Temenos rolls out AI models to help banks lend quicker during coronavirus

Written by Ruby Hinchliffe
23rd April 2020

Temenos, the Swiss banking software provider, has launched a series of explainable artificial intelligence (AI) products designed to help banks and credit unions offer loans to small businesses amid the pandemic.

With a second round of the Paycheck Protection Programme (PPP) on the horizon, US banks are among those financial institutions which will soon see their systems in another state of flux to deliver coronavirus business aid.

Temenos says its ‘Explainable AI’ (XAI) models will help all banks globally speed up digital onboarding, complete eligibility checks and process the loans themselves for both small and medium-sized enterprises (SMEs) and retail customers.

It works by using a transparent as opposed to an opaque model, which will allow banks to augment the product with their own safeguards which will vary from country to country.

Temenos’ chief science officer Hani Hagras

“You cannot make decisions about human lives with a model no-one can understand,” chief science officer (CSO) Hani Hagras tells FinTech Futures, pointing out that many software providers still offer opaque AI modelling which makes knowing the risks of lending more a lot harder for banks.

As for what banks already had in place, Hagras says their current systems simply aren’t built for these unprecedented volumes.

“Banks are used to having a low volume of loan applications, so they did it application by application with experienced underwriters and call centres.

“Now these operations are unequipped to deal with this demand. Our AI can expedite accurate decision making and help the front line staff.”

Asked how quickly banks can expect to be able to roll out Temenos’ XAI models, Hagras says it depends on the bank’s set up. The models work by plugging into different information sources, so turnaround time will depend on which sources banks are plugged into.

For UK and EU-based banks, Hagras says this could mean just “a few days” from implementation to go live, but for banks in other countries it could look more like “a few weeks”.

US banks could also be looking at weeks, unless they’re plugged into credit platforms like FICO, in which case Hagras says it could be days.

The software provider says all banks can get access to the XAI models via the Temenos AI portfolio or integrate them with Temenos Infinity, and they don’t already have to be customers of Temenos to use them.

The models include ‘SME Smart Decisioning’, ‘Urgent Relief Loan’, ‘Loan Pre-Approvals’, ‘Digital Financial Advice’, and a ‘Personalisation’ model which allows banks to customise offerings.

Temenos claims the SME model offers on average more than 25% greater accuracy compared to the risk scores provided by major credit bureaus, which it says will in turn allow banks to increase their pass rate by 20% whilst keeping defaults under control.