TheMReport

TH E M R EP O RT | 19 FEATURE A s homebuyers become more digital-savvy, lenders are looking for new ways to reach out to their customers in an environ - ment that is becoming increas- ingly high-tech. Of all the fintech technologies flooding the market today, artificial intelligence (AI) holds enormous potential, not only to help streamline lender operations and processes, but also to make the marketing of mortgage products more efficient. However, a recent Fannie Mae study revealed that while 63% of lenders were familiar with this technology, only 27% had used AI tools for their mortgage business, while nearly 58% said they expected to adopt some AI solu- tions within two years. During an MReport webinar sponsored by AI Foundry, experts delved into how AI is changing the mortgage industry and help- ing lenders achieve a high-tech, high-touch environment for their customers. They explored how the use of AI could enhance the cus- tomer experience, streamline costs, and improve turnaround times. Using AI in Mortgage D espite the strides fintech has made in recent years, mortgage lending remains a business where it can take weeks to process a loan and where applicants that were "approved" in minutes can still get turned down by underwriters. "Here's where AI is coming to the rescue," said Steve Butler, Founder and President of AI Foundry. "While it takes about three weeks, on average, to close a mortgage today, advances in AI are set to drive a new generation of software robots that automatically process mortgages, replacing slow and costly manual processes." The good news, according to Butler, is that an increasing number of financial institutions have begun to understand the need and urgency of adopting technology enablers such as AI to prepare their operations for the future. "If I have to look into the near- and long-term future of the mortgage industry, in 2019, we will begin to see approval times drop for the current duration of three weeks, beginning a journey where, one-day approvals will become the norm within five years," he said. However, for lenders to under - take this journey, it is important for them to understand the finer nuances of AI and how it is changing the way consumers per- ceive their digital experience. "AI is changing the way we do everything," said Peter Piela, Head of Solution Development for AI Foundry. "What we're seeing now is that AI is covering most of the major human sensory systems, from speech recognition to visual recog - nition and behavioral analysis." While the results of this tech- nology have been truly amazing, the question is, how do we map those strides against what we're doing in our industry? According to Piela, AI is cur - rently impacting mortgage in two broad areas: operational efficiency and enhanced customer or home- buyer experience. From an opera- tional viewpoint, he said that one obvious application is the automa- tion of mundane tasks. However, he adds that AI is capable of doing much more than those "stare-and- compare" activities. "If we look at our human operators like loan officers and underwriters, they make a variety of decisions," Piela said. "Some are fairly straightforward; some are more complex and require nuanced thinking. Why can't we offload some of the more straight - forward decision-making to AI and let it make them in a fully automated manner?" To drive home the growing reach of AI, Rocky Stubbs, SVP and Head of Consumer Direct and Digital Mortgage Lending for Flagstar Bank, gave the example of a demonstration of Google's AI system, Duplex. It uses natural language processing, and for this particular demonstration, it sched- uled a haircut appointment without the person at the other end of the phone ever realizing they were engaging with a virtual assistant. There's already a high general awareness of voice technologies, with more than 70% of consumers having used this tech, according to Stubbs. Not surprisingly, this trend is being driven by younger consumers or digital natives, and most of the usage is coming from smartphones and mobile devices like Siri or the growing share of in-home devices. "Though they're being employed more frequently, most of these tech - nologies are being used for quick, highly transactional functions, and that's why AI has not yet gained large-scale adoption or broad think- ing through a mortgage or banking transaction," Stubbs said. Stubbs continued, "As access to more complex processing becomes widely available, the use cases for mortgage lending will continue to grow, given the nature of the com- plexities we face in our business." A Case to Market O ne such use case is product recommendation, which is different from product com- parison, where the assistant just explains the features and benefits or does a compare and contrast between sales of two types of mortgage products. According to Stubbs, AI can be used for "actual recommendations based on a deeper understanding of the consumer's financial situation and the inputs both within the data set that the bank might have and third-party data sets coming into one frame of reference for the assistant to actually make the product recommendations." From the user experience point of view, Piela said that AI could be used in the form of simple chatbots to answer casual questions, as well as in more sophisticated digital sys - tems to help users navigate through complex decision-making tasks. "If we have a more dynamic and parallel process driven by these AI real bots, we can provide better, more personalized feedback to the end user, and that, in turn, improves the customer experience." Another area where the use of AI can be leveraged by lenders is for intelligent applications. "I don't just mean a voice form where you've got a robotic voice going through the checklist and processing information," Stubbs said. "This would be an intel - ligent process that is asking the minimum number of necessary questions and perhaps even second- or third-layer questions as the application process continues." The applications for AI are also numerous within the underwrit- ing process, especially when it comes to searching for guidelines and regulations. "As the nature of our credit policies and regulation become in- creasingly complex and fast-paced, leveraging intelligent assistants to find relevant guidelines, even to interpret data to find out what the applicable guidelines might be and then going back to the un- derwriter, is a way of turning the tables on how AI is being used today," Stubbs said. Rick Bechtel, EVP and Head of U.S. Residential Lending for TD Bank, also supported the idea of consumer outreach and bring- ing down the cost of marketing through AI. "As AI increasingly becomes a mainstream part of their business, lenders can get distracted." —Robert Bush, SVP, Senior Strategy Manager, Citizens Bank

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