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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 30 February 2024 F E A T U R E S T O R Y G enerative AI is the buzziest technology of recent times— and many boards are pres- suring mortgage leaders to develop a game plan for adoption. That's for good reason. Generative AI is already catching on throughout the broader financial services ecosystem. And tech-forward lenders like Zillow expect the technology to be "a platform shift on par with the introduction of … the touch interface on the first smart- phones," per comments from the compa- ny's Q1 earnings call. That means lenders who don't em- brace generative AI now will soon be dis- advantaged versus those who do. Lenders need a clear and informed strategy to embrace this new technology impactful- ly. Here, I'll explain three practical steps before investing in this new technology. But first, let's take a closer look at what generative AI is. What Exactly Is Generative AI? Generative AI uses models trained on extensive data to create original text, images, and audio. That data can be public (i.e., from across the internet) or proprietary, depending on the use case. Today, most people who have interact- ed with generative AI use a conversational, chat-based interface such as ChatGPT. When a user enters a query (like "What documents do I need for a mortgage appli- cation?"), the AI draws on its training data to predict and generate the response most likely to satisfy the user's needs. The "gen- erative" part is new to the AI landscape. But AI itself has been around for years. Most lenders have been using non- generative AI to analyze loan documents and automate decisions, sometimes achieving subsecond response times. The most exciting capability that genera- tive AI brings is its ability to produce new and coherent material—from chatbot replies to full documents—using only a simple, natural-language prompt. The question is where generative AI can have the most significant impact. The answer depends greatly on your organization's existing technologies, management structure, and needs. As- sessing these factors is a critical first step in building your generative AI strategy— more on that in the next section. Step 1: Perform an AI Readiness Check Before you invest in generative AI, it's essential to know whether your organiza- tion is ready for maximum impact. That involves considering two crucial areas: your AI maturity and efficiency needs. An experienced partner can help you evaluate both. The right partner will start by taking stock of the AI you already use, other than generative AI, the newest flavor. If your lending operation is familiar with nongenerative AI, you can likely implement a generative component with minimal disruption. But if your lending operation uses little AI, adopting genera- tive AI could put the cart before the horse. Instead, a partner might suggest develop- ing more institutional knowledge about AI (say, when it comes to proper data querying or responsible use) so your teams can make the most of generative AI tools. A partner can also gauge your organization's current efficiencies. They might spend time with call center agents to see if they're drowning in calls or speeding through their queues. And they may check in with product teams about software development timelines. This evaluation can help you under- stand where generative AI could impact most. Put simply: the more inefficiencies exist, the more value you stand to realize. 3 STEPS FOR LENDERS TO BUILD A GENERATIVE AI STRATEGY . B y T I M V O N K A E N E L T I M V O N K A E N E L is Chief Strategy Officer at CI&T, a global digital specialist. CI&T's Financial Services team specializes in customer experience management, mortgage operations, real-time payments, open banking, banking-as-a-service, and asset and wealth management.