The FCA has announced details of its successful and catchily named ‘fourth cohort candidates’ in its sandbox. This allows firms to test innovative products in a live environment, while ensuring appropriate protections are in place.
The 29 successful firms include businesses ‘testing’ automated solutions across a range of product areas including automated advice and decisioning. At the same time, UK Finance has recently hosted a webinar focusing on AI in the credit process.
Machine learning, driven by the exponential growth in computing power, has improved significantly since the smoke and mirrors ‘one-minute mortgage’ type solutions of a decade ago. However, the need to control and explain the relationships that exist in auto-decisioning/robo-advice remains the number one objection to the early adoption of AI based technologies.
Regulators remain conscious that, despite the potential benefits, AI presents new challenges and risks and the FCA sandbox allows firms and the regulator to undertake resilience testing in a learning environment. Whilst this helps with risk mitigation, ongoing oversight is still necessary to limit the risk of inappropriate consumer outcomes.
Some lenders continue to, and always will, seek competitive advantage by promoting human based decisioning. For example, many specialist lenders continue to exploit their niche sectors by promoting their skilled and experienced underwriters’ ability to assess complex consumer situations.
Rockstead remains at the forefront of both models. We support clients with risk policy and loan assessment reviews, support lenders with underwriting staff via our staffing services facilities and we are embracing AI to monitor 100% of clients’ interactions via calls, webchat, email and social media via YabberTM.