Fintech startups looking to disrupt payday lending are using artificial intelligence to make loans with rates as low as 6% and with default rates of 7% or less.

AI can make a difference on several fronts, the startups say. It can process enormous amounts of data that traditional analytics programs can’t handle, including data scraped constantly off the borrower's phone. It can find patterns of creditworthiness or lack thereof on its own, without having to be told of every clue and correlation, startups like Branch.co say. And the cost savings of eliminating the need for loan officers lets these companies make the loans at a profit.

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