Artificial Intelligence
Banks, Start Using AI Now to Help Entrepreneurs
Since the start of the COVID-19 crisis, the government has been trying to keep businesses afloat using a variety of measures. Banks also play an important role in providing timely access to credit for small and medium-sized enterprises (SMEs) and self-employed individuals, as we noted in our previous blog post.
Government is pulling out all the stops
Yet—a few weeks later—we see that this flow of funds from banks is only getting off the ground to a limited extent. If banks are smart, they’ll use artificial intelligence right now to help entrepreneurs.
Are banks ready for the boom?
At present, very little use is being made of the programs the government offers through banks. The so-called BMKB-C program, under which the government guarantees 75% of bank loans to small and medium-sized enterprises (SMEs), is now widely available. Banks including ABN AMRO, Deutsche Bank, ING, Rabobank, Riverbank, and Triodos Bank can provide SMEs with additional credit through this program. However, market research shows that 85% of business owners have not yet contacted their bank. With the extension of the COVID-19 measures, it is expected that this trend will gain momentum and that thousands of applications will pour in over the coming weeks.
To be eligible, business owners must demonstrate how “COVID-resilient” they are. The Dutch Banking Association says that banks are conducting an individual credit assessment for each application by examining how revenue and cash flow are trending. Banks are currently in discussions with the government to ensure that applications can be processed in a manageable manner.
“Task AI teams with saving entrepreneurs and the Dutch economy”
Roundtable Discussion on Thursday, November 19
Now is the time to embrace AI
Banks, this is your chance to innovate with Big Data and Artificial Intelligence (AI). These innovations not only help make assessing “COVID-19 resilience” manageable in the current situation; they also offer a sustainable solution for serving a large number of customers and structurally reducing costs in lending. Most banks have built up substantial data and AI capabilities in recent years. A great deal of knowledge and expertise is already in place, but the focus and drive are lacking. Task these resources with saving entrepreneurs and the Dutch economy.
What Does AI Look Like in Lending?
Predictive data applications should incorporate the following elements to assess the company’s viability:
- Transaction data used to prepare the balance sheet. For new loans/customers, the capabilities of PSD2 can offer a solution. This allows payment data to be collected without delay.
- Local economic factors, such as the development of buyers and economic activities in the surrounding area. Google, for example, can provide data for this purpose. For each business location, Google uses historical data to predict peak periods, wait times, and average visit duration. This is a key factor for retail stores, restaurants, hair salons, and gyms—businesses that are currently being hit hard by the COVID-19 restrictions.
- A viability assessment is required in order to grant the loan. AI provides accurate predictions based on payment data, local economic activity, and a smart algorithm.
In summary, banks are preparing to issue thousands of business loans. Assessing resilience to the pandemic is currently a far too time-consuming process that relies on interpretation. Financial institutions can now seize the opportunity to innovate sustainably with scalable data applications to ultimately help the Dutch economy.
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Banks, Start Using AI Now to Help Entrepreneurs
Artificial Intelligence Banks, Start Using AI Now to Help Entrepreneurs Since the start of the COVID-19 crisis, the government has been trying to keep businesses afloat
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