MBA Premier Member Editorial: How Consumer Reluctance to Embrace ID Verification Technology and AI Creates Pain Points for Lenders
Andrew Liput is president and CEO of MBA Premier Member Secure Insight, Hamilton, N.J.
In the evolving landscape of mortgage lending, the integration of AI-driven identity verification and automation technologies promises efficiency, from streamlined document checks to fraud detection. However, consumer reluctance to trust and adopt these tools is generating significant pushback, complicating loan closures and introducing stress points for lenders and borrowers alike.
A primary driver of this hesitation is privacy and security concerns. With AI enabling sophisticated fraud tactics like deepfakes and synthetic identities, consumers fear data breaches or impersonation risks. For instance, reports highlight that 60% of individuals are extremely concerned about fraud, amplified by AI’s ability to bypass biometric safeguards in banking and real estate transactions. In mortgages, this manifests as wariness toward automated identity verification, where borrowers question the reliability of facial recognition or algorithmic assessments over traditional methods. See https://www.proof.com/2025-trust-ledger.
Compounding this is a strong preference for human interaction. Recent consumer research reveals that 90% of homebuyers expect lenders to guide them through every step, up from 84% two years ago, while preference for fully digital experiences has dropped 16% to 43%. Borrowers increasingly demand in-person consultations (61% preference, up 33%), viewing AI as impersonal or error-prone, especially in high-stakes decisions like loan approval. Click here for more information.
This reluctance creates tangible stress in closing processes. Borrowers may delay submitting digital verifications, request manual reviews, or abandon applications altogether, leading to extended timelines—sometimes weeks longer than anticipated. Lenders face higher dropout rates, with late-engaging borrowers twice as likely to switch providers, eroding efficiency gains from AI. Additionally, regulatory scrutiny under laws like the Truth in Lending Act adds pressure, as non-compliance risks arise from mismatched tech adoption and consumer expectations.
To mitigate these friction points, lenders must prioritize hybrid models that build trust through transparency, education on AI safeguards, and optional human oversight. Balancing innovation with empathy is key to smoother closures in an AI-augmented future.
At Secure Insight we have worked hard to integrate automated solutions with the analytical work on the backside, so that the consumer experience is not disrupted in any non-traditional way. In this regard lenders can have the benefit of risk management while not feeling the stress of consumer push back and confusion over their loan closing processes.
(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes submissions from member firms. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)
