The fast advancements in technology have already changed the way residential mortgages are originated, but there’s also a tech revolution going on in commercial real estate. With home loans, the drive has been toward greater customer convenience and speed. Technology has been evolving a bit differently in the commercial real estate world, however, where the transactions are less uniform, the deals tend to be much larger and each asset tends to have a special set of risk factors.
Rick Hill, vice president of industry technology for the Mortgage Bankers Association, spoke with Scotsman Guide about the technological advancements in the commercial mortgage world, and where these innovations could take the industry over the short and long term.
Compared to residential mortgages, we don’t hear as much about technological advancements for commercial mortgages. Does this mean commercial mortgage companies are behind?
They’re focused on different technologies. Residential and commercial are vastly different. We certainly don’t look at the consumer in the same way. Residential lending is looking to create a new experience for those who want to borrow money but want to do it from a digital perspective.
It’s not that you don’t have consumers in commercial [real estate], but it’s a different nature. And so, that huge focus on what we call an omnichannel, where if a transaction is started on a PC (personal computer), you ought to be able to see the status of it on the cellphone or tablet, that’s a different nature than the commercial world.
What advancements have been taking place?
There is some standardization. If you think about appraisals and rent rolls, you can certainly see why there’s an ability to standardize some of those, and I classify that as technology advancement.
Specific to technology, drones are something. Commercial might be ahead of residential in terms of the use of drones for appraisal and inspection activity. A drone is not necessarily just the thing that’s flying in the sky. It can be a vehicle used to go through a building. It can fly around the building, but you can also use those in that appraisal or inspection effectively and efficiently.
You also see robotic process automation for paperwork, copying or imaging. That can replace a clerk who is sitting there putting a page on a copier or whatever. You are certainly also starting to see artificial intelligence and the efforts around that. Blockchain is something that’s out there. There is a heck of a lot of buzz on blockchain at this point. It certainly has its potential.
What’s the payoff of these advancements for mortgage brokers, lenders and borrowers?
There’s a lot of data that gets created. You sort of think about what’s going on with Google and the Facebooks of the world, and all the data they’re collecting on you. Data creates opportunities in a bunch of ways. It can be used to minimize risk. It can be used to minimize your costs in some ways, but it also can create new opportunities.
As technology advances, what is going to be the role of the originator?
You know, it’s hard to predict the future. Typically, as you see technology evolving, it starts with the more rote types of activities that really don’t necessarily require a lot of thought. And then they sort of progress. I would say that an expert adviser is always going to be needed. I don’t see that going away.
What do you think will change in the next five years?
My gut tells me that you’re not necessarily going to see huge changes in the origination process, other than the rote type of role in the near future. You’re going to see a lot of research behind the scenes that eventually will result in more change, but systemwide or industrywide changes are maybe a little bit further out than that. n