The mortgage industry has been talking about ending its'Paper-Palooza' for at least 20 years as we linger behind other industries like healthcare and insurance. Digital technology opportunities span the entire ecosystem, bound only by the willingness of its participants. Artificial intelligence (AI) and machine learning (ML) are the most understood and deployed, thereby leading the way in these early stages. Blockchain, on the other hand, is more "fuzzy" to many, yet has a persuasive cast of evangelists. There are companies, and even countries, being built on blockchain tech, such as Figure and Liquid Mortgage.
"Data is the new oil." Originally coined in 2006 by the British mathematician Clive Humby, this phrase is arguably more apt today than it was then, as smartphones rival automobiles for relevance and the technology giants know more about us than we would like to admit. Just as it does for the financial services industry, the hyper-digitization of the economy presents both opportunity and potential peril for financial regulators. On the upside, reams of information are newly within their reach, filled with signals about financial system risks that regulators spend their days trying to understand. The explosion of data sheds light on global money movement, economic trends, customer onboarding decisions, quality of loan underwriting, noncompliance with regulations, financial institutions' efforts to reach the underserved, and much more. Importantly, it also contains the answers to regulators' questions about the risks of new technology itself. Digitization of finance generates novel kinds of hazards and accelerates their development. Problems can flare up between scheduled regulatory examinations and can accumulate imperceptibly beneath the surface of information reflected in traditional reports. Thanks to digitization, regulators today have a chance to gather and analyze much more data and to see much of it in something close to real time. The potential for peril arises from the concern that the regulators' current technology framework lacks the capacity to synthesize the data. The irony is that this flood of information is too much for them to handle.
The stock market is currently on the roughest losing streak since the start of the pandemic in 2020. The broad S&P 500 index is down 19% from its all-time high, putting it within a whisker of bear market territory. But the tech-centric Nasdaq-100 index is already there, with a loss of 28.3% since November 2021. While the investment picture might be nerve-wracking for many investors, history suggests down markets always eventually recover, so this might actually be a great time to put some money to work. Here's one fast-growing stock leveraging advanced technology, and it's worth considering because it's trading at an 88.9% discount to its all-time high, despite the company being highly profitable.
There's a good chance that the next pro hired on in your marketing department could be AI, according to Brooke Gocklin. Gocklin is a senior manager at Persado, an AI-generated writing service provider. Observes Gocklin: "Machines are not human -- they'll never be able to provide the same value. "But AI is able to work alongside us to generate better results, especially when it comes to repetitive and mundane tasks -- like writing A/B test copy variations and surfacing the results back to leaders fast enough to take action." Persado -- which started as an AI writing firm specializing in auto-generating personalized subject headlines for marketing emails -- stunned many copywriters back in 2019 by inking a five-year deal with Chase. Under the agreement, Chase brought Persado onboard to auto-generate slogans and other ad copy for its credit card and mortgage businesses. For an alternative perspective on the impact of AI-generated writing on jobs, check-out: "The Robots Cometh: How artificial intelligence is automating writing jobs," by Joe Dysart. This 13-minute video offers a detailed, uncritical look at AI-powered copywriter Localio.io. The tool's specialty is localization: It's designed to quickly auto-generate copy for Yelp, Facebook, LinkedIn and other digital properties in more than 120 languages. The hyper-local content attracted two million new page views for the news outlet, July-to-December 2021. Bergens Tidende uses AI-generated writing from United Robots to auto-convert company annual reports into short news summaries. Says Jan Stian, project lead, Bergens Tidende: "The business bot imitates the whole spectrum of journalism.
Mynd is a tech-enabled real estate company serving the $85B property management and real estate investment market. In the past few years, consumers have gained access to free stock trades, greater transparency in the mortgage market, and apps that make managing their money more convenient. Yet real estate investment, the most powerful tool for building generational wealth, has largely been the purview of wealthier individuals and professional money managers. Mynd is determined to overhaul that paradigm. At Mynd, we're on a mission to democratize access to happy homes and sustainable investments by making the purchase of single-family residential real estate as effortless as other types of investments.
Financial technology startup firm Lendai announced Wednesday that it has raised $35 million in equity and debt seed funding. The purpose of the company is to enable foreign, non-residential borrowers investing in US real estate properties the ability to access immediate financing and competitive rates using its AI-based Triple Digital Underwriting System platform – making the underwriting process fast, easy and efficient. According to the company's announcement on Wednesday, this early round of financing is led jointly by Meron Capital and Cardumen Capital, with underwriting help from Discount Capital, Skywell Capital Partners, Mindset Ventures, and Viola Credit. Proceeds from the seed financing will enable Lendai to expand its reach and to help level the playing field for foreign investors who want to invest in US residential real estate properties. Concurrently, Lendai will use the seed funding to expand its services to more US states and launch new financing loan programs.
Technology has played a dominant role in UK's mortgage loan origination. It has automated most of the processes and has made the entire system more efficient. But this does not mean technology has eliminated the necessity of human intervention in the process. Mortgages play an essential role in the UK lending market. Whether the borrower wants to purchase a house or start a business, mortgages provide the necessary financial assistance. In 2020, even with the pandemic and lockdowns, the total number of mortgages sold in the UK was over one million.
Digital banking has been on the rise for many years: the pandemic made it imperative. In the past two years, customers no longer merely chose to do their personal banking at home, they were in many cases forced to. Organizations scrambled to adopt digital technologies and supporting processes to position themselves to advantage. As low interest rates continue to keep the mortgage market active, digital-first mortgage originators and servicers are taking the mortgage market by storm, largely because they provide their customers with an excellent borrowing experience. Recent research by McKinsey showed that almost 60% of borrowers are willing to complete the entire mortgage process online.
Shay Sabhikhi (pictured top) and Matt Sanchez (pictured top right), co-founder and COO and founder and CTO respectively, of CognitiveScale, spoke with Mortgage Professional America to describe the efficiencies of scale achieved since launching TrustStar, a SaaS-based product designed to provide mortgage companies with AI-powered market intelligence. Sanchez used an example of AI's use in lending: "If you were to get a bad decision, let's say you were denied credit for something, you'd want to know what that decision was based on, of course, as a consumer. And perhaps you might even want to know what you can change to get a better decision. That level of explanation is something we find very important. It becomes more important when you introduce artificial intelligence."
AI is an integral part of that second benefit in particular, and it's helping the insurance giant tap data to solve core business problems. In this interview, Huntsman offers insight into Prudential's broad initiative to transform underwriting, including how it translates digital strategy into business outcomes enabled by data science. How has the data science team participated in Prudential's digital transformation journey? Huntsman: Because underwriting is such a big part of our business, it was the first place the company looked at digitizing processes. Historically, between the life insurance application, medical exams, and statements from the customer's doctor, the underwriting process could be lengthy and painful.