerate digital onboarding, conduct eligibility checks and process loan applications for SMEs and retail customers through cloud-based software as a service (SaaS) technologies.

The models have been developed to integrate with other Temenos AI and SaaS products, currently utilised in Australia by a range of lenders including Westpac, MyState and Judo Bank.

According to the software company, the new XAI models will help banks make “urgent lending decisions” that are transparent and simple to use for the lender, customer and regulators, and will allow lenders to identify appropriate lending products that “carry an acceptable level of risk for both the customer and the bank”.

The SME model reportedly provides more accurate risk scoring than those offered by some credit bureaus, which could see banks increase their “pass rate” by 20 per cent while keeping defaults under control.

The models will also enable banks to take into account “a wide range of variables” when making lending decisions, including additional incomes, new cost reductions and alternative forms of security. The XAI models can then “instantly” calculate the impact of new variables and suggest additional terms and conditions.

Further, the software provider said that the consistency in decision-making through the use of the XAI models could help reduce the need for manual intervention, which can slow the processing of the huge volumes of applications being submitted during the COVID-19 pandemic

According to Max Chuard, CEO of Temenos, the XAI products have been rolled out to assist banks in meeting their lending obligations, maintaining lending portfolios and assisting small-business clients through this difficult economic period.

“These are challenging times for small businesses in particular,” he said, adding that the company is “committed to innovation that not only keeps banks and the global economy running, but also helps SMEs and retail customers access funding at a time of financial distress”.

“We are delivering our cloud-native, advanced AI banking software as SaaS to enable banks to qualify and process loans rapidly. I am proud that with our technology we can provide banks with a modern digital banking platform and decision-making capabilities, allowing them to move incredibly fast and compress projects that would usually take months into days.” 

Jerry Silva, research vice president, IDC, added: “A record number of small businesses and individuals are now applying for loans and financial relief. In the face of this demand, banks need to respond by providing digital self-service user journeys, quickly conducting eligibility checks, adhering to bank risk criteria and establishing appropriate pricing. 

“Solutions like Temenos’ new XAI models are designed to help banks accelerate the loan application process by centralising and enforcing policy rules using AI to ensure decisions are based on bank-specified criteria while maintaining transparency with customers and maintaining compliance and risk controls,” Mr Silva said.

The new XAI models include: 

• Temenos AI – SME Smart Decisioning: Temenos provides centrally created support for decision makers at the front line, for onboarding, credibility checks and rapid loan processing. Furthermore, it reduces the need for human intervention in underwriting departments. The model is already proven with blue-chip UK lenders and can rapidly augment the decision-making processes already in place. 
• Temenos AI – Urgent Relief Loan: Identify customers with a significant drop in income, who are at financial risk, and offer further credit or credit deferral products. 
• Temenos AI – Personalisation: Offer personalised products to customers in real-time based on their changing behaviors and needs identified using Explainable AI models 
• Temenos AI – Loan Pre-Approvals: Lending pre-approval for all customers. Expedite short-term urgent lending to the greatest number of customers. 
• Temenos AI – Digital Financial Advice: Identify customers who are unlikely to be able to continue without finding a new source of income, hence both reducing risk and offering the opportunity to provide suitable financial solutions to them.

[Related: Virgin partners with Deloitte, Temenos to build ‘new digital bank’]

Hannah Dowling is a journalist for mortgage business, the leading source of news, opinion and strategy for professionals working in the mortgage industry.

Prior to joining the team at Mortgage Business, Hannah worked as a content producer for a podcast catering to property investors. She also spent 6 years working in the real estate sector at a local agency. 

Hannah graduated from Macquarie University with a Bachelor of Media and Journalism. 

You can email Hannah at: This email address is being protected from spambots. You need JavaScript enabled to view it.