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With the advent of AI and automation-based technologies, large enterprises in commercial real estate are working on their digital transformations to ensure that they remain ahead of the curve. This has seen large commercial real estate (CRE) enterprises acquiring smaller firms for their talent and technology, such as CBRE’s acquisition of Floored. Technology has been a great leveler for the industry and is giving smaller firms, which were traditionally at a disadvantage compared to their larger counterparts, a fighting chance to give more established firms a run for their money.
Traditionally, the more established servicers have always had an advantage compared to their smaller counterparts, particularly in terms of resources and staff. Now, midsize mortgage servicers can take advantage of technology and the agility of being in a smaller organization to gain insights about their business and arrive at faster decisions. For example, a smaller mortgage servicer can use automation to discover inefficiencies in its processes and resolve them much faster than established firm with set processes could.
Predictive Analytics
Smaller servicers can use data and AI to gain valuable insights about their properties, from the environmental, political and social factors that may be affecting the price of a property, to exhaustive comparable data of other properties in the neighborhood. Predictive analytics has become a useful tool for smaller loan servicers.
Predictive analytics is also being used to analyze patterns — in particular, client and tenant behavior to predict high turnover or client delinquency — to help these organizations make informed decisions. According to a Deloitte report, more than 55% of CRE executives surveyed said that AI could help their sales, customer relationship management (CRM), accounting and financial planning departments.
While implementing predictive analytic technologies, smaller servicers must be careful to ensure agility and continuity as far as their business processes are concerned. They must also pick the right functions to introduce such technologies to and perform due diligence before making any decisions like selling a property or evicting an existing tenant. Most of all, predictive analytics must be used as a tool to achieve business objectives and not the other way around.
Workflow Automation
Established CRE companies generally follow repetitive processes that are costly, error-prone and often slow compared to more agile, smaller mortgage servicers. According to the same Deloitte survey, “nearly two-thirds of CRE executives believe that AI technologies can increase the speed and accuracy of mundane tasks in lease administration.” Smaller firms can use automation in smaller volumes for significant processes like invoice generation, loan origination and financial modeling.
Smaller firms can also use automation in task allocation and to maintain transparency as far as tasks and processes are concerned. Even social media posts and marketing campaigns can be automated to enhance customer engagement.
Organizations must ensure clear communication with all stakeholders while implementing automation to their existing workflows. In particular, clearly defining the objectives and need for introducing automation is necessary to ensure success in this endeavor.
Talent And Agility
The Deloitte report found that “fifty-two percent of the respondents globally and 57 percent from the United States consider lack of adequate skills as the top challenge in adopting AI technology.” Whether it is hiring talent or introducing a new automation or AI-driven software, smaller mortgage servicers are at a distinct advantage compared to their more established counterparts. Midsize servicing companies are able to adopt technology at an unprecedented level, while nimbly hiring the right talent to ensure optimum utilization of these technologies.
According to an Altus Group report, 79% of organizations are planning to increase their use of proptech software to introduce efficiencies in their organizations. A relatively quick hiring process and the ability to pivot business units easily are major competitive advantages that smaller loan and mortgage servicing companies are well positioned for, compared to their bigger counterparts. If smaller organizations focus on streamlining their processes to take maximum advantage of having the right people and technology, established servicers will have a hard time keeping pace.
In the future, CRE organizations may derive their competitive advantage from the use of automation and AI-driven technologies to derive insights and optimize inefficiencies across their business. In addition to this, if the organization can hire the correct personnel and implement the right technology solution, they can not only keep pace with more established firms, but also potentially disrupt their business.