Loan Officers and AI

 

[What does the Bureau of Labor Statistics Say? "Recent research on automation notes that traditional algorithms threaten to automate the mortgage origination tasks of loan officers. Projections anticipate modest growth (3.2 percent) to 2029, though the slight decline during the 2008–18 period (−3.2 percent) was not anticipated by the projections (10.1 percent), so it would not be surprising if future growth were modestly negative, as well. By contrast, the OEWS database registered robust growth (49.0 percent) from 1999 to 2009."]

Key Issues for Loan Officers in the Age of AI:

How AI is changing the role of loan officers

In the past, the loan application process was highly manual. Loan officers used paper forms and computer-generated spreadsheets to collect information from customers. Today, AI is automating many of these manual processes, which is changing the role of loan officers. Manual processes that can be automated include gathering customer information, generating reports, and underwriting loans.

Pros of AI in loan processing

- Accuracy - AI is programmed to provide consistent, accurate results. - Speed - AI can process information at a very high speed, faster than a human could. - Efficiency - AI can be programmed to handle tasks that are repetitive, which frees up employees’ time to focus on other tasks rather than performing the same tasks over and over again. - Reduced Errors - AI is designed to minimize human error and reduce the number of mistakes made in the loan approval process. - Scale - AI can be used across platforms and lending channels, making it useful for large organizations with many branches. - available on all devices - AI-powered tools are available on a variety of devices, including desktop computers, mobile phones, and voice assistants.

Cons of AI in loan processing

- Lack of human touch - Some customers prefer to have a real person with whom they can speak. A computer can’t offer the personal touch of an employee. - Inability to explain results - When an AI system generates a report, it can be difficult to understand why a customer received a particular score or was approved for a certain amount. Some customers want to know what data was collected and how the system reached its conclusions. - Lack of flexibility - AI systems are designed to provide consistent results. Thus, they’re not as flexible as humans. For example, an AI system may not be able to handle exceptions to the rule like a human can. - Lack of creativity - AI systems are rigid, programmed to follow rules and not deviate from those rules. Humans, on the other hand, can be creative and think outside the box. - Need for additional human involvement - Some loan officers believe that even though AI can automate some processes, humans will always need to be involved in the decision-making process. - Lack of emotional intelligence - AI systems lack the ability to understand human emotions, which can be important in financial transactions.

Future of AI and loan processing

As AI continues to evolve, it will play an even larger role in loan processing. More companies are investing in AI technology, which is helping to improve accuracy, reduce errors, and expand accessibility. AI is likely to change the way that loan officers operate, with machines making decisions rather than people. It’s possible that in the future, loan officers won’t exist as they’re currently defined. As AI becomes more integrated into loan processing, it’s likely that some loan officers will find themselves out of a job. However, it’s also possible that AI will shift the role of loan officers, requiring more skills like data analysis and technology management.

Impact of AI on loan officers

As technology like AI continues to advance and be used in the loan industry, the role of loan officers could be greatly impacted. Many loan officers believe that AI will require more advanced skills and more data analysis. By investing in AI and other technology, banks can reduce their operating costs. Since many large banks are investing in these technologies, loan officers may need to adapt to these changes in order to stay competitive in the industry. While the future of AI is exciting, it’s important to note that these technologies are not fully developed. In fact, many industry experts believe that full AI won’t ever be achieved. As AI continues to evolve, it will impact the loan industry. While it’s unclear exactly what this change will look like, it’s likely that AI will impact the role of loan officers in various ways.