How AI can support the mortgage lending process

How AI can support the mortgage lending process

By Tom Chaplin, Head of UKI Mortgage Product at nCino

The mortgage industry has undergone significant evolution over the years especially in the UK market. Driven by changes in technology, regulatory environment, and the ever-rocky economic landscape, it looks like we still have a while to go before the market settles. This makes it more important than ever for lenders to utilise resources to help save money and provide a positive customer experience for borrowers.

Utilising AI for mortgages

With the advancement of technology, including cloud, large language models (LLMs), chatbots and other artificial intelligence (AI) tools, the mortgage industry has been able to digitise almost the entire lending process. From using Robotics AI to automate data entry, to using chatbots and virtual agents for regularly asked customer service queries and support, utilising these technologies allows lenders to save money and provide a positive customer experience for borrowers in the process.

Digitising the mortgage process provides the ability to reduce time spent on applications, underwrite loans, and assist with the lengthy loan verification process that can unnecessarily take up lenders’ time, meaning they can then focus on other areas of support for applicants.

Starting with the beginning of the lending process, online application portals allow borrowers to fill out forms, verify their eligibility and submit documents when applying for a mortgage. Digitising the lending process to create better flexibility to apply for a mortgage takes out some of the heavy lifting that can impact such decisions.

Underwriting loans is another significant part of the mortgage lending process, which can take weeks to complete, and directly impacts the customer experience. The factors affecting the timeline include risk assessments, a manual review process, and verification procedures. Moving towards a digital approach and implementing cloud technology can expedite the underwriting process significantly. However, lenders must always strike a balance of being thorough, leaning on both human interaction and technology to provide timely and reliable loan decisions to borrowers.

Ethics and AI

Navigating the ethical landscape of AI can be challenging, with traditional mortgage applications often requiring extensive documentation, such as bank statements and tax returns. However, technological advancements have enabled the use of digital verification tools. These tools can securely access and analyse financial data, allowing lenders to verify information quickly and accurately. This helps organisations to address key concerns such as privacy, bias, and transparency.

Taking AI to the next level in mortgages

To further harness the power of data, analytics, and advanced algorithms, mortgage providers should utilise the technology coming down the pipe, to reshape traditional banking practices to better risk management, improve efficiency, and personalise services.

Technology is continually evolving and whilst we are seeing the widespread adoption and integration of machine learning and AI tools, across the automation part of mortgage lending, there is still more that can be done.

As new technology emerges and matures in the coming months and years, natural language processing, like Chat GPT, will have the ability to provide advice recommendations, deal with policy enquiries and transcribe advice given in interviews and case study write ups.

But that’s not the end of AI’s role in mortgage lending process

We hope to see predictive analytics take a step forward in this new age of technology which would see pre-approved lending, personalised pricing, real time recommendations to changes in policy to temporarily improve operational efficiency by predicting pinch points before they happen, and smart allocation of cases for underwriting. With these hopes of the future, it can be said that the mortgage industry is about to undergo momentous change in terms of speed, efficiency, and productivity.

It’s important for the industry to rely on financial technology to streamline and simplify the mortgage process to make the home buying process more accessible for borrowers. The adoption of technology will not override traditional mortgage lending methods but exist alongside to improve customer experience through online applications, AI-powered chatbots, automated underwriting, and new advancements changing the way that banks and financial institutions conduct business.

Those who embrace agility and foster a culture of continuous innovation are already more prepared to address the challenges and opportunities that lie ahead for traditional banks.