How AI in lending is reshaping banking

Lending now is much more than handling documents and dealing with loans. Everything is computer-controlled, and lending has become a keystone event in a client’s financial ecosystem where trust is acquired or lost, and customer satisfaction crystallized.

While fintechs focus on serving gig economy workers, or banks go digital into blue oceans, a constant principle prevails: innovation always starts with people. The human factor cannot be overshadowed by technology; it needs to be used to augment it.

Smart shift: AI lending contextualization and clarity elevation

Cloud solutions, real-time analytics, and AI are foundational technologies now entrenched in everyday processes. They are also changing credit evaluations, flagging risks, and personalizing loans with elaborated risk management for every client.

According to the BCG study, AI-powered lending functions can cut approval windows by 30% while reducing credit losses by 20%. These figures showcase true effectiveness and impact, unlike earlier numbers that only highlighted efficiency.

Today, banks are using systems to move from offering generic products to personalized, insight-driven offerings: from zeroing in on EMIs to dynamic adjustment models based on behavior prediction, including preemptive delinquency forecasting.

Whether we like it or not, users now expect to borrow money as easily as ordering food or hailing a ride. Their experience expectations do not stop at the bank’s door.

CX is the difficult-to-define term everyone within an organization likes to work with, but shallow attempts cannot and should not be mistaken for superficial styling. Effective CX begins with thoughtful problem solving and culminates in measurable results: higher NPS scores, effective customer retention, or fewer service complaints.

McKinsey reports that banks excelling at customer experience outperform peers three to one on shareholder returns. The best institutions embed customer experience into operating models alongside budget allocations and KPIs, treating it as a strategic pillar instead of an afterthought.

Purpose-driven innovations

While there are issuers in every corner of financial services, from AI copilots to embedded lending, the biggest worry for most companies is knowing what is actually important and what they need to completely ignore.

Based on research by EY, 43% of customers would pay more for personalized services, but only 18% feel understood by their banks.

That gap is where meaningful innovation should exist. At Nucleus Software, we do not chase trends; we start with defining goals first (for instance, faster loan disbursal, better user journey, or stronger lifetime value), and we systematically work backwards from those goals.

Innovation is powerful so long as it is purposeful and ethically guided.

Trust: The currency of the digital age

We live in a time where data is everything: from lending decisions to targeting customers. However, without strong governance and transparency, that data can quickly escalate into a problem.

A Deloitte study showed that nearly three-quarters of consumers are likely to remain loyal to banks that they believe protect their data privacy.

Banks are required to uphold transparency in an era influenced by AI accountability and data privacy laws. Real-time risk analytics, AI audits, and explainable decision models have become trust enablers, not optional features.

In today’s digital ecosystem, trust is the most vital currency in which banks can deal.

Value over vanity: Measuring what matters

There may be an underlying reason for digital transformation failures, attributed not to absence of willpower but to imposing the wrong metrics for success.

Measuring project milestones or user logins is simple. Assessing whether technology enhances outcomes such as quicker onboarding, lower defaults, or higher retention is what matters most.

With clients from Asia, the Middle East, and Africa, at Nucleus Software we help them design journeys focused on results and let performance speak louder than reports.

In closing: Lending that listens, learns, and leads

Throughout my career, I have noticed the most impactful transformations—cultural or digital—have one thing in common: empathy serves as the bedrock.

Lending in the future will be smarter, but it will also be more inclusive. In addition to foreseeing trends, it comprehends them. Banks and lending institutions that focus on customer satisfaction as a prerequisite will shape the banking industry.

All things considered, true success does not come from being too digital in service approaches and features, but from being more human when it comes to interacting with customers digitally.

Author: Ashwani Arora, Global Head – Customer Success, Nucleus Software