Executive spells out the challenges and opportunities artificial intelligence is presenting for the mortgage sector
It’s no secret: the mortgage industry is entering a new phase of digitization driven by artificial intelligence (AI), potentially having a huge impact on how deals are sourced, underwritten, and closed.
Some mortgage professionals are on board with that change. Others are more reticent. But for Tim Rye (pictured top), senior vice president of commercial solutions at Teranet, the choice couldn’t be clearer: embrace those shifts or risk being left behind.
Speaking with Canadian Mortgage Professional after Tuesday’s (April 21) Property Ecosystem Summit in Toronto, Rye noted how complex and fragmented Canada’s housing and lending landscape has become.
“We continue to be in an environment of multiple facets,” he said. “What’s true in urban environments is not true outside of urban environments. And we see very unique differences across each of the provinces.”
Rye said that uneven picture showed exactly why a more connected data ecosystem is needed. Currently, plenty of inefficiencies are at play across the housing marketplace, not least the fact that information often isn’t pushed automatically from system to system without having to be re-entered.
The solution, in his eyes: “a need for partners to come and work together, both with industry and with regulators, to drive advancements for customers and for the ecosystem,” with a view to supporting homeownership, affordability, and a smoother homebuying journey.
Is preventing mortgage fraud about to become more complicated?
The rise of AI has created profound questions for mortgage professionals and brokers – particularly about the role brokers will continue to play amid an increasingly digital mortgage process.
But Rye sees some potential pitfalls ahead with the rapid expansion of AI in the industry. “One of the areas that we’re seeing AI being used is in fraud advancement: new documents being created that look very real,” he said. “And so AI is being used for both good and bad in this industry.”
That raises the bar for verification and reinforces the need for reliable, authoritative data sources in the mortgage process. However, Rye also believes many mortgage professionals may be underestimating how immediately useful AI can be in their day-to-day operations by seeing it as a threat or nuisance rather than an asset.
“One of the things with AI that I think people don’t always consider is that it can help you with some of your basic tasks as well,” he said. “AI doesn’t have to revolutionize and change the way you do things.”
A potentially huge positive step for brokers
Among the most obvious ways brokers will be able to harness AI is by using it to mine databases of past and present clients to drum up more business.
“If you’re a mortgage broker and you have 5,000 records in your database, could you ask AI: ‘What’s the most likely client for me to close a deal with in the next six months?’ ‘What’s the average age of my customers?’ Years ago you had to run spreadsheets, do macros,” Rye said. “You can do a lot of quick things now that might help you refine your approach versus transforming how you do business.”
The technology could potentially herald a huge shift for the mortgage space as much as for many other sectors. Rye said the transition is likely to be a positive step for the industry – as long as it’s carefully managed.
“AI is coming. Tools and technologies are coming faster, and we’re seeing it more and more,” he said. “I don’t think we can avoid it. We have to embrace it, and we have to make sure we put protections, tools and partnerships in place to ensure a trusted ecosystem remains for the housing environment of Canada.”
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