Five AI Takeaways from the 2023 ELFA Annual Convention

by Scott Nelson Nov/Dec 2023
AI was the topic at this year’s ELFA annual convention. Here are five takeaways Scott Nelson, president and CDO of Tamarack Technology, gleaned from the presentations and discussions at the convention.

Scott Nelson,
President and CDO,
Tamarack Technology

  1. Everyone Wants Some (AKA AI). I left Phoenix with the perception that everyone in equipment finance is excited about the potential that AI offers. Microsoft’s AI Office 365 Copilots are creating everyday exposure, and the addictive quality of AI is driving adoption.
  2. Generative AI Will Have Consequences in Equipment Finance. I understood the exponential increase in creative power created by generative AI — e.g., ChatGPT, BARD, DALL-E, Mid Journey — but I had not thought through how bad-actors will be empowered by these tools in equipment finance. Fraud is a creative crime, and GenAI will create new challenges for lenders.
  3. Underwriters Are Natural AI Application Engineers. One of my favorite conversations during the conference was with a CEO who was clearly “credit enabled.” He asked, “Are your predictors self-healing?” I replied, “In this case, self-healing means learning, so yes.” Underwriters are the risk managers of the business and, as such, they know they will make “mistakes” but need to learn from those mistakes — just as AI does.
  4. Small-Ticket Businesses Will Benefit Faster From AI-Based Applications. AI is a learning technology that learns by trial and error. As such, a key to success with AI is rapidly gathering data from outcomes with minor consequences of failure. I found that small-ticket lessors understand this instinctively and are leading the AI engagement for underwriting and funding workflow automation.
  5. Fear Uncertainty and Dread (Fud) Fuels the Resistance. Not everyone is getting on the AI bandwagon yet — resisters, so to speak. Most of these discussions revolved around the legal uncertainty of AI and ethics. A common discussion was the fear of building something that develops its own moral code or an absence thereof. New technology is always challenged by FUD because it enables bad actors as well as good and can be used incorrectly. I recommend Mark Andreessen’s recent “Techno-Optimist Manifesto.”

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