Borrowing in 2026: What you’ll actually experience | FinTrends

Description

In this episode, we sit down with Andrew Steadman, Chief Product Officer at SBS, to explore the lending trends borrowers will genuinely feel this year and beyond. We cut through the noise around AI to look at where it is actually delivering value for borrowers, and where it’s falling short due to poor data quality, lack of transparency, and trust issues. Andrew shares how better use of data, particularly through open banking, can lead to fairer, more informed loan decisions that protect both lenders and borrowers. We discuss why explainability is critical for AI-driven decisions, what lessons the industry has learned the hard way, and how regulation is shaping a more transparent future. The conversation also turns practical: what are the first simple steps lenders can take to make real progress without overhauling their entire systems? Finally, we fast-forward two years to imagine what lending could look like, what will be faster, cheaper, or safer, what role humans will still play, and why the borrower experience at the point of need remains the biggest opportunity for change.

Hosted on Ausha. See ausha.co/privacy-policy for more information.

Transcription

Speaker #0
Welcome everyone. Today I'm joined by Andrew Steadman, Chief Product Officer at SBS, to break down the lending trends Bowerworths will actually feel this year. We will look at where data truly improves decisions, what AI is getting right and wrong, and the simple steps lenders can take to see real progress. Then we'll fast forward two years to what will be faster. cheaper or safer and what probably won't change. So thank you Andrew for being with us and sharing your insights.
Speaker #1
You're very welcome it's good to be back.
Speaker #0
So let's dive in with the first question what's the biggest change in lending this year that every borrower will actually feel?
Speaker #1
I think with all of the noise in the industry about AI I think the impact of that on borrowers is going to be felt more. I think what we've seen over the last year or so is banks trying to use AI, but it's not been that successful because of the quality of data. So I think going forward, there is real value to be had, and it provides a faster service for me as a borrower or informed service. So I think we'll see much more activity in that space than we have in the prior year.
Speaker #0
Where does using more data genuinely improve loan decisions?
Speaker #1
Well, I think... I think the information any vendor has about an individual, the better decision they can make. You know, I mean, the traditional idea of could I see your past three bank statements, right? We've all had that request at some point. I think with the realms of open banking, the ability for me to give access to my data for the purpose of making the decision is much more controlled. I have control over what... that data is being used for but also i can give you much more access to more data it's not just three bank statements it's potentially a year's worth of transactions and i think when a bank uses that information properly they can give me a better decision they won't perhaps lend me too much and overstretch me they'll understand my position understand where i spend so i think I think it's almost they can consider me as well as themselves. in making that decision. So they will manage their risk, but also when they distract me as a borrower.
Speaker #0
So I'm curious, where do you draw the line to keep it fair and transparent?
Speaker #1
I think fairness is all about me as the borrower being clear about what information I will share and what it's used for. So the transparency comes from the bank explaining that. But also they have to be responsible enough to then almost forget that information. after they've used it for the purpose I gave it. I think one of the fears that people have had in the past is that they give information to a bank for one purpose and it's used for other purposes. With all of the regulation around data nowadays, that has to be much more transparent. So I should be very confident in being able to give you the information for the purpose of benefiting me as the borrower. And I think that's the critical thing. And if banks can show that, child. the trust, which is really what it's all about, then I'm willing to share more information. Simple as that.
Speaker #0
Earlier, you were talking about AI. So about AI in lending, can you give us one success you've seen in the wild and one lesson learned the hard way?
Speaker #1
Yeah. So I think for me, one of the really good examples is with buy now, pay later lending. It was a very different type of lending. It was immediate decision making. And I think what we saw is the application of analytics in a way that hadn't been done before. And particularly because it was a new type of lending, we saw the lenders themselves using their own information and building their own algorithms to determine the behavior of consumers in this new type of lending. And so I think we've seen a lot of success with it there. There'll always be debate about whether it's the right type of lending and those sorts of things. But I think if you look at it being used responsibly, I think the problems the industry has with buy now, pay later are more related to the broader sharing of data about who's borrowing what, which we have in other types of lending, but haven't fully got that in place for buy now, pay later. In terms of horror stories, which there are a few out there, obviously we can't name names. But I think it's when the data is used for a decision that doesn't make sense. So I, as a borrower, I look at it and go, well, why was that refused? It doesn't make sense to me. My risk profile is good. I haven't got other borrowing. What's going on? And with a lot of AI systems, the bank then can't give you the explanation. And if the explanation is not there, I can't trust it. And I think that's one of the difficulties banks are having with AI, is if it's not explainable to a consumer. I don't trust it because I don't know what's going on. And I think we see the AI Act in Europe really driving to fix that problem, to force people to explain the decision. And yes, they are complex decisions, but if they can't really be explained, why would I ever trust them? So I think if you look at examples of where that's happened, that's probably where the failings come in.
Speaker #0
If a lender wants more progress without a big overall, what are the first... two or three steps that deliver results?
Speaker #1
I think for me, there are a couple of things as a lender. There's firstly, looking at where the existing process can be complemented with new technologies such as AI. Banks are already making decisions. And typically, those decisions are being made through APIs to some form of system. Can that be complemented by adding in an AI component? It's not about disrupting the whole of the system or the whole of the... the process. It's about just adding in that extra thinking, if you like, that extra decision making process. So I think that's an option. The other one is increasingly we are looking at borrowing at a point in time. We're in a car dealership buying a car, right? We're standing on the front at the front of a house looking at a new house wondering how much it's going to cost me to buy. Enabling me as a borrower at my point of need. to be able to understand whether I can borrow, I think that's going to be an important thing. And that's less about the overall decision, it's just about making that information available to me more easily.
Speaker #0
Fast forward two years, what will be faster, cheaper, or safer in lending? And what is one thing that probably won't change?
Speaker #1
So I think safer and cheaper and things like that. I think technology can... enable better decisions to be made faster. So as a borrower, I really can get the decision I want when I want it. We all talk to many banks around the globe, and we know that decision making takes too long, right? And often it's the human in the loop that is delaying things. I don't think the human in the loop will ever disappear, but it's about reducing their involvement as much as possible. always going to be a need for them to review certain cases. I don't think that will ever go away, but it should be a minimal number rather than the majority. So as I said, the example of you standing on a forecourt looking to buy a car, why can you not scan the vehicle number with your phone, have your bank then tell you how much they'll lend, you say yes, they send the money to the dealer, you drive off in the car. The mechanisms all exist to make it that fast, but the industry is not there yet. And I think it's those types of things. That's why buy now, pay later for me is a good example. At my point of purchase, I can borrow the money. It's done in an automated way because it's often small amounts, often borrowed over a short period. And so the risk profile is very different. But that thinking needs to be extended to other types of lending, perhaps of higher value. add convenience to me as a borrower. So I think that's where the real opportunity lies to really service the customer where they want to be borrowing the money, not identifying the thing they want to purchase and then going to have to talk to the bank. It's a disjointed experience and I think they need to solve that.
Speaker #0
When do you think we will reach that point?
Speaker #1
I think it'll be a few years. I'd love to see it within two years but I fear it might be a bit longer than that Just because. you know it needs disruption often a disruptor comes in to do that will cause the industry to move um so hopefully we'll see a disruptor we'll push that or somebody who's more imaginative and creative willing to try um but it's a bit of a journey because i think particularly in the borrower in lending generally the risk issue that the banks have to deal with is their primary concern and so they're much more cautious in the way they offer services to be consumed. Opening a savings account, far less risk involved. They'll let you do it online quickly, promptly. But as you get into the lending, they want more caution and time. But I think with open banking, with immediate payments, if you think about open banking, you can literally open your bank account to the lender and say, have a look, they see your salary, they see where you're spending, they see all of your utilities, they can understand your cash flow immediately. So they can determine how much you can borrow. And if you say yes, they can immediately send the money to the dealer and you can drive off in your new car. So I think the mechanisms are there. It's whether the industry is really wanting to push that hard and make it happen.
Speaker #0
Great. Thank you so much, Andrew, for being with us.
Speaker #1
You're very welcome.

Description

Hosted on Ausha. See ausha.co/privacy-policy for more information.

Transcription

Speaker #0
Welcome everyone. Today I'm joined by Andrew Steadman, Chief Product Officer at SBS, to break down the lending trends Bowerworths will actually feel this year. We will look at where data truly improves decisions, what AI is getting right and wrong, and the simple steps lenders can take to see real progress. Then we'll fast forward two years to what will be faster. cheaper or safer and what probably won't change. So thank you Andrew for being with us and sharing your insights.
Speaker #1
You're very welcome it's good to be back.
Speaker #0
So let's dive in with the first question what's the biggest change in lending this year that every borrower will actually feel?
Speaker #1
I think with all of the noise in the industry about AI I think the impact of that on borrowers is going to be felt more. I think what we've seen over the last year or so is banks trying to use AI, but it's not been that successful because of the quality of data. So I think going forward, there is real value to be had, and it provides a faster service for me as a borrower or informed service. So I think we'll see much more activity in that space than we have in the prior year.
Speaker #0
Where does using more data genuinely improve loan decisions?
Speaker #1
Well, I think... I think the information any vendor has about an individual, the better decision they can make. You know, I mean, the traditional idea of could I see your past three bank statements, right? We've all had that request at some point. I think with the realms of open banking, the ability for me to give access to my data for the purpose of making the decision is much more controlled. I have control over what... that data is being used for but also i can give you much more access to more data it's not just three bank statements it's potentially a year's worth of transactions and i think when a bank uses that information properly they can give me a better decision they won't perhaps lend me too much and overstretch me they'll understand my position understand where i spend so i think I think it's almost they can consider me as well as themselves. in making that decision. So they will manage their risk, but also when they distract me as a borrower.
Speaker #0
So I'm curious, where do you draw the line to keep it fair and transparent?
Speaker #1
I think fairness is all about me as the borrower being clear about what information I will share and what it's used for. So the transparency comes from the bank explaining that. But also they have to be responsible enough to then almost forget that information. after they've used it for the purpose I gave it. I think one of the fears that people have had in the past is that they give information to a bank for one purpose and it's used for other purposes. With all of the regulation around data nowadays, that has to be much more transparent. So I should be very confident in being able to give you the information for the purpose of benefiting me as the borrower. And I think that's the critical thing. And if banks can show that, child. the trust, which is really what it's all about, then I'm willing to share more information. Simple as that.
Speaker #0
Earlier, you were talking about AI. So about AI in lending, can you give us one success you've seen in the wild and one lesson learned the hard way?
Speaker #1
Yeah. So I think for me, one of the really good examples is with buy now, pay later lending. It was a very different type of lending. It was immediate decision making. And I think what we saw is the application of analytics in a way that hadn't been done before. And particularly because it was a new type of lending, we saw the lenders themselves using their own information and building their own algorithms to determine the behavior of consumers in this new type of lending. And so I think we've seen a lot of success with it there. There'll always be debate about whether it's the right type of lending and those sorts of things. But I think if you look at it being used responsibly, I think the problems the industry has with buy now, pay later are more related to the broader sharing of data about who's borrowing what, which we have in other types of lending, but haven't fully got that in place for buy now, pay later. In terms of horror stories, which there are a few out there, obviously we can't name names. But I think it's when the data is used for a decision that doesn't make sense. So I, as a borrower, I look at it and go, well, why was that refused? It doesn't make sense to me. My risk profile is good. I haven't got other borrowing. What's going on? And with a lot of AI systems, the bank then can't give you the explanation. And if the explanation is not there, I can't trust it. And I think that's one of the difficulties banks are having with AI, is if it's not explainable to a consumer. I don't trust it because I don't know what's going on. And I think we see the AI Act in Europe really driving to fix that problem, to force people to explain the decision. And yes, they are complex decisions, but if they can't really be explained, why would I ever trust them? So I think if you look at examples of where that's happened, that's probably where the failings come in.
Speaker #0
If a lender wants more progress without a big overall, what are the first... two or three steps that deliver results?
Speaker #1
I think for me, there are a couple of things as a lender. There's firstly, looking at where the existing process can be complemented with new technologies such as AI. Banks are already making decisions. And typically, those decisions are being made through APIs to some form of system. Can that be complemented by adding in an AI component? It's not about disrupting the whole of the system or the whole of the... the process. It's about just adding in that extra thinking, if you like, that extra decision making process. So I think that's an option. The other one is increasingly we are looking at borrowing at a point in time. We're in a car dealership buying a car, right? We're standing on the front at the front of a house looking at a new house wondering how much it's going to cost me to buy. Enabling me as a borrower at my point of need. to be able to understand whether I can borrow, I think that's going to be an important thing. And that's less about the overall decision, it's just about making that information available to me more easily.
Speaker #0
Fast forward two years, what will be faster, cheaper, or safer in lending? And what is one thing that probably won't change?
Speaker #1
So I think safer and cheaper and things like that. I think technology can... enable better decisions to be made faster. So as a borrower, I really can get the decision I want when I want it. We all talk to many banks around the globe, and we know that decision making takes too long, right? And often it's the human in the loop that is delaying things. I don't think the human in the loop will ever disappear, but it's about reducing their involvement as much as possible. always going to be a need for them to review certain cases. I don't think that will ever go away, but it should be a minimal number rather than the majority. So as I said, the example of you standing on a forecourt looking to buy a car, why can you not scan the vehicle number with your phone, have your bank then tell you how much they'll lend, you say yes, they send the money to the dealer, you drive off in the car. The mechanisms all exist to make it that fast, but the industry is not there yet. And I think it's those types of things. That's why buy now, pay later for me is a good example. At my point of purchase, I can borrow the money. It's done in an automated way because it's often small amounts, often borrowed over a short period. And so the risk profile is very different. But that thinking needs to be extended to other types of lending, perhaps of higher value. add convenience to me as a borrower. So I think that's where the real opportunity lies to really service the customer where they want to be borrowing the money, not identifying the thing they want to purchase and then going to have to talk to the bank. It's a disjointed experience and I think they need to solve that.
Speaker #0
When do you think we will reach that point?
Speaker #1
I think it'll be a few years. I'd love to see it within two years but I fear it might be a bit longer than that Just because. you know it needs disruption often a disruptor comes in to do that will cause the industry to move um so hopefully we'll see a disruptor we'll push that or somebody who's more imaginative and creative willing to try um but it's a bit of a journey because i think particularly in the borrower in lending generally the risk issue that the banks have to deal with is their primary concern and so they're much more cautious in the way they offer services to be consumed. Opening a savings account, far less risk involved. They'll let you do it online quickly, promptly. But as you get into the lending, they want more caution and time. But I think with open banking, with immediate payments, if you think about open banking, you can literally open your bank account to the lender and say, have a look, they see your salary, they see where you're spending, they see all of your utilities, they can understand your cash flow immediately. So they can determine how much you can borrow. And if you say yes, they can immediately send the money to the dealer and you can drive off in your new car. So I think the mechanisms are there. It's whether the industry is really wanting to push that hard and make it happen.
Speaker #0
Great. Thank you so much, Andrew, for being with us.
Speaker #1
You're very welcome.

Embed