Fintech & Ecommerce

Upstart Shows Record AI Automation in Unsecured Loans

Fully automated unsecured loans enabled by Upstart AI technology provide instant and automated approval with no waiting, no documents to upload and no phone calls

Upstart Shows Record AI Automation in Unsecured Loans

Artificial intelligence (AI) lending platform Upstart has reached a record 88% percentage of automated unsecured loans.

To compare, the company’s share of fully-automated unsecured loans stood at 29% in Q2 2017. By 2019, it reached 64% and slowly progressed to 69% in Q2 2021.

The high share of unsecured loans becoming fully automated is meaningful for Upstart. Since loan automation means no waiting, no documents to upload and no phone calls, the lender can scale originations faster than headcount. Besides, the platform’s customers who face a seamless instant approval process are more eager to use Upstart’s services in the future and recommend it to others.

Upstart is one of the top financial platforms for the sharing economy, connecting borrowers and lenders in a smart way. Its AI algorithms define creditworthiness in a non-traditional way, taking into account the borrower’s education, area of study, and job history, among other factors.

It enables the platform’s sophisticated machine learning to more accurately identify risk and give more loan applicants a financial opportunity than it happens with traditional, credit-score based lending models.

The automation score was announced during the company’s quarterly earnings call for Q2 2023. The quarterly results also displayed other positive tendencies. Thus, Upstart achieved record-high contribution margin and positive cash flow in Q2 as well.

At the same time, the AI lender’s total revenue decreased by 40% from the second quarter of 2022, to $136 million.  Its lending partners originated 109,447 loans, totaling $1.2 billion across the platform, down 64% from the same quarter of 2022.

AI technology can greatly facilitate the decision-making process for lenders. However, it is not the only way how AI can be used in mortgage lending as one of the most popular loan types.

Nina Bobro

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Nina is passionate about financial technologies and environmental issues, reporting on the industry news and the most exciting projects that build their offerings around the intersection of fintech and sustainability.