Temenos (SIX: TEMN), the banking software company, announced today the launch of Explainable AI (XAI) models to enable banks and credit unions to rapidly offer loans to small and medium enterprises (SMEs) that have seen their cash flow disrupted by the Covid-19 outbreak.
These patented XAI models allow banks to accelerate digital onboarding, conduct eligibility checks and process loan applications for SMEs and retail customers. The models are available as part of the Temenos AI portfolio or can be integrated with Temenos Infinity, the leading digital omnichannel product, and are delivered as Temenos SaaS for fast and scalable deployment.
Max Chuard, Chief Executive Officer, Temenos, said: “These are challenging times for small businesses in particular. As the leader in banking software, Temenos 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 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.”
Temenos’ XAI models help banks make urgent lending decisions that are transparent and explainable in human language to the end-users, customers and the regulators. These models enable banks to identify appropriate products that carry an acceptable level of risk for both the customer and the bank. The SME model, in particular, provides on average over 25% greater accuracy compared to the risk score provided by leading credit bureaus, allowing banks to increase their pass rate by 20% while keeping defaults under control.
The new XAI models enable banks to take into account a wide range of variables when making lending decisions, such as additional incomes, new cost reductions, and alternative forms of collateral. Temenos XAI models can instantly calculate the impact of new variables and suggest additional terms and conditions.
As a result of the pandemic, banks are being asked to lend in unusual circumstances, requiring them to manage the twin pressures of increasing arrears and political pressure not to trigger defaults. Government Initiatives like the UK Coronavirus Business Interruption Loan Scheme (CBILS) and the US Paycheck Protection Program (PPP) are aiming to help SMEs in need of financial support by promoting emergency bank loans.
Jerry Silva, Research Vice President, IDC, said: “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 centralizing 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.”
These API-driven XAI models can be rolled out with the associated policy rules, allowing smart decision-making with minimal integration that can be deployed in the cloud in days or just a few weeks. This consistency in decision-making helps frontline staff by reducing the need for manual intervention, which can slow the processing of the huge volumes of applications being considered. Temenos’ XAI models can be used by any business user with minimum reliance on the IT department.
The XAI models available worldwide include:
• Temenos AI - SME Smart Decisioning: Temenos provides centrally created support for decision makers at the front line, for on-boarding, edibility 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 - Personalization: Offer personalized 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.