The HousingWire award spotlight series highlights the individuals and organizations that have been recognized through our Editors’ Choice Awards. Nominations for HousingWire’s 2024 Tech Trendsetters award are open now through Monday, Sept. 30. Click here to nominate someone.
If we learned anything from HousingWire’s recent AI Summit, artificial intelligence (AI) is rapidly reshaping lending by streamlining processes, reducing costs, and enhancing the overall borrower experience. As a result, lenders can scale their businesses more effectively, respond to market demands faster, and provide a smoother, more user-friendly experience for borrowers, all while reducing costs.
HousingWire sat down with Kevin Wilzbach, director of product management at Wolters Kluwer Compliance Solutions and 2023 HousingWire Tech Trendsetter, to discuss how AI and digital lending solutions are helping lenders navigate a volatile market. From automating workflows to meeting customer demand for better borrower experiences, Wilzbach shares key insights on the future of fintech and the tech investments that will help lenders stay ahead.
HousingWire: What has been the most surprising tech transformation that you have seen in recent years?
Kevin Wilzbach: Without question, the growth in the use of AI and particularly GenAI has been transformational for the banking industry. Perhaps what is most surprising to me is the relative rapidity of its adoption—and the many ways in which lenders and other financial institutions are starting to explore ways to unlock the potential of AI-generated data as part of their decision support processes. AI has certainly been transformative, helping convert raw data into actionable insights for lenders and providing a competitive advantage in the process. Today, technologies like natural language processing and machine learning have moved from the research lab into something more tangible that commercial enterprises can take advantage of.
Not surprising, we are increasingly incorporating AI-powered capabilities into our offerings, largely driven by customer demand for enhanced lending workflows, together with better operational and analytics capabilities. Our banking customers’ continued input is playing an invaluable role that informs our efforts in developing integrated solutions that will help lenders be more nimble and allow them to scale their offerings according to market demands.
HousingWire: Where do you see the greatest need in housing tech? What problems still need to be addressed?
Kevin Wilzbach: While the industry awaits relief in the form of interest rate reductions, there’s no quick fix to the associated high costs of housing in the near term. There’s also the challenge of available housing. A boost in inventory is clearly needed. Increasing today’s housing stock, combined with reduced rates, will help improve housing affordability.
However, reducing the overall costs of loan origination also needs to be addressed. A 2024 study by Freddie Mac indicates that origination costs have risen 35% over the past three years leading up to the study and now top $11,600 per loan for retail lenders. That’s not sustainable for a healthy mortgage industry. In addition, the regulatory environment is ever-changing and with it comes increased burdens on the lending industry. Using tech in a smart, deliberate manner, such as the adoption of digital lending technologies, is helping lenders better manage today’s dynamic regulatory environment, while providing the means to speed and streamline lender originations processes, from application through to closing.
HousingWire: Will adopting digital lending drive higher mortgage business?
Kevin Wilzbach: Our experience working with lenders has shown that the use of digital tools will, through increased automation, build greater borrower engagement and facilitate a faster, easier and enhanced lending experience. Consumer behaviors are forcefully driving the transformation to digital, and enlisting those digital tools earlier in the lending process leads to a better borrower experience.
HousingWire: Where would you advise clients and colleagues to focus their tech resources in the near term as they navigate today’s market environment?
Kevin Wilzbach: We recognize that lenders can substantively help navigate the ups and downs of the market by using technology and scaling their efforts accordingly. Adoption of digital lending solutions, for example, presents a great opportunity to reduce costs and streamline operations. While we recognize that investments and process changes can seem counterproductive during a market downturn, we encourage lenders to actively plan for the next big market rebound that will affect first lien and refinancing volumes. Pulling back too drastically could impact an organization’s readiness for the anticipated increase in lending volumes. Recent statements by economists and the Federal Reserve’s half percentage point interest rate cut announced Sept. 18 are encouraging signs.
Our advice to lenders is to not take your foot off the gas pedal. Now is the time to prepare for the market to rebound. If you work with third-party service providers, consider those that have integrated offerings rather than point solutions as a means of helping ramp up all the faster as market conditions improve.
