Artificial Intelligence (AI) is a key factor in the development of mortgage technology. Considering the health and economic problems created by the COVID-19 pandemic, digitalization continues to drive market preferences and allows for advancement. Industry professionals claim the pandemic is acting as a significant trigger for digitalization for the mortgage process.
What exactly is Artificial Intelligence? AI is simply a computer science programming that is supposed to simulate human intelligence. This means that work is previously done by humans, such as making a decision or taking an action, can now be done through these systems.
Artificial intelligence in the mortgage industry can create customized interactions for borrowers, assist lenders in making quick and informed decisions, and speed up closing times.
For instance, if individuals of a certain population category approach lenders and are pre-qualified, AI will inform these lenders that they are extremely likely to go on with funding over the next 90 days. More simply, behavioral habits and patterns that allow the lender to best service potential borrowers can be detected by AI. This means that even for people who don’t have any credit information, Artificial Intelligence can spot correlations and provide an estimate of how likely they are to repay their loan.
By using this alternative data to better assess risk, lenders can access a large market of new applicants. This then results in a higher number of quality loans in a shorter amount of time and in turn significantly increases their revenue. Not only does this benefit lenders but these faster closing times are a huge advantage for borrowers.
Aside from AI being able to detect critical, up-to-date information, it also results in a large cost reduction. Within minutes, tedious and repetitive activities that take several hours for a human to complete are now processed almost instantly. This removes the exhaustion aspect, the need for monitoring, and ultimately saves a lot of time. Analysts, though robots would be doing a lot of the leg work, will concentrate on high-value jobs. The risk of mistakes, which would not only cost the organization time and money to fix but also benefit in terms of lost opportunities and reputational harm, is dramatically reduced.
Overall, Artificial intelligence and digitalization in the mortgage industry are essential. Having software that can extract information from various sources and documents, standardize it, and analyze risk is reshaping mortgage tech.