Majority of mortgage leaders say AI will lead to job cuts

A majority of technology leaders in the mortgage industry believe artificial intelligence will lead to a reduction in headcounts over the next one-to-three years, according to a new Arizent report. 

Respondents from managers to C-level executives described the sector’s uneven relationship with technology in Arizent’s new “AI-Driven Decision Making 2022” report. Among the May survey’s 386 participants, 42 mortgage leaders from bank and nonbank lenders, credit unions, brokerages, insurers and servicers described their firms’ AI strategies, roadblocks in implementation, and successes.

An overwhelming 49% of mortgage respondents said AI will slightly reduce their companies’ headcounts, while 20% said it would significantly trim their payrolls. On the contrary, a combined 32% said AI would slightly or significantly increase their ranks.

The prediction doesn’t bode well for the industry already firing thousands of workers in response to the market’s downward spiral. Mortgage institutions performing a variety of roles have cited a decades-high interest rate hike, reduced mortgage volume and predictions of a recession as cause for the layoffs.

The AI assessment seemingly conflicts with mortgage respondents’ admitted hesitation to use AI and machine learning tools. A combined 78% of mortgage firms are not actively engaging with AI and machine learning products, with 51% of companies still building a business case for them and 27% investigating the tools. Siloed and insufficient data sets present the biggest hurdles in implementation, according to 32 mortgage respondents. The industry’s rocky relationship with real estate data is evident in its evaluation of automated valuation models, often accused of promoting racial bias.

Mortgage businesses also struggle with a lack of skilled labor to implement the complex hardware and software programs, according to the study. Of those same 32 respondents, 28% cited a lack of talent, although bankers, insurers and wealth managers struggling to adopt AI and ML cited talent shortages at a higher rate.

“A lack of expertise to integrate advanced technologies such as AI, ML, (Robotic Process Automation) with existing tools is the biggest challenge preventing us from adopting and enabling it,” an anonymous mortgage respondent told Arizent.

Mortgage firms otherwise reported one of the best relationships with technology at-large, with industry respondents reporting the highest rates of satisfaction with the democratization of data among financial verticals. Among mortgage leaders, 76% said their companies are very or extremely effective at opening up access to data for employees, while 83% said they’re effective at opening up access to data for vendors and customers. 

Forty-four percent of mortgage representatives said they direct technology resources to fraud and risk management, an important goal amid near-epidemic levels of fraud and significant cybersecurity threats. 

When it comes to managing production pipelines, 93% of mortgage companies use technology; 61% use a third-party or off-the-shelf solution specific to the industry and 32% use either a homegrown or custom-built product. Far behind them are 5% of firms still using excel or spreadsheets to manage organizations, and 2% which claim to use paper processes.

Dive into the “AI-Driven Decision Making 2022” for more insights into how leaders at mortgage businesses and other financial services institutions are integrating, governing and securing AI and data analytics in meeting internal and customer-facing objectives.