Mortgage lenders are keeping pace with, and in some cases surpassing, banks and credit unions when integrating new technologies. Enlisting outside expertise can be a deciding factor in how successful these efforts are.
National Mortgage News' Emerging Technology and Artificial Intelligence report surveyed 128 professionals across the banking, credit union and mortgage industries on the adoption of new technologies and growing use cases.
Top findings from the report
- Mortgage lenders are advanced users of tech against banks, credit unions.
- Many core tools rely on existing partnerships for integration.
- Data security and integration were two critical hurdles for tech adoption.
- Mortgage lenders and financial institutions are well-suited to build APIs in-house.
Results from the report are highlighted below using interactive charts. Mouse over each section for more detail, and click on the chart labels to show or hide sections.
A modern approach
Most respondents have hopped on the tech bandwagon at this point, but some are much further ahead.
Roughly 60% of credit union respondents said their organizations were established users of modern tools, with formalized use cases across numerous divisions. Bankers were more evenly distributed, but the largest portion, at 37%, also identified their organizations as established users.
Mortgage lenders were more advanced. More than 40% of lenders said their firms are strategic tech users, promoting widespread use as part of a broader strategy with the ability to measure performance.
A recent example of this includes Fairway Home Mortgage's
Caleb Ondrusek, who Fairway promoted to executive vice president of technology and innovation to oversee this partnership, said in a previous interview with NMN that being able to leverage tools like what OpenAI offers "allows you to serve data back to a loan officer or even a borrower, in some cases, that is modeled and more accurate," with less chance of hallucinating.
Breaking out the tools
Many mortgage lenders are either leaning on existing partnerships or forging new ones to further adoption.
Loan origination systems (LOS) and product pricing engines (PPE) were the top two technologies that respondents said they would rely on a primary LOS provider for implementation, with 65% and 63% respectively.
Advanced data analytics tools, with 24%, and cloud-based infrastructure, with 26%, were the top technologies that bankers and mortgage lenders said they would built in-house.
When enlisting outside help, remote online notarization (58%) and agentic AI such as chatbots or virtual assistants for customers (54%) took first and second place, respectively.
Tom Brown, head of banking, financial services and insurance for the cloud-computing firm Rackspace, said banks and nonbank mortgage companies are exploring tools like LOS, AI-driven underwriting and remote online notarization "to improve the user experience of LOs, improve lead conversion and shorten the process lifecycle to remain competitive in the market."
Tech suites go beyond these tools, Brown added, as many have also adopted products supporting "[customer relationship management], application software, underwriting software and tools — they understand the need to modernize [end-to-end] loan origination."
Mission critical for technology
Mortgage lenders and bankers are quick to scout for suites of modern technology, but that doesn't mean integration is done without a fair share of caution.
The most critical hurdles to clear before respondents would consider integrating a product into their tech stack were data security features (82%), integration compatibility with LOS (76%) and calculating the return on investment (68%).
Ease of implementation (67%), start-up time after implementation (67%) and the cost of implementation (67%) were also of high importance for mortgage lenders and bankers.
Benjamin Schieken, founder of the mortgage shopping platform Fincast, said lenders are holding back on "fully embracing AI and LOS upgrades" due to the burdens of "compliance risk, legacy infrastructure and challenges around standardizing borrower data across systems."
"Lenders should prioritize tools that reduce borrower costs and improve transparency, not just ones that check a 'digital transformation' box," Schieken said.
New entrants to the API race
Most nonbank mortgage lenders and financial institutions can build application programming interfaces in-house, and that share is steadily growing.
Nonbank mortgage companies (68%) were the most apt at building APIs internally, followed by banks (63%) and credit unions (54%). Interestingly, bankers were the only group not to respond that their organizations were unable to build APIs without the help of outside partners.
For Creighton Oswald, managing director and certified mortgage banker at FTI Consulting, the question of internal development is under the larger umbrella of "the famous 'build, buy or lease decision'."
"Specifically, does the company have a strong core competency (i.e. secret sauce) which they wish to own and control or is the 'new tech' more of a commodity which can be managed more efficiently and at a cheaper cost by using a third party," Oswald said.
This analysis is one of a multipart research series on mortgage technology disruption. Check back tomorrow for more analysis.
