Fintech & AI speed up lending, boost business efficiency

Fintech developments, data sharing, and artificial intelligence are reshaping the lending sector, streamlining finance approvals and enabling faster, more accurate access to funding for businesses and lenders alike.

Gus Gilkeson, Chief Executive Officer of Grow Capital, has outlined how advancements in technology are improving opportunities for those seeking finance, as well as for lending institutions, by minimising delays and inefficiency.

Gilkeson explained that these improvements are influencing both how companies operate and their financial management strategies. He highlighted the practical impact of technology, particularly AI tools, on day-to-day business operations.

"From a borrower's perspective, AI tools offer the chance to find efficiencies both in the overall running of your business, and also in how you manage your cash flow."

"Invoices, incomings and outgoings can be tracked accurately, and in real-time if you want, to provide a clearer picture of the business financials. Forecasting, budgeting, and identifying potential funding gaps can be done easily and efficiently."

He noted that lending institutions also stand to benefit. "For lenders, AI and data-sharing tools are allowing key identification and financial data to be verified sooner and potentially more accurately, as raw data can be shared across platforms reducing the opportunity for human error."

"Ultimately when finance approval times reduce and funding is being made available sooner –the borrower can make strategic decisions faster."

Technology shift

Gilkeson compared current fintech and AI progress to earlier technological revolutions, stating that the sector is still in its early stages of transformation. "I would expect some time in the not-too-distant-future that a business will be able to log on to a portal where all their financial and business data is stored and has previously been verified, allowing them to access millions of dollars in finance with the click of a button."

He identified several key advantages associated with emerging financial technologies:

Access to finance sooner: Quicker funding approval opens opportunities for businesses, particularly when time-sensitive investments or purchases are required or during acquisitions.

Open banking: Through the Consumer Data Right, businesses can securely give consent to share banking and other financial data with authorised parties. This process facilitates quicker verification, reduces paperwork, and minimises the need for physical document signing.

Fraud mitigation: Enabled data sharing allows financial institutions to validate raw information independently, reducing the risk of manipulated balance sheets or omitted information. Human error is also less likely when data is transferred digitally and verified across platforms.

Business efficiencies: For small to medium-sized enterprises, the option to automate financial management and administrative processes has become a reality. According to Gilkeson, "AI tools can flag cash flow risks, optimise payments and identify gaps, potentially resulting in smarter decision-making."

Potential risks

While the benefits are evident, Gilkeson cautioned that there are risks associated with adopting new technology, particularly related to data security and identity protection.

"Do your research into the tools you are adopting and also into how the third parties you're dealing with are storing and managing your data. Having strong cyber security should be a non-negotiable."

He also addressed the reliability of AI-based systems in the financial services sector. "It's also important to remember that AI is not perfect and mistakes can be made, especially if original data is entered incorrectly. You will still need professional services like brokers, accountants and financial planners to check and validate your application or strategy."

Gilkeson acknowledged that the pace of change presents further considerations for the sector. "As with any new technology there are always risks and challenges, but the opportunities this will open up is very exciting."