Peach CEO Eddie Oistacher sat down with Financial IT for their Winter Edition 2023 to talk about Peach’s leadership role in bringing generative AI to loan servicing. In their Q&A, Eddie covered the opportunities generative AI is creating in the loan servicing space, how it’s being incorporated into Peach's cutting-edge platform, and how predictive and generative AI can work together to make smarter and faster underwriting decisions.
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Q: Please introduce your company and provide an overview of its core operations and services.
A: Peach Finance is the industry’s most configurable loan management and servicing platform. Our API-first lending technology enables fintechs and traditional financial institutions to quickly launch and confidently scale lending programs. With Peach, lenders can support virtually any type of lending product, including BNPL, credit cards, cash advances, personal loans (installments and lines of credit), retail installment contracts, business loans and novel constructs.
Peach gives lenders a system of record with more than 250 configuration variables, plus a Servicing Suite with a lending-specific CRM, borrower portal, agent portal, omnichannel communications, payment processing and reporting. Meanwhile, our Compliance Guard™ module combines compliance-vetted rules with borrower status monitoring to help lenders stay compliant in their servicing operations.
We’re proud to partner with many of today’s foremost lending innovators, including Square, Mission Lane, Lendable and Remitly.
Q: Could you shed light on how Peach is leveraging AI technology to move the lending industry forward? What innovative applications of AI are you implementing?
A: It’s been exciting to see numerous applications of generative AI unfold across a wide range of industries over a relatively short period of time. However, the lending industry to date has been impacted much more by predictive AI than generative AI. This means there’s a greenfield opportunity to be among the first to deliver significant generative AI-driven enhancements within the loan servicing space.
To understand the opportunity within servicing, we should first recognize that servicing has long been a source of frustration for borrowers. Irritating chatbots, lengthy hold times and inflexible borrower portals are just a few of the reasons for borrower dissatisfaction. It’s become a truism within lending that far more resources are invested in acquiring customers than in retaining them.
We should also acknowledge that loan servicing is a significant cost center for lenders...
lender’s priority list. But that doesn’t mean compliance is straightforward, even for lenders with the most earnest intentions. Often, legacy infrastructure is the culprit, making it difficult for lenders to take the actions clearly outlined in the law. Even regulations that haven’t changed for some time—like the—still present significant challenges for many lenders.
The SCRA grants active-duty service members the ability to request certain protections during the period of their deployment, enabling them to devote their energy to serving the country. These protections include a reduction in interest rate to a maximum of six percent on any pre-service loans. While the SCRA in its current version has been law since 2003, the number of recent enforcement actions indicates just how difficult it is for many lenders to comply with the SCRA’s interest rate protections.
Blunt tools in the absence of a scalpel
For example, in October of 2022 the Department of Justice (DOJ) announced that the financial leasing arm of GM agreed to pay over $3.5 million to resolve allegations in relation to
Peach’s approach to SCRA
At Peach, we brought real-life lending experience to the design of our platform. So from day one, we recognized the importance of being able to make retroactive changes to loans. (There are numerous applications beyond SCRA, including our Supported Portfolio Migration.) In the case of SCRA, Peach has long enabled lenders to retroactively change interest rates and waive past fees—as separate, manual actions.
Peach’s approach to SCRA
This was functional, but the ideal way to implement SCRA is to make these changes simultaneously. We now support this capability by leveraging the power of Peach's Loan Replay™ engine, which can make changes to the ledger at any time, and then recalculate a loan’s history in light of those changes. The new combined functionality is as user-friendly for your agents as processing a payment.
Peach’s approach to SCRA
Specifically, the new SCRA feature allows your agents to perform the following adjustments simultaneously on a loan of an active-duty service member:
- Lower interest rates to 6% (and lower the recurring payment during the active-duty period to account for the interest rate reduction)
- Waive fees, if necessary
- Enact these changes retroactively, if necessary, and replay the loan history with the rate and fee adjustments
- Preview the intended changes
“We launched our first product on Peach in six weeks. Eighteen months later.”
John Smith, CMO
Our SCRA functionality is available via API as well as through our white-label agent tool. The white-label agent interface can be seen here:
Peach’s approach to SCRA
Our SCRA functionality is available via API as well as through our white-label agent tool. The white-label agent interface can be seen here:
For those working directly with the API, this can be as simple as sending the following request body to the SCRA endpoint:
You’ll receive a response with either the actual post-SCRA adjusted payment plan or a preview of it. Below is a comparison of a payment plan prior to the SCRA adjustment, and the expected payments after the SCRA adjustment. The SCRA period is in effect for the first two months, and thus you will see the interest rates lowered to 6% in the response body (and the recurring amount due lowered by the amount of the interest rate reduction for the two relevant months). The origination fee has also been canceled.
The breadth of loan data needing to be adjusted means that rewriting loan histories requires the right design and abstractions, and having a built-in layer of abstraction to handle retroactive changes is the only feasible approach. Because of our team’s combined experience in the real world of lending, we know that the need to edit past loan events is inevitable. So we’ve designed a system that makes these changes as painless and automated as possible.
