NXTsoft, Upstart Team to bring AI to lenders


NXTsoft, which provides API connectivity to banks and FinTechs, announced Wednesday (June 23) that it has partnered with artificial intelligence (AI) lending platform provider Upstart.

The deal “will allow Upstart to more effectively implement its fully digital AI lending platform to any US-based financial institution,” the two companies said in a press release.

Upstart’s AI is powered by more than 1,000 variable and advanced machine learning algorithms, enabling greater automation and more accurate risk-based pricing. In turn, this allows banks and credit unions to approve more borrowers at the same rate of loss as traditional models based on FICO scores.

Through integration with Birmingham, Alabama-based NXTsoft, FIs can more quickly integrate Upstart’s AI platform into their services. NXTsoft claims that its OmniConnect secure API solution “has established API connectivity to 99% of all US-based backend systems and can provide API connectivity between those back-end systems and any ancillary FinTech solution.”

Founded 25 years ago, NXTsoft provides OmniConnect to over 1,000 financial institutions.

San Mateo-based Upstart said its mission was “to help solve massive inefficiencies in the credit market.” The company added that the industry “has relied on credit scores and a handful of variables to make lending decisions, resulting in very inaccurate assessments of a borrower’s true credit value.”

This has created a situation where less than half of American consumers have access to prime credit, even though 80% of them have never defaulted on a loan. “This disparity is a direct result of the lack of information available to financial institutions to do better credit scores,” the companies said.

And while the number of banks using AI to assess credit risk has tripled over the past three years, those gains have been mostly limited to larger lenders, according to a report compiled by PYMNTS and Brighterion.

In 2018, only 5% of FIs used AI systems for credit risk management and fraud detection. This year that figure has risen to 16%. However, these figures were flawed. Only a handful of small banks reported using AI, while 79% of those with $ 100 billion or more in assets said they used AI.

To learn more about this topic, download a copy of the PYMNTS report, AI in Focus: The Navigating Bank Credit Risk Playbook.



About the study: The AI ​​In Focus: The Bank Technology Roadmap is a research and interview report examining how banks are using artificial intelligence and other advanced IT systems to improve credit risk management and other aspects of their operations. The Playbook is based on a survey of 100 banking executives and is part of a larger series assessing the potential of AI in finance, healthcare and others.


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