Chatbots are rapidly becoming ubiquitous. These artificial intelligence-powered computer programs simulate conversations, answering questions through voice or text when interacting with consumers across industries, including the mortgage business.
Unlike decades ago, when potential homebuyers interacted solely with human mortgage professionals, AI-driven chatbots have minimized traditional challenges associated with originators, such as miscommunications, delayed replies, high labor costs and inconsistent service quality. Generative AI chatbots help potential homebuyers start the Uniform Residential Loan Application and provide originators with necessary information.
Large lenders such as Rocket Mortgage, Better and Wells Fargo have integrated AI into their chatbots and virtual assistants. AI-powered text and voice technology has automated 24/7 customer support while helping with document assistance and reducing loan approval times.
“In contrast to AI-driven chatbots, this new technology acts much more independently and can initiate interactions. It may not be sentient yet, but it is getting closer.”
Most current chatbots are powered by generative AI, which uses natural language processors to respond to queries. The next version of chatbots use agentic AI — which can reason and plan to solve complex multi-step problems. With the advent of agentic AI, chatbots will become more sophisticated than their predecessors.
This next level of AI makes voice and text technology intuitive, smarter and more accurate. Agentic AI minimizes the human element. In contrast to AI-driven chatbots, this new technology acts much more independently and can initiate interactions. It may not be sentient yet, but it is getting closer.
Creating conversations
Agentic AI uses technologies, such as machine learning, natural language processing, reinforcement learning and large language models, to help chatbots reason and make real-time decisions. AI agents create conversational interactions with consumers by text, voice or email while providing instant information about loan applications.
While both AI and agentic AI have made text and voice technology more natural, agentic AI reacts faster and makes proactive decisions due to its advancements in several key areas:
● Contextual understanding. Agentic AI grasps complex interactions with clients better than AI by analyzing real-time data, including past communications, financial information and market trends.
● Dynamic decisions. These chatbots adjust to borrower questions faster than traditional AI, providing a more seamless and organic experience.
● Proactive engagement. These systems continuously learn and can call or alert borrowers about their loan applications at any time. This ongoing learning process improves accuracy, enabling customization to meet the consumers’ unique needs
● User experience. AI chatbots have greatly improved the borrower experience, but agentic AI makes it more personalized.
Ballooning market
Although agentic AI is still in its infancy, Statista estimates that the market will increase from $5.1 billion in 2024 to more than $47 billion by 2030. Major tech brands such as Google Cloud, SAP, Microsoft and Salesforce are already integrating AI agents into their suite of services. The mortgage industry is just embracing this next generation of AI.
Rocket Companies, the parent company of Rocket Mortgage, unveiled the agentic AI-powered Rocket.com in January. The website, which primarily uses a text chatbot, helps consumers “search, purchase and manage their home financing.”
It answers real estate and mortgage questions 24/7 and informs clients and real estate agents of updates on interest rates, application status, and market news. Rocket reported that the AI agent system has “tripled” its conversion rate from website visitors to loan closings.
Agentic AI chatbots are an attractive option because they can potentially save mortgage companies money on reduced call center costs, limit interaction with human loan professionals, improve operational efficiencies, shorten the loan approval process, increase conversion rates, make data-driven decisions, improve regulatory compliance and provide a better borrower experience.
Adopting any new technology can be daunting, however. When mortgage companies decide to switch to agentic AI voice technology, they need to consider several potential tech issues before moving forward, including whether they have the processing power to support agentic AI and analysis of massive datasets.
Mortgage companies also need to determine whether they will be able to integrate the new tech with their legacy systems, such as the customer relationship management platforms, loan origination systems, and third-party programs. And will their cybersecurity protocols protect the vast amount of sensitive financial and personal data while complying with regulatory guidelines?
Preventing bias
A key challenge for mortgage companies is “biased” data. Lenders must protect against data bias, which could lead to discriminatory practices. Skewed information can cause different demographics to receive better offers than others.
Researchers at Lehigh University conducted a recent study that audited 1,000 loan applications, showing that the LLMs denied more loans and recommended higher interest rates to Black applicants. The study found that bias could be removed by “instructing the LLM model to use no bias in making loan decisions.”
IBM suggests that organizations follow several principles to avoid bias. This includes making sure that the data fed into machine learning models are comprehensive and balanced and reflect the actual demographics of society. IBM also suggests continuously monitoring to detect bias, using transparent AI platforms to explain the algorithm’s methodology and employing a diverse and interdisciplinary software development team to provide multiple perspectives when developing the AI system.
Deciding factors
When adopting agentic AI chatbots, companies need to decide whether to buy a system or build a proprietary platform that meets their unique needs.
Off-the-shelf models probably come with lower initial costs, faster implementation, proven reliability, vendor support and built-in integrations. Many products may have limited customization or can feature bloat or vendor dependency and recurring fees.
“When adopting agentic AI chatbots, companies need to decide whether to buy a system or build a proprietary platform that meets their unique needs.”
With a custom software solution, companies receive systems that are tailor-made to their unique needs, including specific functionality, streamlined workflows, improved user experience, flexible modifications, long-term savings and ownership.
A custom-built platform, however, can have higher initial costs and longer development time. If a company chooses this approach, it must select a trusted and industry-experienced vendor that will provide a secure, regulatory-compliant, and scalable platform.
Eliminating challenges
Operating autonomously and making decisions with minimal employee involvement, agentic AI has the potential to develop a hyper-personalized borrower journey. This begins with the first interaction between the loan applicant via chat, voice or email.
Although generative AI provides real-time data, AI agents understand complicated interactions more efficiently when analyzing financial history, property information and many other factors. The faster real-time adjustments will also enable consumers to receive custom mortgage recommendations based on the latest market and interest rate trends.
While agentic AI will handle most of the tasks and answer questions quickly and accurately, many mortgage companies will opt for a hybrid model, including an originator, to help with the more complex applications and offer a personal touch when needed. Companies can’t completely let agentic AI platforms run without supervision, at least not yet.
Powered by agentic AI, loan applicants will enjoy a more streamlined process that eliminates many of the challenges mortgage companies faced before, such as delays, miscommunication and misinformation. For lenders, faster approval times, higher lead conversion rates and more natural 24/7 customer support are motivating reasons why they should consider upgrading to an agentic AI systems. This new innovation could save buyers and lenders money, time and aggravation.
