First Internet Bank: AI-Powered Efficiency in SBA Lending

First Internet Bank, a pioneer in branchless banking since 1999, has announced a significant leap in its operational capabilities by integrating Parlay Finance’s cutting-edge artificial intelligence-native Loan Intelligence System (LIS). This strategic collaboration is specifically designed to bolster the bank’s Small Business Administration (SBA) lending operations, promising a substantial transformation in how small businesses access crucial capital.

The integration is poised to deliver remarkable improvements, with First Internet Bank anticipating an impressive increase of up to 50% in efficiencies across the entire lending process. The LIS is engineered to meticulously eliminate manual tasks that traditionally consume valuable time and resources, thereby freeing the SBA lending operations team to focus on more strategic initiatives. Furthermore, the system is designed to furnish deeper, more granular insights crucial for robust loan decision-making, ensuring a faster, more accurate, and equitable lending environment for small and medium-sized enterprises (SMEs).

The Genesis of a Strategic Partnership

The alliance between First Internet Bank and Parlay Finance underscores a shared vision for modernizing financial services through technological innovation. First Internet Bank, with its legacy of disrupting traditional banking models, continues its trajectory of innovation by embracing AI as a cornerstone for future growth. Nicole Lorch, President and Chief Operating Officer at First Internet Bank, highlighted the immediate benefits of this partnership, stating, “Partnering with Parlay has allowed us to reclaim hours once spent on manual data entry and repetitive tasks.” This sentiment reflects a broader industry trend towards automating routine processes to enhance productivity and employee satisfaction.

Echoing this enthusiasm, Craig Fortner, Senior Vice President and Chief Information Officer at First Internet Bank, lauded the seamless nature of the integration. Fortner noted that the LIS “integrated seamlessly into our tech stack, instantly boosting data quality and workflow efficiency.” This smooth adoption is critical for any new technology, ensuring minimal disruption and immediate value generation. The ability of the LIS to enhance data quality is particularly vital, as accurate and comprehensive data forms the bedrock of sound financial decisions and risk management.

Unpacking Parlay Finance’s Loan Intelligence System (LIS)

The Parlay Finance LIS is a sophisticated platform engineered with a suite of features designed to revolutionize the SBA lending landscape. Its capabilities extend across multiple critical areas of the lending lifecycle:

Core Capabilities for Enhanced Efficiency

• Real-Time Customer Onboarding and Guidance: The system provides dynamic, real-time support throughout the onboarding process, ensuring that borrowers are guided efficiently and accurately, improving the speed and integrity of submissions.
• Intelligent Information Validation: Leveraging advanced algorithms, the LIS taps into a diverse array of data sources, including credit bureaus, financial statements, tax records, and incorporation documents. This comprehensive validation process significantly reduces errors and fraudulent activities, enhancing the reliability of loan applications.
• AI-Powered Analysis: The LIS employs artificial intelligence to accelerate pre-vetting and deal structuring. This AI-driven analysis enables lenders to quickly assess the viability of applications, identify potential risks, and structure loan terms more effectively, leading to quicker approvals.
• Institutional Lending Intelligence: Beyond mere automation, the system is designed to scale the bank’s unique expertise. It captures and institutionalizes the collective knowledge and best practices of First Internet Bank’s lending specialists, making this invaluable insight accessible across the organization.

Transforming the Borrower Experience

For small business borrowers, the integration of the LIS translates into a markedly improved and transparent experience. The system empowers applicants to submit inquiries and subsequently receive real-time updates regarding their business health, the status of their application, and clear, actionable next steps in the lending process. This level of transparency and responsiveness significantly enhances customer satisfaction and builds trust.

Alex McLeod, Founder and CEO of Parlay Finance, emphasized the forward-thinking nature of First Internet Bank, stating, “First Internet Bank pioneered branchless banking in 1999. Now they’re showing the industry how AI strengthens relationship banking and enables lenders to serve far more small businesses.” This statement underscores the potential of AI to not only streamline processes but also to foster deeper, more meaningful relationships between banks and their small business clients.

The Broader Impact of AI in Lending

The move by First Internet Bank and Parlay Finance is indicative of a broader industry shift towards the adoption of artificial intelligence in financial services. Previous reports from PYMNTS have highlighted that loan underwriting enhanced by automation has demonstrably expanded credit access while simultaneously sharpening the identification of credit-worthy customers. This dual benefit—broadening access while maintaining prudence—is a cornerstone of responsible innovation in lending.

For small and medium-sized businesses, the landscape of digital lending and financing products represents a beacon of hope amidst a challenging economic environment. AI-driven decision frameworks are fundamentally transforming approaches to SMB lending, democratizing access to crucial working capital that might otherwise be out of reach.

A collaborative study by PYMNTS Intelligence and Markaaz, titled “Keeping Score: Why Data Quality Determines Lending Decisions for the Smallest Firms,” revealed compelling evidence: 84% of lenders with robust underwriting standards reported that their small business loans were “highly profitable.” This finding strongly correlates high-quality data and sophisticated analytical tools, such as those offered by the LIS, with improved profitability and reduced risk in small business lending portfolios.

Conclusion

The integration of Parlay Finance’s AI-native Loan Intelligence System by First Internet Bank represents a significant milestone in the evolution of SBA lending. By embracing artificial intelligence, the bank is not only enhancing its operational efficiencies and data quality but also profoundly improving the customer experience for small business owners. This partnership exemplifies how cutting-edge technology can be leveraged to strengthen relationship banking, expand access to vital capital, and pave the way for a more intelligent, efficient, and inclusive financial future for SMEs.