Artificial Intelligence and Factoring - an upcoming revolution?

Artificial Intelligence and Factoring - an upcoming revolution?

20 December 2018 by Erik Timmermans

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WOA expert advisor Igor Zaks together with his colleagues from TenzorAI analyses the potential influence of AI on factoring operations. Their article was first published in the World Factoring Yearbook 2018.

The development of AI technology, as well as significantly expanded data flows within supply chains present a great opportunity for factoring companies. Historically, financial institutions have been unable to deal with complex risks, and therefore most finance products have been based on simplifying the risk type – examples include letters of credit where contractual relationships were replaced by formal examination under UCP standards, “traditional” supply chain finance where performance risk was eliminated through confirmation and legal framework, etc. By contrast, the factoring industry has traditionally dealt with “real world” risk combinations. New technology will enable the industry to use data and structured processes to better finance such risks. Using advanced AI tools would not only allow factoring companies to better analyse and price the risk, but to become true partners to their clients, developing a deep understanding of their business and in many instances becoming a source of valuable advice to the clients.

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