Artificial intelligence has been a buzzword for a long time, and rightfully so. By now, we deal with AI every day—it’s in our phones and in our homes, and we keep on hearing about it everywhere we go. These days, it became a buzzword in the private mortgage industry as well. But is it truly all it’s cracked up to be?

Private lenders know that going digital is the only way to survive, there is no other choice. They adopt systems that improve efficiency, optimize processes, and create a stellar customer experience. Many invest in this right at the start of their business, knowing the benefits they will get from a solid digital foundation.

Your clients are more than a set of parameters

However, when it comes to artificial intelligence used for private lending, it’s hardly the Alexa you have at home. It can seem like a neat future-focused feature, but it needs to be approached with caution. Relying on computers to decide whether a borrower is a good fit for a private mortgage can end up costing you great business opportunities.

For example, if you rely on AI to choose which deals to approve or decline, and you set it to auto-decline deals that are over 80% LTV, with no less than a 600 credit score, you might miss out on important details that can make you open to doing select deals outside these parameters.

Let’s say, you receive a deal with 90% LTV, and your AI automatically declines it. But if you reached out and spoken to the borrower, you would’ve learned that their family members were willing to add another property as collateral, which would make this deal much more attractive to you.

Focus on communication & flexibility

The core of the private lending industry is to create solutions for people who can’t go to the banks. It’s about flexibility, direct communication, and relationship building. You want to provide your borrowers with the best experience so that they know they can turn to you for future opportunities. Artificial intelligence can’t do this for you, at least not at this point.

If you are reading our blog, then you are likely interested in automating as many of your processes as possible, and we salute you. So much of the tedious manual work can absolutely be delegated to the machines, it’s the key to a company’s success.

Artificial intelligence can be truly beneficial for institutional lenders. However, machines should not be making important decisions for privates, especially those directly related to the growth of your business. The year 2020 taught us a lot about the importance of person-to-person communication. Tap into it, cultivate relationships, ask the right questions, and try to accommodate your clients as much as you can.