How AI is transforming the lending industry and influencing the customer experience
For years, the mortgage industry has followed a tried-and-tested route for underwriting and servicing loans, which has made the loan process cumbersome for consumers. Prospective homeowners face daily emails, phone calls, and other electronic requests for information. They often need to take time off work for property appraisals and inspections. And many of these processes are still completed using paper signatures and manual reviews.
The result is that the journey from application to keys in hand stretches to an average of 42 days.
But the tide is turning.
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Mortgage Digital Transformation Begins by Learning From Other Industries
- The Smartphone Revolution
There was a time when Nokia and BlackBerry ruled mobile communication. But that was before Apple’s iPhone rendered these industry titans obsolete almost overnight.
Today, the mortgage industry finds itself in a similar position as processes are becoming increasingly digitized and consumers expect the instant gratification provided by online transactions.
Envision a streamlined loan process where a single visit from a property professional can capture detailed information and pave the way for immediate processing. Imagine capturing a floor plan, calculating square footage, and documenting a home’s condition and quality features in minutes. Then with the push of a button, this data automatically populates appraisal forms and inspection reports to satisfy lending underwriting criteria.
This scenario is like Apple’s disruption of Nokia and BlackBerry; it’s an example of a revolution from within for the consumer’s benefit.
- Netflix: The Evolution of Streaming
Digital transformation isn’t a mere possibility, it’s an inevitability. Netflix’s metamorphosis from a humble DVD rental service to a streaming entertainment behemoth exemplifies a pattern from which the mortgage sector can draw inspiration. The transformation of Netflix is especially instructive on how visual media can enhance and expedite the loan process through advanced AI applications.
For the mortgage industry, AI in lending is the next frontier.
While a picture is worth a thousand words, a video is worth a thousand images. Using AI trained on images, videos, and speech inputs allows appraiser assignment, fee negotiation, and booking to happen within minutes, reducing the friction and time spent in the loan process.
- E-commerce: The Amazon Effect
Amazon’s rise redefined customer experience standards. Why? Because the e-commerce giant privileged customers.
For the mortgage industry, the parallel is clear: it is time to adopt a digital-first approach to develop efficient, customer-oriented loan products. What does a customer-centric loan product mean?
What if you could access exhaustive property details and valuations digitally to streamline decision-making for lenders and borrowers without physical visits. This can reduce confusion and friction, helping applicants make informed decisions early and helping lenders identify discrepancies sooner in the process.
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- Embracing Mortgage AI: The OpenAI Phenomenon
The launch of OpenAI’s ChatGPT marked a pivotal moment in the understanding of AI and machine learning’s potential across all industries. The mortgage industry is no exception.
To enhance customer service and simplify intricate processes, the mortgage industry needs to tap into AI. Just look at generative AI.
Generative AI can significantly improve a complex parcel search and match process for annual property tax payment planning in mortgage servicing. With this technology, lenders can achieve close to a 100% match rate to substantially reduce manual intervention, which in turn reduces time spent and alleviates costs.
- Cloud Computing Takes Center Stage
The proliferation of platforms like Google Cloud democratized access to powerful IT resources and fostered an environment ripe for innovation.
Imagine a unified system for property data that integrates historical and current data on weather exposure, hazard risk, climate risk, and neighborhood information. What could be done with such comprehensive insight into a single property?
The answer is many things, including:
- Significantly enhance underwriting accuracy.
- Tailor loan products to individual risk profiles.
- Expedite the approval process and offer better terms to borrowers.
Furthermore, this depth of information enables improved risk management, personalized customer service, and the development of innovative financing solutions that align more closely with consumer needs and property specifics.
Why wouldn’t the mortgage industry take a cue from this shift to cloud and transition towards a more agile and cost-efficient infrastructure?
Charting the Future: Embracing Technological Advancements
As technology continues to advance, the mortgage sector is on the verge of transformative change. The fusion of emerging, tech-led lending practices, enhanced risk management protocols, and a shift toward digital customer engagement will usher in a new era in mortgage services.
Technology has a history of disruptions across sectors, and the journey ahead for the mortgage industry will be one that is awash in innovation, adaptability, and strategic planning. The leaders of tomorrow’s mortgage landscape must harness this technology today and transform challenges into avenues for growth and success.
Are you positioned to embrace the next wave of change?
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