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AI seen boosting large mortgage lenders and speeding loan production
Keefe, Bruyette & Woods rates mortgage banking a 4.65 risk score out of 10 for AI disruption, while expecting automation to shorten loan cycle times and reduce costs.
Keefe, Bruyette & Woods said artificial intelligence is unlikely to upend mortgage banking, but it could improve efficiency at the biggest lenders by lowering costs and speeding loan production, which may further drive industry consolidation.
In its analysis, the investment bank argued that scale and data advantages, along with regulatory infrastructure and capital, position large financial players to deploy AI more effectively than smaller rivals.
KBW said mortgage banking has repetitive, rules based workflows that are well suited to automation, with AI more likely to reinforce large lenders’ advantages than fundamentally reshape the process. It pointed to the prospect that automating labor intensive steps could shorten loan cycle times, reduce costs, and improve accuracy.
The firm placed mortgage banking in the middle of its broader AI vulnerability view, assigning it a 4.65 risk score on a 10 point scale. It also said mortgage insurance companies and mortgage REITs carry somewhat higher AI disruption risk, though regulatory protections and capital intensive models could limit displacement.