Smart Payment Allocation Using Machine Learning

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Solution Overview

Problem

Borrowers with multiple loans often face misapplication of payments due to lack of clear instructions, leading to inefficiencies and potential errors in loan repayment processes.

Innovation Solution

A system and method for executing smart payments, which involves receiving a bulk payment from a borrower, retrieving information on each loan, using a machine learning model trained with prior payments to determine a payment allocation for each loan, and providing this allocation to the loan system for execution.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Productivity

If the lender automatically determines payment allocation without borrower instructions, then the payment processing efficiency is improved, but the accuracy of payment application deteriorates leading to misapplication

Engineering Contradiction:

Improvepayment processing efficiencyVSAvoidpayment allocation accuracy

Core Design Contradiction:

ProductivityVSMeasurement precision

Solution Approach 1:

The system enables the borrower to self-serve by providing express instructions on payment allocation preferences. The borrower actively manages their own payment distribution across multiple loans through the interface, eliminating the need for lender determination while ensuring accurate application according to borrower intent.

Inventive Principle:

Principle #25Self-service

Solution Approach 2:

The system incorporates feedback mechanisms where the borrower's explicit allocation instructions are captured and used to determine payment distribution. This feedback loop ensures that the payment allocation accurately reflects borrower preferences while maintaining automated processing efficiency.

Inventive Principle:

Principle #23Feedback

2Measurement precision

If the borrower provides express instructions for payment allocation, then the accuracy of payment application is improved, but the ease of operation deteriorates due to additional steps required

Engineering Contradiction:

Improvepayment allocation accuracyVSAvoidpayment making convenience

Core Design Contradiction:

Measurement precisionVSEase of operation

Solution Approach 1:

The system establishes payment allocation preferences in advance through borrower instructions. By pre-configuring allocation rules and preferences before making payments, the borrower eliminates the need to manually specify allocations for each payment transaction, thereby maintaining accuracy while improving convenience.

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The system provides multiple functions within a single interface: the borrower can view loan balances, make payments, and set allocation preferences all in one place. This multi-functionality consolidates what would otherwise be separate operations into a unified experience, improving ease of operation while maintaining accurate payment allocation.

Inventive Principle:

Principle #6Universality (Multi-functionality)

3Measurement precision

If the lender manually determines payment allocation, then the accuracy of payment application is improved, but the productivity deteriorates due to increased manual intervention

Engineering Contradiction:

Improvepayment allocation accuracyVSAvoidpayment processing efficiency

Core Design Contradiction:

Measurement precisionVSProductivity

Solution Approach 1:

The system replaces manual mechanical determination of payment allocation with an automated electronic system that processes borrower instructions. This substitution eliminates manual intervention while maintaining accuracy through systematic processing of allocation preferences, thereby improving productivity without sacrificing precision.

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

4Productivity

If the system uses machine learning to determine payment allocation, then the productivity is improved through automation, but the device complexity increases

Engineering Contradiction:

Improvepayment processing efficiencyVSAvoidsystem complexity

Core Design Contradiction:

ProductivityVSDevice complexity

Solution Approach 1:

The system introduces an intermediary layer that translates borrower instructions into automated payment allocation decisions. This intermediary mechanism simplifies the overall system architecture by providing a clear interface between borrower input and system execution, managing complexity while maintaining high productivity through automation.

Inventive Principle:

Principle #24Intermediary (Mediator)

Data Source

PatentUS20250117771A1Systems and methods for executing smart payments

Publication Date: 2025.04.10 JPMORGAN CHASE BANK NA

AI summary

Systems and methods for executing smart payments are disclosed. According to an embodiment, a method for executing smart payments may include: (1) receiving, by a computer program and from a borrower, a bulk payment for a plurality of loans; (2) retrieving, by the computer program, information on each of the loans, wherein the information comprises a payment amount due for the loan; (3) determining, by the computer program and using a machine learning model that is trained with prior payments to the loans by the borrower, a payment allocation of the bulk payment for each of the loans; and (4) providing, by the computer program, the payment allocation to a loan system for each of the loans, wherein the loan system for each of the loans executes a payment to the loan for the payment allocation.