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How Will Artificial Intelligence Affect The Mortgage Industry

CHRIS GRIMES

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Artificial Intelligence has been gradually making a transformative impact on a number of business sectors and industries. The deepening influence of AI, machine learning, and Robotics Process Automation (RPA) is particularly notable in the mortgage industry, where these technologies address issues like risk, consumer experience, and asset quality. 

 

These technologies are set to play a bigger role in better compliance, operational efficiency, and cost control. While AI is already helping bring cost efficiencies in the mortgage industry, there is potential for a lot more in the future.

 

How AI Is Changing the Mortgage Industry

 

While human interaction and judgment continues to play an integral role in the mortgage industry, AI is helping lenders to devise better and more customized experiences for the borrowers. AI can discern trends and recognize borrowers’ behavioral patterns that help mortgage lenders to serve clients in a better way.

 

The mortgage process is often a tedious and drawn-out one. AI enables lenders to make faster and poignant decisions. This also ensures speedier closure and turn-around time for lenders, improving their productivity.

 

The huge volume of data that AI-powered technologies can process, equips mortgage lenders with better risk assessment capabilities. These capabilities help smoothen the process for a borrower, and at the same time, help the lender make more profitable decisions.

 

Positive Impacts of AI

 

AI and machine learning technologies are helping automate the entire lending process. They are also helping lenders to evaluate borrowers on their repayment capability in a better way.

 

AI applications can access and analyze customer information with greater in-depth precision. This helps provide a broader picture of borrowers to a mortgage lender. With more advancement in technology, it will become easier for lenders to spot misinformation and fraud.

 

Mortgage lenders are upbeat about the benefits of AI and machine learning applications. They anticipate less operational costs, better customer experience, and reduced cycle times. The technology will help their businesses and the entire mortgage lending industry to be more competitive. 

 

RPA to Expedite Mortgage Processing

 

Mortgage lending is traditionally a complex six-stage, paper-based process. It requires a lender to verify income, check credit history, and appraise the property, to evaluate an applicant’s creditworthiness. 

 

There is an inherent risk of inefficiencies in a complicated process like mortgage processing. Robotic Process Automation (RPA) helps lenders with automatic responses to client requests, and reduction of manual tasks. 

 

In RPA, ‘bots’ carrying out repetitive tasks are combined with AI applications to perform the tasks intelligently. RPA can integrate with existing legacy systems to complete tasks much faster and with an appreciably lesser number of errors. This optimizes the mortgage processes across all areas.

 

Bots can automatically dispense information and answer client questions. This cuts down customer response time drastically and helps improve the overall customer experience. 

 

AI will Improve the Quality of the Workforce

 

Most of the AI applications are task-oriented, designed to automate routine manual tasks. The automation can help save the time spent by employees in responding to emails, looking for data, and performing other mundane yet necessary administrative tasks.

 

None of the AI-powered or machine learning applications could probably take the place of a human operator in the mortgage industry yet. But it can automate certain repetitive tasks and free up time for the employees.

 

As a result, entrepreneurs and employees engaged in the mortgage lending business can enjoy better creative control over their work, adding value, and focusing more on activities that generate revenue for their company.  

 

AI Leads in a Post-Covid World

 

As with other industries, the ongoing COVID-19 pandemic has forced mortgage lenders to reconfigure their working environment. Though employees have benefitted by working from home, it has also raised concerns about regulatory and legal compliances. 

 

AI tools and applications have helped mortgage lending companies to be compliant with federal and state laws, apart from gaining a boost in their productivity. AI-powered technologies can further increase efficiencies as they become more prevalent.  

 

Mortgage lenders with a clear AI focus are in a better position to overcome unexpected events like the COVID-19 pandemic. They are the ones who can have the first-mover advantage and emerge stronger to face the changed conditions in the post-pandemic world. 

 

Challenges in Integrating AI

 

AI usage is still in its nascent stage in the mortgage industry, but there evidently is an immense interest. However, apart from its significant potential, there are some challenges to overcome before mortgage lenders can fully adopt the technology.  

 

The foremost challenge is to integrate the new AI-powered applications with the technology infrastructure in use by mortgage lenders currently. 

 

Secondly, for AI to provide insight into a customer’s credit profile, it is crucial for the borrower to first submit clear and complete personal information. At the same time, a large number of potential borrowers want more than just a three-digit score to prove their creditworthiness. 

 

Also, with the implementation of AI, there is a concern of bias creeping in against certain sets of people. To prevent this, regulators are favorably looking at AI credit models that can be employed by the mortgage lenders.

 

The Future of AI in the Mortgage Lending Space

 

Going a step beyond digitization and automation, these are some other technologies that can help optimize the mortgage space:

 

Application Programming Interfaces (APIs)

 

They enable communication between systems, services, and websites. This helps in data coordination in the mortgage process.  

 

Chatbots

 

These AI-powered robots help handle borrower’s queries, freeing up time for employees to focus on more creative tasks.

 

Process Mining

 

Mortgage lenders can pinpoint bottlenecks by mapping out processes and studying event logs. They can analyze the data and take remedial actions to minimize inefficiencies.  

 

Learn How AI Can Help Grow Your Business with Fundmore.ai 

 

Machine learning and AI are gradually taking the mortgage industry to another level.  These new technologies are ushering in new innovations to create significant change in the industry. We see them developing at a rapid pace over the next few years, enabling higher efficiencies, speed, and security. 

 

Mortgage lending is one of the bedrocks of the global economy. A small improvement in the mortgage lending space with automated machine learning capabilities can bring about an impactful change. Big data in lending is suited for innovative AI-driven platforms, as it can automate and lower human resource costs.

 

Fundmore.ai is designed to reduce wastage, and deliver superior customer experience. To learn more about how we can help you improve your lending business, fill out this online contact form and our team will get in touch with you soon!

Tags: mortgages, Automation, lending, Mortgage Processings