The green way to define AI in mortgages

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When considering the top view of the mortgage industry, it is difficult to understand its associated carbon footprint. After all, it mostly involves a few transactions and a certain amount of paperwork, right?

Wrong.

Dig deeper into the ecosystem and you’ll discover the impact of offices, computers, data centers, paper mail, and travel – each of which contributes in one way or another to the carbon footprint. overall.

While some of them are invariable and incur a certain amount of environmental costs, others can be measurably limited. And in light of point 10 of our Green 2030 resolution, it is imperative that financial institutions take concrete steps to decarbonize the economy.

In this context, one wonders: could AI prove to be a sustainable alternative to reduce the carbon footprint of the mortgage sector?

Let’s take an in-depth look.

Negative environmental impact of the mortgage industry

As noted earlier, every activity, from advertising to loan repayment, adds to the avalanche of environmental costs in the mortgage industry.

So how do you go about quantifying it?

A report by The Guardian established a carbon footprint of almost 160g of CO2e for every pound spent on financial services (including mortgages) in the UK.

At this rate, believe it or not, the mortgage industry generates an average of 800 kg of CO2e per year for a capital of £ 100,000, loaned at 5% interest!

To put this number in perspective, it equates to the annual electricity consumption of a household!

Additionally, a FREEandCLEAR study found that Documentation, mainly in the mortgage origination process, is the main culprit of the green tax imposed by the industry.

Here is a brief overview of the main highlights of the study:

  • Borrowers may be required to review and sign as many fifty loan documents – making paperwork the hardest part of the mortgage with 56% of the votes from survey participants.
  • Mortgage institutions consumed 2.2 billion sheets of paper per year in the United States alone (which is a conservative estimate)!
  • Considering the large volumes of paper, this results in the destruction of 264,000 trees each year.
  • The production of this quantity of paper alone will emit greenhouse gases to the tune of 27,947,441.16 kilograms of CO2e. In addition, it will generate solid waste equivalent to 9,588,883.74 kilograms.
  • Likewise, production will consume 37,254,449 kilograms of wood, 951,607,442.03 liters of water and 358,115 million BTUs of energy.

Plus, the fact remains that paper costs money to buy, store, print and circulate. And if such documents are lost, it costs money to replace them.

The problem gets worse when documents need to be returned, because requests may be inconsistent or incomplete. As a result, the cumulative costs must be borne by the lender, the borrower and, most importantly, the environment.

Obviously, to embrace an environment-focused mindset, the first line of action would be to deal with the threat of red tape.

The green way to define AI in mortgages

With the above observations in mind, the emergence of digital technologies such as artificial intelligence in the mortgage industry could be a blessing in addressing these concerns. AI is paving the way for a smarter, error-free and paperless loan creation process.

The most obvious application of AI in mortgage origination is to submit the application to the lender. Smart forms can easily and seamlessly replace existing documents and extract data to eliminate the redundancy of filling out the same information over and over again. As a result, mortgage processing will no longer depend on the fifty or so paper documents and will reduce it considerably.

Here are other notable ways in which artificial intelligence and machine learning can make mortgage companies more environmentally friendly:

Self-service powered by AI

As a mortgage expert, you may have all the know-how of the steps and documentation required to apply for loan approval. However, for a layman, the experience can be quite overwhelming.

And for that reason, offering them AI-driven chatbots and a searchable knowledge base powered by an artificial intelligence dashboard can avoid the need for outdated printed brochures. Plus, once you’ve empowered your customers, you’ll notice a significant drop in app “round trips”.

Verification and validation of documents

Verification and validation of documents requires the inspector to visit the borrower and physically perform the verification. The client’s details are then entered into the loan forms.

However, AI systems use Intelligent Document Processing (IDP) to analyze information from existing digital copies and automatically populate that data.

The information is then matched to the relevant fields for faster submission of the request. Plus, it works in tandem with automated systems that validate documents with almost zero latency.

Personalized subscription

The personalization of services has become a key differentiator in the financial industry as the “one size fits all” approach no longer attracts customers. However, to personalize services, mortgage institutions will need to invest in both online and offline information retrieval systems.

In this aspect, cloud-based loan origination systems can leverage online data from multiple channels to grant personalization. The role of AI here will prove to be essential as it can help acquire and store valuable data relative to specifics without adding weight to the database.

The impact of Digilytics: AI in mortgage origination

At Digilytics, we’re trying to nip the problem in the bud through the implementation of AI in mortgage origination.

Our solution reduces the carbon footprint of lenders.

Digilytics offers RevEl, a bolt-on loan origination system that streamlines all stages of the mortgage origination process using the power of AI and ML.

RevEl grants the following tangible results:

  • Running a true paperless ecosystem that reduces reliance on physical documents.
  • Increase First Time Right requests and reduce the average number of request submissions.
  • Accept complete and consistent applications to speed up funding time by 40%.
  • Adoption of a data-driven mindset within the organization and better knowledge of data through centralization.
  • Resilience to market disruptions such as the COVID-19 pandemic and maintaining momentum for recovery.
  • Support for the Green 2030 mission in the UK mortgage industry.

And while achieving your sustainability goals, Digilytics can also help you improve the AI-powered mortgage lending experience for clients!

Can we say that this is a win-win situation for all!

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