Over the weekend, I attended a birthday party where I had a conversation with an old friend who also works in CRE lending. As one does at a party, I got to talking about some of the recent tech advancements in the industry. But before you pass judgment on my topic of conversation, I’m not the only one who’s excited about it.
ChatGPT, and other techs like it, have completely eclipsed our frame of view. What has surprised me more, however, is the response in CRE, specifically. What started as a simmer, is quickly approaching a rolling boil of activity. I’m seeing all kinds of creative applications of how this technology can be applied to things like CRE deal analysis and workflow. And while there are still lingering concerns about data, security, and compliance (for good reason, I might add…), the potential to completely overhaul the lending process is not lost on me. From deal sizing, to underwriting, and portfolio management, it feels like our industry is finally getting up to speed with the pace of innovation. But ChatGPT is just a very shiny object amidst a lot of other really amazing ways to rethink the way we approach lending.
By now, I’m deep into my conversation and about ready for a refill, and as I’m enthusiastically wrapping up my pitch, I’m surprised to find that my friend appears concerned. “Sure, that sounds great, Laura. But what about Job loss?”
As someone who’s been working in the technology space for the last couple of years, I’m not oblivious to the fact that my excitement about the potential often overrides my concern. As someone who comes from the world of lending, I get it – especially in the economic environment we’re in. I’m not about to tell you that there’s nothing to worry about, but the rewards definitely outweigh the risks. Plus, you might be surprised to find that new technology is not a harbinger of doom for you and your team, but might actually help you level up in some surprising ways.
What better time to jump on the tech train than when your competition is at rest? CRE originations have slowed to a crawl, and the clear trend has been for lenders to cut budgets, staff, you name it. They are hunkering down for a CRE winter. You have your eyes on a bigger prize than ‘survival’.
While it might go against natural instinct, there is some real wisdom to leveraging the downturn (and downtime) to invest in adopting and integrating new technology. That also takes time. In order to reap the benefits of a new system, some ‘processing time’ is required. No matter what a technology vendor tells you about ‘quick implementation’, setting a system up is just one part of the process. There’s also workflow alignment, systems integrations, training and adoption, and the fine tuning that’s critical to real success. You can’t just plug it in and turn on a hose of ROI. Luckily, we have an abundance of time, but that won’t last forever. CRE is sleeping, but who’s to say how long this lasts? It might be a cat nap, or a full night’s sleep. Either way, originations will come back up to speed – and you’ll want to be ready for it.
Those who take the time to review processes and refine their tech stack now will not only come out swinging when business picks back up, but they will have avoided starving themselves for the winter (and the imminent sluggish performance from a skeleton crew in a dimly lit building).
Some of the headlines I’ve seen recently pit man vs. machine like some modern take on the Terminator. Sure, while there are certainly organizations that are taking incredibly aggressive approaches to technology investment, cutting teams and throwing massive amounts of cash at development, that’s a picture of the most extreme case. Most technologies (like Blooma) are specifically designed to optimize performance, not replace the people doing the work. You can bet that where tech is inserted, the manual and mundane will become obsolete, but do you really want to waste valuable time doing busy work anyway? You won’t miss it, and bonus, you’ll actually get some time back to innovate and optimize elsewhere.
So, what does this look like in CRE lending specifically? Here are just a few ways that tech can help you achieve impressive gains on the job:
Technology can automate and streamline various processes involved in CRE lending, such as document management, data collection, and verification. This reduces manual efforts and increases efficiency. By eliminating mundane administrative work, you can focus on more strategic and value-added aspects of your job.
Advanced data analytics tools and machine learning algorithms can process vast amounts of data quickly and extract valuable insights. These data-driven insights enable lenders to enhance their decision-making processes, identify opportunities for growth, and effectively mitigate risks. Furthermore, the use of technology in data analysis helps improve the overall quality of work by reducing the chances of errors or oversights that may occur with manual analysis. Lenders can rely on the power of technology to process data efficiently, identify patterns, and draw meaningful conclusions.
By utilizing technology, the process of valuing properties can be expedited through the aggregation of market data and leveraging AI. This enables informed and swift decision-making when originating new deals or refinancing existing properties. As a result, the time to generate revenue is significantly reduced due to the efficiency of the decision-making process facilitated by technology.
Technological advancements in CRE lending contribute to improved risk management by offering real-time monitoring of market trends, property valuations, and portfolio performance. Through the use of automated risk assessment models or lending profiles, lenders can access more accurate risk profiles, leading to better-informed lending decisions. By leveraging these technological capabilities, lenders can proactively identify and assess risks associated with CRE lending. This proactive risk management approach enables them to make more informed decisions, mitigate potential pitfalls, and safeguard the overall health of their lending portfolios.
Technology can assist in maintaining compliance with regulatory requirements by automating your workflow and ensuring accurate and timely reporting. This reduces the risk of non-compliance and associated penalties.
Technology enables better collaboration among various stakeholders involved in CRE lending, such as lenders, borrowers, investors, and appraisers. Online platforms and communication tools allow for seamless sharing of information, feedback, and document exchange, improving transparency and reducing delays.
Overall, technology improvements have the potential to make CRE lending processes more efficient, accurate, and secure, benefiting both lenders and borrowers and contributing to the growth and development of the industry. Rather than replacing your job, technology can enable you to work more effectively by leveraging its capabilities and integrating into your workflow. It’s important to remember that while technology can bring significant improvements, it can’t completely replace human expertise and judgment in complex lending processes. By adapting to and embracing technological advancements, you can position yourself to thrive in a changing landscape and leverage technology as a tool to enhance your job performance rather than a threat to your role.
Now, where’s that refill?
Laura Taylor is Blooma’s CX aficionado with a demonstrated history in financial services working for companies like JP Morgan Chase & Co. and local favorite, San Diego County Credit Union. Today, she uses her extensive experience in CRE lending and underwriting to help Blooma customers everywhere level up their CRE lending.