Will Robinson of Encapture on How Innovative Banks Use Machine Learning to Reduce Risk

Will Robinson is the CEO of Encapture, Dallas, a high-growth SaaS platform that helps banks automatically extract important information from documents. Launched 20 years ago, Encapture helps companies save time and money by using machine learning to process large amounts of data. 

Since joining the company in 2019, Robinson has assembled a strong team of individuals who share his passion for fintech and AI banking, ensuring sustainable growth, achieving innovative excellence and tripling revenue. He leads Encapture with an emphasis and passion for company culture and setting a high standard of excellence.

MBA NEWSLINK: Where can lenders best use artificial intelligence in the mortgage life cycle, and what’s the impact?

WILL ROBINSON, ENCAPTURE: While artificial intelligence may sound like a daunting initiative, many lenders have successfully implemented this technology to automatically read and extract key data out of documents in three areas of the mortgage lifecycle:

·  Upfront application process. Lenders are using AI when collecting identification, income, and third-party services documents to support the underwriting decision. Machine learning can identify which documents are missing and extract key data to automatically enter into the loan origination system. It can also calculate income, identify unusual bank statement patterns, and flag timing issues (like an old pay stub or tax return) that would otherwise slow down the approval process.

·  Post-close audit. Instead of having a quality control team manually flip through a several hundred-page loan package, AI can read through the package in seconds, identify all required documents/disclosures, and verify that all the data is consistent (including checking for signatures). 

·  HMDA LAR reporting. Many compliance teams don’t trust their LOS data and require folks to manually review supporting loan documentation before submitting to the loan application register. Artificial intelligence can review those documents automatically, check the data against the LOS or other system of record, and flag discrepancies for the compliance team to investigate.

Typically, the use of AI in the mortgage process allows lenders to dramatically speed up loan cycle times and reduce errors with the same (or smaller) headcount.

NEWSLINK: With overall mortgage volumes recently declining, why should lenders invest in automation technology now?

ROBINSON: The biggest impact of automation technology is its ability to materially and permanently lower the overall cost structure of originating and servicing a loan. When implemented correctly, it allows lenders to limit the wild swings in hiring and firing staff based on the strength of the market. Many lenders have felt this pain over the past couple of years – it has been extremely difficult to hire and retain good staff during the “boom times,” and now lenders are facing challenging conversations about layoffs. Automation technology stabilizes these fluctuations, allows lenders to run very lean in a soft market, and scale much more efficiently (i.e. hire fewer staff) in a strong market.

NEWSLINK: We’ve seen a big increase in regulatory reporting requirements recently (e.g., HMDA) and expect more to come. How can lenders use AI to help comply?

ROBINSON: As we recently discussed, many compliance folks are repeating tasks that should have been already completed in the underwriting or closing processes – things like checking for loan package accuracy and completeness and ensuring that the system of record data matches the supporting documentation. It’s an incredibly inefficient process and, even worse, can breed mistrust between various groups in your organization. AI technology can replace these critical but mundane tasks and free up compliance officers to just handle the exceptions. It also makes for a much less stressful examination when an auditor randomly samples and checks loan files.

NEWSLINK: Many lenders assume that implementing automation technology results in painful headcount reductions. Does this really happen?

ROBINSON: This is a common misconception about artificial intelligence. In reality, many lenders struggle to hire and retain high quality employees, and they typically have several job openings for these roles. Further, the current loan ops team is usually overworked and struggling to keep up with all their responsibilities. Automation technology allows lenders to double or even triple the capacity of their existing team without having to hire extra resources. It also eliminates the low-value-add tasks of manually entering data or staring at documents so that employees can spend more time serving borrowers and handling exceptions. Ironically, the “soft” impact of automation technology is that it empowers your current employees so well that it leads to much higher job satisfaction and lower attrition. Employees love feeling like you’re investing in them and that you care about improving their daily experience.

NEWSLINK: What should lenders start doing now to be well prepared for the next upturn in loan activity?

ROBINSON: The default response in an uncertain environment is to hunker down, but many leaders I’m visiting with are using this opportunity to assess their current processes as a way to increase market share. Three practical ideas:

·  Collect feedback from your team about recent pain points experienced through the last 18 months. Figure out what was hard about scaling the team and prioritize the impact of solving these issues. Push hard to quantify the “hard dollar” results of making these changes.

·  Evaluate your technology stack. There is so much new technology around helping lenders acquire new borrowers and be more efficient. As a leader, it’s your responsibility to know what’s going on here and ensure your team is set up for success. A quick tip on this point – hold your vendors accountable for whatever ROI they promised you. They don’t want to lose your business and will (or should) bend over backwards to help you achieve your business case.

·  Encourage your employees. This is a tough time with a market slowdown, broader economic uncertainty, and inflation. You folks (even your best ones) are probably nervous about what the future holds. Create a culture of empathy and demonstrate that you care about their well-being and professional development. Sounds small but this goes a long way, especially when the market turns back on again.

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at msorohan@mba.org; or Michael Tucker, editorial manager, at mtucker@mba.org.)