How the mortgage industry is responding to the rise of AI

November 20, 2023 10:22 AM

As artificial intelligence continues to dominate headlines in the mainstream press, its adoption is growing in the field of home finance. Thought leaders in the space continue to explore all of the possibilities for its uses, whether it could be used as part of cybersecurity measures or deployed in combination with blockchain technology to demystify its "black-box" methodologies for automated decisions.

Still, a recent report from Fannie Mae found that while the use of artificial intelligence is on the rise, concrete new plans for future deployment of it are down. Meanwhile, AI-powered chatbots are getting a test run and the value of AI, machine learning and other tech tools in cybersecurity is giving mortgage lenders food for thought.

Read our roundup for more on these and other stories on how mortgage professionals are managing the impact of AI.

AI use and familiarity grow, but deployment wanes

Much has changed in the way lenders think about using artificial intelligence in the five years since the last Fannie Mae survey on the topic, but perhaps most surprisingly, deployment in the field appears to be in decline.

While limited or trial use of AI and machine learning is up by 9% and overall familiarity with AI by 2%, deployment and rollout plans are down 7% and 9%, respectively.

However, all is not gloom and doom. "AI applications intended to improve operational efficiency are clearly highly valued by lenders and could function as a starting point," said Peter Ghavami, vice president, modeling and data science at Fannie Mae.

Read more:

Mortgage lenders take one step forward, two back in AI use

Experts see promise in combining AI and blockchain

A synergy between AI and blockchain technology has the potential to improve transparency and security issues in the mortgage lending business, but must be handled carefully.

"There needs to be a delicate balance between transparency and protecting a company's proprietary information," said Brett Brumley, CEO of Lender Toolkit.

Mortgage industry experts are also exploring the opportunities for combining these two complementary technologies more broadly in areas such as loan underwriting, fraud prevention and algorithmic bias.

Read more:

Opening up AI's 'black box' with blockchain technology

AI-powered chatbots enter the mortgage space

The emergence of ChatGPT has got every business entity from financial institutions to insurance carriers thinking about what generative AI can do to transform their businesses.

Several key players in the mortgage industry have also been quick to jump on the bandwagon to explore using the technology.

National Mortgage News had a look at the chatbots of four of the frontrunners.

Read more:

How mortgage AI chatbots stack up against ChatGPT

How AI can help mortgage firms with cybersecurity

Research shows that, following cybersecurity incidents, companies deploying AI-powered solutions can reduce financial losses and increase data breach response times. Those are findings that mortgage lenders can certainly learn from.

The Ponemon Institute and IBM study found that firms using "AI, machine learning, automation and orchestration to augment or replace human intervention in detection and investigation of threats as well as the response and containment process" saved more and responded faster than those who did not.

Mortgage firms have traditionally been slow to adopt new technology in general, but the upside of using AI and machine learning tools to mitigate the threat of data breaches may necessitate a rethink.

Read more:

AI can save millions of dollars, time in data breach response: IBM

AI could revolutionize research, but concerns linger

A recent McKinsey report estimates that generative AI could help organizations reduce their research and development costs by 10 to 15%.

"Looking for information, analyzing data, interpreting data, looking for trends — all those things are completely possible with generative AI," said Darrell West of the Brookings Institution's Center for Technology Innovation.

However, concerns about the reliability of the technology and the need for strict industry regulation mean that research analysts can feel secure in their jobs — for now.

Read more:

Can AI do the work of research analysts?