MReport March 2019

TheMReport — News and strategies for the evolving mortgage marketplace.

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18 | TH E M R EP O RT COVER STORY can become. Digital lending, Leonard said, "is a dynamic that has fundamentally changed the consumer-lender relationship, and brought with it new challenges– but more importantly, new op- portunities to build and capitalize on that relationship. Lenders that have the technology to address these expectations will be the most successful in benefiting from these new opportunities." The rise of digital initiatives is especially critical for lenders already tackling a market with diminishing refinance volumes and a predominant purchase market. As a result, according to Michael Kuentz, former President and CEO, Lenders One, lenders must bring technology that "can be mixed with creating lead genera- tion while allowing loan officers to partner with realtors and consum- ers." "Digital lending is no doubt shaping the industry," Kuentz said. "It's about finding the points of breakdown in technology and how we can leverage it as an enabler to correct that break- down, shave-off time and make it cost-effective." In 2019 though, speed and integration will define lend- ing activities according to Mark Revard, Eastern Division EVP and Head of Gateway Mortgage Group Innovation Council. "The real differentiators in the mortgage industry in 2019 will be the lend- ers who can build a "one-touch" mortgage experience and offer up- front mobile engagement designed to quickly remove the client from the shopping pool," he said. "These truly advanced companies will offer consumers a sophisticat- ed, easy-to-use experience through a one-touch technology platform that helps reduce overall costs." Tyrell agreed saying that more and more lenders would consider integrating their systems on a single platform for a seamless mortgage experience. "Most lend- ing platforms on the market today only service a specific part of the mortgage process from their native application. While many lending platforms do offer third- party integrations, most lenders still outsource additional vendor licenses to fit their needs–opening them up to the risk of data in- tegrity issues, which can substan- tially increase costs," he said. "In 2019, lenders will be looking for a digital mortgage platform that of- fers configurable technology built to meet the unique needs of all business channels and customer types from a single system of record." This is where application programming interfaces (APIs) will play an important role. "Digital platforms that enable lenders to consume and deploy APIs are critical to the entire loan lifecycle, and enable customized workflows, process efficiencies, cost reduction, and enhanced risk mitigation," said Jeff Moyer, Division Business Director of Data and Analytics at First American Mortgage Solutions. "APIs enable flexible access to data and services without the limitations of static and pre-packaged solutions." Additionally, Moyer said that APIs allow rapid access to big data, sophisticated analytics, and technologies enabling lenders to save time and money on loan processing while increasing data integrity and compliance." However, the one technology that is more than likely to define the mortgage market in 2019 will be artificial intelligence (AI). The Latest and Greatest A ccording to a Fannie Mae survey, some of the major areas of AI or machine learning (ML) application to the mort- gage industry include identifying anomalies, assessing risk, explor- ing non-credit bureau data to enhance prediction of loan perfor- mance, and answering customer questions (e.g., search tools and chatbots). The survey revealed that while 63 percent of lenders said that they were familiar with the technology, only 27 percent said they used or had tried AI tools for their mortgage business. "We're just starting to see the ways in which AI is positively im- pacting the mortgage industry, but the sky is truly the limit," Leonard said. "First up, effective integration of AI across the loan lifecycle will allow lenders to deliver improved customer service, respond to customers faster and decrease the opportunities for errors. These ca- pabilities will help lenders stream- line complex processes, reduce friction in borrower interactions and better anticipate client needs to deliver more proactive service across the loan lifecycle." But though the industry is see- ing a lot of excitement around AI and other technology like block- chain, Smith said that using that using more practical and cutting- edge technology like iBots and auto-decisioning logic optimally so that they can create the right experience for borrowers will be important. "It has to be applicable, it has to be in real-time to the consumer, and it has to work seamlessly with the lender's un- derwriting guidelines," Smith said. "It's tough to get there with all the regulations, but as we continue to progress and technologies evolve that enable us to create a balance between regulation and user ex- perience, then using technologies to help lenders get there is a very real possibility." While technology such as eClosing has grabbed the atten- tion of lenders, Kuentz said that the industry was really excited about AI and robotic process automation not only because of all the possibilities posed by these technologies but also because of the partnership opportunities they presented. However, they also presented certain challenges. "When we can solve what's more of an ecosystem challenge, like eClosing is, or, how can you begin to adapt AI and robotic process automation so that your employees don't feel as if they're being replaced, those are some of the big challenges that the indus- try will have to face," Kuentz said. According to Revard, all para- digms are being challenged by point of sale, loan creation, and operations and servicing platforms that automate using AI and ML technology. "In the next three to five years, the way in which the public will consume banking and mortgage products will be drasti- cally different, using technology to drive a more customizable consumer experience," he said. While AI is being rapidly adopted by the industry, it will still take a couple of years for blockchain to make its mark ac- cording to Kuentz, who doesn't see the technology making its mark at least in the next 24 months. "In the long-term [the adoption of blockchain] is a no-brainer but before that, we need to get other areas of the process fine-tuned," he said. "It's still early for blockchain as we're still trying to gain adop- tion of technologies like Day One "We're just starting to see the ways in which AI is positively impacting the mortgage industry, but the sky is truly the limit." —Shelley Leonard, Chief Product Officer, Black Knight Inc.

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