Discussing Mortgage Artificial Intelligence with Thomas Shaw, CMO & CTO at LS Mortgage

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TL;DR

• Mortgage companies are increasingly leveraging AI to streamline operations and improve customer experiences. 
• AI-driven decision-making is transforming the mortgage industry, enabling better business intelligence and more informed strategic decisions.
• LS Mortgage uses an iterative approach to AI implementation, starting small, testing solutions, and gradually expanding the scope of automation.
• Human oversight in AI systems is crucial, using confidence indicators and variance analysis to determine when intervention is needed.
• Developing in-house AI expertise and partnerships is important to navigate the rapidly evolving AI landscape.

Before we dive into the key takeaways from this episode, be sure to catch the full episode here:

Meet Thomas Shaw, CMO & CTO at LS Mortgage

In this week's episode of Pioneers, we sat down with Thomas Shaw, Chief Marketing Officer and Chief Technology Officer at LS Mortgage, to discuss the company's innovative approach to leveraging artificial intelligence in mortgage lending.

Throughout our conversation, Shaw shares how LS Mortgage has successfully employed mortgage artificial intelligence. AI solutions enable them to automate complex workflows, improve customer relationships, and significantly enhance overall efficiency. 

"I get to work with our customers and clients but also turn that into technological solutions that work through the back ends of our systems to make us better, quite frankly, from a customer experience (...), expense management and revenue generation standpoint." — Thomas Shaw

He also discusses the challenges and opportunities of AI adoption, including the need for industry-wide governance frameworks. Additionally, he highlights the importance of developing in-house AI expertise and partnerships.

Aligning Marketing and Technology Strategies in the Mortgage Industry

Thomas Shaw's unique dual role as CMO and CTO at LS Mortgage allows him to maximize artificial intelligence effectively for customer experience and enhance operational efficiency. Shaw aligns the company's AI initiatives with its overall mortgage business objectives. 

"The automated decisioning from the data that comes from a lot of those automated systems… we can take that further with some of the ways that AI can be applied, especially within the platforms that probably already exist out there." — Thomas Shaw

This strategic alignment is crucial for maximizing the value of AI investments in decision making processes and driving meaningful results.

Artificial Intelligence in Mortgage Lending for Smaller Players

LS Mortgage has evolved from scaling with people to scaling with technology, enabling smaller lenders to adopt AI and automate complex workflows at a lower cost. By leveraging AI, smaller players in the mortgage industry can compete more effectively with larger institutions. 

Embracing AI technology is transforming the lending landscape and creating new opportunities for innovation and growth. Using AI algorithms is simplifying the entire mortgage application process. 

Mortgage Artificial Intelligence Implementation

LS Mortgage takes an iterative approach to AI implementation, identifying pain points, testing solutions, and gradually expanding the scope of automation. They started small and continuously refined their AI models. 

Now, the company can manage risk and ensure the accuracy and reliability of its automated processes. 

This incremental strategy allows continuous improvement and helps build trust in AI solutions among employees and customers.

Human Oversight in AI Systems

Confidence indicators and variance analysis determine when human intervention is needed in AI-automated processes to ensure accuracy and manage risk. While artificial intelligence can handle many tasks automatically, human expertise remains essential for catching errors, handling edge cases, and making complex decisions. 

Striking the right balance between automation and human involvement is essential for maintaining the integrity and effectiveness of AI systems.

AI Can Enhance Operational Efficiency

Thomas mentioned that automating underwriting processes with AI has significantly reduced loan origination times from 45-60 days to as low as 20 days, benefiting both the organization and the customer. 

Ankur added that a few years ago, building classical machine learning models would have required labeling tens of thousands of bank statements. But now, with large language models (LLMs) coupled with optical character recognition (OCR), that process requires much less effort.

This dramatic improvement in turnaround times demonstrates the tangible impact of artificial intelligence on operational efficiency. 

An AI-powered solution enables mortgage companies to reduce costs and increase productivity by reducing manual document processing and streamlining workflows. This allows mortgage lenders to respond to customers' queries faster, approve mortgage applications, and increase customer satisfaction. 

At Multimodal, we offer an API-first approach that helps you transform loan origination with artificial intelligence without replacing your existing software stack and processes.

Need for Industry-Wide AI Governance Frameworks

The mortgage industry lacks clear regulatory compliance and standards for using artificial intelligence, leading larger banks to be more cautious about adopting AI to avoid reputational risk. 

This regulatory uncertainty highlights the need for industry-wide AI governance frameworks that provide clear guidelines and best practices for responsible AI deployment. 

Mortgage companies should work alongside banks to foster innovation while ensuring AI's ethical and transparent use.

AI-Driven Strategic Decision Making

Business intelligence is a promising area for AI application, as it can guide future AI projects and create a self-reinforcing improvement cycle. AI algorithms can greatly help with data analysis and uncover insights from market trends. 

Business leaders can use this information to make more informed strategic decisions and identify new opportunities for growth and efficiency. 

This AI-driven approach to the mortgage process has the potential to transform how mortgage lenders operate and compete in the marketplace.

Developing AI Skills and Partnerships

Building in-house AI expertise and collaborating with knowledgeable external partners are key to navigating the complex and rapidly evolving artificial intelligence landscape. Mortgage industry stakeholders should recognize the importance of investing in AI talent and fostering a culture of continuous learning and experimentation. 

By partnering with experienced AI providers and consultants, mortgage companies can accelerate their AI adoption and ensure the success of these technological advancements.

Framing Mortgage Artificial Intelligence as an Enabler

AI should be introduced to teams as a tool to unlock their potential and allow them to focus on higher-value tasks rather than as a replacement for their roles. Framing AI as an enabler can build employee buy-in and enthusiasm for the technology. 

"To underwrite a loan and to make it faster and the experience better, leveraging the technology is going to be huge, and lenders that move towards that way will reap the rewards (...) in the future." — Thomas Shaw

This positive approach helps overcome resistance to change and encourages employees to embrace AI to help enhance their organizational skills and contributions.

Thinking Beyond Chatbots

While chatbots are a popular starting point for adopting AI, the true value lies in deeper AI powered tools and applications such as automated decisions and business intelligence. 

Mortgage industry leaders need to think beyond surface-level AI use cases and explore more sophisticated applications that can drive significant business value. 

Companies can position themselves at the forefront of AI innovation in the mortgage industry by focusing on areas such as underwriting automation and data-driven insights.

"We've got the next phase of this that we're seeing a lot of. Lenders go into this automated kind of underwriting phase where now we're taking the combination of information from our backend that maybe we were providing to customers but a more detailed version of that...and watching that occur and then actually watching conditions come out of that." — Thomas Shaw

Shaw's insights underscore the transformative potential of artificial intelligence in mortgage lending. LS Mortgage is setting a powerful example for other lenders looking to harness the power of AI. They are aligning marketing and technology strategies, adopting an iterative approach to implementation, and focusing on deeper AI applications.

Want to learn more about AI in banking? Check out this episode on AI-driven lending with Andy Mattingly, COO at FORUM Credit Union.

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